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LMF Acquisition Opportunities, Inc. *

LMF Acquisition Opportunities, Inc. *

Jan 8, 2021 by Matt Cianci

PROPOSED BUSINESS COMBINATION: SeaStar Medical, Inc. 

ENTERPRISE VALUE: $85 million
ANTICIPATED SYMBOL: tbd

LMF Acquisition Opportunities, Inc. proposes to combine with  SeaStar Medical, Inc.

  • SeaStar Medical’s Selective Cytopheretic Device (“SCD”) is a patented, cell-directed, extracorporeal immunomodulator that selectively targets activated neutrophils and monocytes to address hyperinflammation.
  • Neutrophils and monocytes are the cellular mediators that drive systemic inflammation, which when spreading uncontrollably through the body can lead to organ damage, organ failure, or death.
  • The SCD technology targets the cellular drivers of inflammation to restore balance in the body and potentially reverse the damage.
  • SeaStar Medical intends to submit SCD for approval with the FDA under the Humanitarian Device Exemption to commence commercialization for the treatment of pediatric AKI and advance SCD into a pivotal trial for the treatment of AKI in adults.

SUBSEQUENT EVENT – 10/17/22 – LINK

  • After the shareholder vote, the SPAC allowed the reversal of redemptions.
    • 85.787% have redeemed now from 99.108% previously announced at the vote.

SUBSEQUENT EVENT – 10/17/22 – LINK

  • LMF, SeaStar Medical and Vellar Opportunity Fund SPV LLC – Series 4 entered into an agreement for an equity prepaid forward transaction.
    • While the Seller has no obligation to purchase any Shares under the Prepaid Forward Agreement, the aggregate total Recycled Shares may be purchased under the Prepaid Forward Agreement shall be no more than 1,500,000 shares, exclusive of the Additional Shares, and the actual number of Recycled Shares that will be purchased under the Prepaid Forward Agreement is referred to as the “Number of Shares”.
    • Seller has agreed to hold the Recycled Shares in a bankruptcy remote special purpose vehicle for the benefit of
      • (a) LMF until the closing of the Business Combination and
      • (b) SeaStar Medical Holdings after the Closing.
    • Seller also may not beneficially own greater than 9.9% of issued and outstanding Shares following the Business Combination.
  • The Prepaid Forward Agreement provides that, no later than the earlier of (a) one local business day after the Closing and (b) the date any assets from LMF’s trust account are disbursed in connection with the Business Combination, Seller shall be paid directly, out of the funds held in LMF’s trust account, a cash amount equal to the Number of Shares multiplied by the Per-Share Redemption Price.
  • Seller shall be paid directly from LMF’s trust account an amount equal to the product of 100,000 multiplied by the Redemption Price, for the purpose of repayment of Seller purchasing, prior to the Closing, 100,000 additional Shares from third parties in the open market through a broker, which Shares shall not be included in the Number of Shares under the Prepaid Forward Agreement, and which Additional Shares will be free and clear of all obligations of Seller in connection with the Prepaid Forward Agreement.
  • Seller may in its discretion sell Recycled Shares that Seller purchases, the effect of which is to terminate the Prepaid Forward Agreement in respect of such Recycled Shares sold (the “Terminated Shares”)
    • The Counterparty shall be entitled to proceeds from such sales of Terminated Shares equal to the product of
      • (x) the number of Terminated Shares multiplied by (y) the Reset Price.
    • Following the Closing, the “Reset Price” will initially be $10.00/Share, but will be adjusted on the last scheduled trading day of each month (each a “Reset Date”) commencing on the first calendar month following the Closing to the lowest of
      • (a) the then-current Reset Price
      • (b) $10.00 and
      • (c) the volume weighted average price (“VWAP Price”) of the Shares of the last ten (10) trading days of the prior calendar month, but not lower than $5.00; provided, however
        • To the extent Counterparty sells, enters any agreement to sell or grants any right to reprice, or otherwise dispose of or issue any Shares or any securities of Counterparty or any of their respective subsidiaries which would entitle the holder thereof to acquire at any time Shares, including, without limitation, any debt, preferred stock, right, option, warrant or other instruments that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Shares, at an effective price per share less than the then existing Reset Price, then the Reset Price shall be adjusted to equal such reduced price.
  • The maturity date of the Transaction will be the earliest to occur of
    • (a) the third anniversary of the Closing and
    • (b) the date following the effective date specified by Seller in a written notice to be delivered at Seller’s discretion after any occurrence wherein during any 30 consecutive trading-day period, the VWAP Price for 20 trading days is less than $3.00 per Share (a “VWAP Trigger Event”)
    • Upon the occurrence of the Maturity Date, Counterparty is obligated to pay to Seller an amount equal to the product of (a) (x) the Maximum Number of Shares less (y) the number of Terminated Shares multiplied by (b) $2.50 (the “Maturity Consideration”).
    • The Maturity Consideration shall be payable by Counterparty, in cash or, at the option of Counterparty, Shares based on the daily VWAP Price over 30 trading days ending on (i) the Maturity Date to the extent the Shares used to pay the Maturity Consideration are freely tradable by Seller, or (ii) if not freely tradeable by Seller.
  • The Prepaid Forward Agreement may be terminated if any of the following events occurs:
    • (a) failure to consummate the Business Combination on or before October 29, 2022, as such date may be amended or extended from time to time
    • (b) termination of the Merger Agreement prior to the Closing and
    • (c) the Shares are involved in a delisting on the relevant exchange and are not immediately re-listed, save for any transactions contemplated by the Merger Agreement.
    • Upon such a termination event, a break-up fee equal to
      • (i) all of Seller’s actual out-of-pocket reasonable fees, costs and expenses relating to the Business Combination plus
      • (ii) $1,000,000 is payable by SeaStar Medical to Seller in the event the Transaction is terminated by
        • (a) Counterparty and the Business Combination closes or (b) SeaStar Medical Holdings following the Closing
          • provided that the Break-Up Fee is not payable if the Business Combination does not close by reason of failure of Seller to purchase the Maximum Number of Shares or Seller’s beach of the Prepaid Forward Agreement.

