Vapotherm (VAPO) Proxy Filing summary

Executive summary

• The proxy statement covers a proposed merger where Vapotherm will be acquired by Veronica Holdings, LLC (Topco), with the merger agreement signed on June 17, 2024.

• Upon completion, Vapotherm shareholders (excluding certain insiders and affiliates) will receive $2.18 per share in cash, representing a 166% premium over the closing price on June 14, 2024.

• The transaction is structured as a “going private” deal, after which Vapotherm’s stock will be delisted and deregistered, and the company will cease public reporting.

• SLR Capital Partners, Vapotherm’s primary lender, will convert a significant portion of its debt and warrants into equity in Topco, and Perceptive Advisors will invest $50 million in new preferred equity.

• The Board and a Special Committee of independent directors unanimously recommend shareholders vote in favor of the merger, citing the company’s debt burden and risk of bankruptcy as key factors.

Voting matters and shareholder proposals

• Shareholders are asked to vote on: (1) approval of the merger agreement, (2) a non-binding advisory vote on merger-related executive compensation, and (3) a proposal to adjourn the meeting if necessary to solicit more votes.

• Approval of the merger requires a majority of outstanding shares; failure to vote or abstentions count as votes against.

• Certain directors, officers, and major shareholders holding 33.2% of shares have entered into agreements to vote in favor of the merger.

Board of directors and corporate governance

• The Special Committee, composed entirely of independent directors, was delegated full authority to negotiate and recommend the transaction.

• The Board and Special Committee received a fairness opinion from Scalar, LLC, concluding the $2.18 per share consideration is fair from a financial point of view.

• The Board and Special Committee considered alternatives, including bankruptcy, and determined the merger is in the best interests of unaffiliated shareholders.