SUBSEQUENT EVENT – 8/24/22 – LINK

  • On August 23, 2022, LMF Acquisition Opportunities, Inc. and SeaStar Medical, Inc. entered into a common stock purchase agreement and a registration rights agreement with Tumim Stone Capital LLC, pursuant to which Tumim has committed to purchase up to $100 million of the Company’s common stock (the “Total Commitment”).
  • The parties’ respective obligations under the Purchase Agreement will not become effective until the closing of the Business Combination and certain amendments and deliverables under the Purchase Agreement are made except that certain provisions of the Purchase Agreement will become effective immediately.
  • The Company will have the right, but not the obligation, to sell to Tumim up to $100 million of the Company’s common stock.
  • Such sales of common stock by the Company will be subject to certain limitations, and may occur from time to time at the Company’s sole discretion, over the period commencing after the date of the consummation of the business combination dated as of April 21, 2022 (the “Closing Date”), and ending on the first day of the month next following the 24-month anniversary of the Closing Date (the “Termination Date”).

EXTENSION – 7/29/22 – LINK

  • The Company extended the date to consummate a business combination from July 29, 2022, to October 29, 2022. 
  • In connection with the Extension, the Company’s sponsor, LMFAO Sponsor, LLC, has notified the Company that it intends to deposit an aggregate of $1,035,000 (representing $0.10 per public share).

TRANSACTION

  • The transaction contemplates an enterprise value of approximately $85 million for SeaStar Medical. As part of the transaction, all SeaStar Medical shares owned by SeaStar Medical’s existing equity holders will be converted into Class A Common Stock of SeaStar Medical Holding Corporation.
  • The Dow Chemical Company Pension Plans, as existing investors of SeaStar Medical, are committed to further participate in the transaction through a PIPE investment that is expected to close at the time of the completion of the business combination.

PIPE

  • LMAO, SeaStar Medical, Dow Employees’ Pension Plan Trust (“Dow Pension”) and Union Carbide Employees’ Pension Plan entered into a commitment letter (the “Dow Commitment Letter”) pursuant to which Dow agreed to subscribe for and purchase shares of Common Stock in a PIPE to close immediately prior to the Closing in an amount equal to or greater than $5,000,000.

LOCK-UP

Company & Sponsor Lock-Up:

  • The Sponsor and holders of the merger shares agreed that they will not transfer any shares held by them until the date that is the earlier of:
    • (1) the twelve-month anniversary of the Closing and
    • (2) the last sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Merger.

NOTABLE CONDITIONS TO CLOSING

  • The Closing is subject to LMAO having at least $15,000,000 unrestricted cash on hand at closing.

NOTABLE CONDITIONS TO TERMINATION

  • The Merger Agreement may be terminated by written notice from either LMAO or SeaStar Medical, if the Closing has not occurred on or before July 29, 2022 or October 29, 2022 if the Extension occurs (the “Outside Date”).

ADVISORS

  • Maxim Group LLC served as sole financial advisor to SeaStar Medical.
  • Skyway Capital Markets LLC served as sole financial and valuation advisor to LMAO.

MANAGEMENT & BOARD

Executive Officers

Bruce Rodgers, 56
Chief Executive Officer, President, and Chairman of the Board of Directors

Since completion of its initial public offering in October 2015, Mr. Rodgers has served as Chairman, Chief Executive Officer, and President of LMFA, an affiliate of our sponsor and publicly traded company on the Nasdaq Capital Market. LMFA is a specialty finance company that provides funding to nonprofit community associations primarily located in the state of Florida. Mr. Rodgers was instrumental in developing LMFA’s business model prior to its inception and was one of its primary investors. As LMFA’s Chief Executive Officer, Mr. Rodgers has guided LMFA through its initial public offering, subsequent public offerings, and acquisitions of complementary businesses. Mr. Rodgers is a former business transactions attorney counseling numerous businesses with respect to mergers, acquisitions and capital raising transactions. In this capacity, Mr. Rodgers was an associate of Macfarlane, Ferguson, & McMullen, P.A. from 1991 to 1995 and a partner from 1995-1998 and was an equity partner of Foley & Lardner LLP from 1998 to 2003. Originally from Bowling Green, Kentucky, Mr. Rodgers holds an engineering degree from Vanderbilt University (1985) and a Juris Doctor, with honors, from the University of Florida (1991). Mr. Rodgers also served as an officer in the United States Navy from 1985-1989 rising to the rank of Lieutenant, Surface Warfare Officer. Mr. Rodgers is a member of the Florida Bar and holds an AV-Preeminent rating from Martindale Hubbell.

Richard Russell, 60
Chief Financial Officer, Treasurer, Secretary and Director

Mr. Russell has also served as Chief Financial Officer of LMFA, an affiliate of our sponsor and publicly traded company on the Nasdaq Capital Market since 2017. Since 2016, he has provided financial and accounting consulting services with a focus on technical and external reporting, internal auditing, mergers & acquisitions, risk management, and CFO and controller services. Mr. Russell also served as Chief Financial Officer for Mission Health Communities, offering management services for nursing and post-acute care facilities, from 2013 to 2016 and, before that, Mr. Russell served in a variety of roles for Cott Corporation, an American-Canadian beverage and food service company, from 2007 to 2013, including Senior Director Finance, Senior Director of Internal Auditing, and Assistant Corporate Controller. Mr. Russell’s extensive professional experience with public companies includes his position as Director of Financial Reporting for Quality Distribution, a transportation and logistics company, from 2004 – 2007, and as Director of Financial Reporting for Danka Business Systems PLC, a supplier of photocopiers and office imaging equipment, from 2001 to 2004. Mr. Russell also serves as Chief Financial Officer of Generation Income Properties, Inc., which is a real estate investment company that is publicly traded on the OTCQB Venture Market, a position he has held since December 2019. Mr. Russell earned his bachelor of science in accounting and a master’s in tax accounting from the University of Alabama, a bachelor of arts in international studies from the University of South Florida, and a master’s in business administration from the University of Tampa. On March 1, 2020, Mr. Russell was appointed to the board of directors for TDNT, a publicly held consumer products company that has been trading on the OTCQB Venture Market since April 2015. Mr. Russell is also Chairman of the Hillsborough County Internal Audit Committee since January 2020 and has been a board member since August 2016.

Board of Directors

Craig Burson, 59
Director

Mr. Burson is currently the founder and Managing Member of Peak 8 Capital, LLC and Ski Mountain Properties, LLC, two commercial real estate businesses founded by Mr. Burson and his wife.  From January 2000 to March 2020, Mr. Burson worked for H.I.G. Capital, LLC (“H.I.G.”), a leading global alternative investment firm with approximately $42 billion of equity capital under management and a focus on the small cap and mid cap segments of the market. From June 2003 until March 2020, Mr. Burson served as a Managing Director in H.I.G.’s Growth Equity and VC funds. During his 20 year career at H.I.G., Mr. Burson focused on making investments in the business services, consumer, healthcare, and technology sectors. Mr. Burson was involved with over 20 investments while at H.I.G., sat on many of the boards of companies in which investments were made, and was a member of the audit and compensation committees for a number of his investments. Prior to H.I.G., Mr. Burson was a member of the Raymond James & Associates technology investment banking practice, where he was active in public offerings, private placements, and mergers & acquisitions. In addition, Mr. Burson had a 15-year career with the Dow Chemical Company, holding management positions in engineering, sales, marketing, and new business development. His focus at the Dow Chemical Company was on the healthcare, semiconductor, water treatment, mining, and oil & gas industries. Mr. Burson also served as a development leader at Dowell Schlumberger, where he was involved with advanced oil & gas treatment technologies. In addition, he spent time in the trenches working as a roust-a-bout for Phillips Petroleum while earning his engineering degree. Mr. Burson earned a Bachelor of Science degree in Mining Engineering from the Colorado School of Mines and an M.B.A. from Harvard Business School.

Martin Traber, 75
Director

Mr. Traber currently serves as a director of LMFA, an affiliate of our sponsor and publicly traded company on the Nasdaq Capital Market, since its initial public offering in October 2015, although Mr. Traber will cease to be a director of LMFA upon the completion of this offering. Mr. Traber is currently Chairman of Skyway Capital Markets, LLC a Tampa, Florida-based investment banking firm. From 1994 until 2016, Mr. Traber was a partner of Foley & Lardner LLP, in Tampa, Florida, representing clients in securities law matters and corporate transactions. Mr. Traber was a founder of NorthStar Bank in Tampa, Florida and from 2007 to 2011 served as a member of the Board of Directors of that institution. From 2012 to 2013, he served on the Board of Directors of Exeter Trust Company, Portsmouth, New Hampshire. Mr. Traber holds a Bachelor of Arts and a Juris Doctor from Indiana University. He has counseled and observed numerous businesses in a wide range of industries. The knowledge gained from his observations and his knowledge and experience in business transactions and securities law will assist in monitoring our performance and when we consider and pursue business acquisitions and financial transactions. As a former corporate and securities lawyer, Mr. Traber has a fundamental understanding of governance principles and business ethics. His knowledge of other businesses and industries are useful in determining management and director compensation.

Bruce Bennett, 60
Director

Mr. Bennett currently serves as CEO and Chairman of Mad Mobile, Inc., a global leader in point-of-sale modernization and technology solutions for the retail and restaurant industries, which he founded in 2010. As CEO and Chairman of Mad Mobile, Mr. Bennett is responsible for providing leadership and oversight over all functions of the company, including areas such as financial, sales, marketing, hiring, and compensation for the company’s 250 employees globally. Prior to 2010, Mr. Bennett served as the Chief Operating Officer and as a member of the board of directors of SOE Software, a nationally recognized leader of e-Government focused software solutions, from 2005 to 2010. In addition, Mr. Bennett has founded, grown, operated, and sold multiple high-growth technology companies, including: GoSolutions, Inc., a provider of voice and data communications services, from 2002 to 2004; Mediacentric Group, Inc., an e-commerce delivery service network provider, from 1998 to 2003; eAngler.com, an online fishing resource, providing anglers with content, community, and e-commerce, from 1994 to 1999; and Image Technologies Group, Inc., a provider of strategic consulting, website-design services, database programming, back-end integration, multimedia services, and wireless applications, from 1989 to 1993. A veteran of the software industry, with over two decades of experience, Mr. Bennett is well-versed at both the board of directors and executive levels of public and private sector companies, and he strives to maximize organizations’ key value propositions and enhance their greatest asset: their people. Mr. Bennett received his Bachelor’s Degree in Computer Science from the University of Texas at El Paso in 1983. We believe that Mr. Bennett is well-qualified to serve on our Board due to his experience founding, growing, operating, and selling high-growth technology companies, his prior board of directors experience, his successful history of addressing the complex needs of large retail and technology brands, and his proven ability to undertake complex mergers and acquisitions.

ByMatt Cianci