$NVCN News Out ---> Neovasc's Management and Board

$NVCN News Out ---> Neovasc's Management and Board of Directors Urge Shareholders to Vote In Favor of the Proposed Reverse Stock Split at the Upcoming Annual General and Special Meeting of Shareholders

VANCOUVER , May 15, 2018 /CNW/ - Neovasc Inc. ("Neovasc" or the "Company" (NASDAQ, TSX: NVCN), a leader in the development of minimally invasive transcatheter mitral valve replacement technologies, today announced that its management and board of directors (the "Board" urge the Company's shareholders of record to vote "FOR" the proposal authorizing the Board to effect a reverse stock split.

"Remaining on the Nasdaq Capital Market ("Nasdaq" is a critical piece of the Company's turnaround strategy," commented Fred Colen , Neovasc's President and Chief Executive Officer. "Without reaching a minimum bid price above US$1.00 for a minimum of 10 consecutive days before July 2, 2018 , the Company may be delisted from the Nasdaq, which would have serious consequences for the Company as further outlined in this press release. In short, a vote against a reverse stock split will decrease liquidity for existing shareholders, increase the cost of capital for the Company, and significantly worsen the terms of the last financing," continued Mr. Colen.

"With an affirmative vote in hand we will then approach the Nasdaq for an extension to the July 2, 2018 deadline to give us more flexibility on the timing of the reverse split to best meet the needs of the Company and the shareholders," continued Mr. Colen. "Without the affirmative vote for a reverse stock split, we believe it is unlikely we will be granted such an extension."

"Management believes that it is in the best interest of the Company and its stakeholders to remain on the Nasdaq, and that the reverse stock split is the only tool available to get the share price of the Company above the minimum US$1.00 bid price before that deadline. As such, the Board and I urge the Company's shareholders to vote "FOR" granting the Company the ability to effect a reverse stock split," concluded Mr. Colen.

In the proxy filed on SEDAR on May 7, 2018 for the annual general and special meeting of shareholders on June 4, 2018 , there is a proposal for shareholders to provide the Board with the authority to effect a reverse stock split of up to 1-for-100 at a time determined at the Board's discretion, if at all.

Consequences of a failure to effect a reverse stock split and remain on the Nasdaq
Management believes a failure to approve a reverse stock split and remain on the Nasdaq could have a material adverse effect on the Company and its stakeholders for several reasons, including the following:

Liquidity in the trading of common shares of the Company (the "Common Shares" will be significantly reduced, as the Nasdaq is the Company's primary trading market, thereby putting downward pressure on the share price of the Common Shares.
It will be more difficult for the Company to raise additional capital on reasonable terms from the majority of U.S. based institutional funds that require or want the Company to be listed on a major U.S. exchange in order to make an investment.
The Company's US$28,575,000 aggregate amount of outstanding senior secured convertible notes (the "Notes" require the Company to be listed on the Nasdaq or a similar major U.S. exchange. Should the Company default on this requirement, the interest payable on the Notes will jump from 0% to 15% per annum, and holders of the Notes will receive a redemption right with a premium of 118% multiplied by the greatest closing price of the Common Shares during the period commencing on the date of delisting until the date such redemption payment is made.


Clarification on the details of the reverse stock split
Management wishes to clarify certain matters related to the reverse stock split:

The ratio for the proposed reverse stock split is not fixed at 1-for-100 but the Board can utilize any ratio up to 1-for-100.
The proposed reverse stock split will not happen at the date of the AGM, but the Board can choose when to effect the reverse stock split, if at all.
Approving the reverse stock split should enable the Company to remain listed on Nasdaq, while providing the Company with additional time to address the challenges caused by the terms of its last financing and its capital structure.
Approving the reverse stock split does not mean the Board will effect the reverse stock split. The Board may elect not to proceed with the reverse stock split if it is unable to address or mitigate the impact of the Event Price Provisions described below.


Impact of a reverse stock split
"A reverse stock split is a process by which a company's shares are effectively consolidated to form a smaller number of proportionally more valuable shares. Despite contrary notions, a reverse stock split has zero economic impact as an independent action. For example, under a 1-for-10 reverse stock split, rather than 100 million shares at US$0.50 , a company would have, all else being equal, 10 million shares at US$5.00 at the time of the split. In either case, the market value of the example company is the same before and after," explained Paul Geyer , Neovasc's Chairman of the Board.

The reverse stock split will proportionately reduce the number of Common Shares held by all the shareholders. As an independent action, a reverse stock split has no economic impact on the percentage ownership in the Company by shareholders. However, the warrants (the "Warrants" and Notes issued pursuant to the November 2017 underwritten public offering and concurrent private placement (together, the "2017 Financings" contain certain provisions ("Event Price Provisions" that, on the sixteenth trading day following a reverse stock split or similar event, reduce the exercise price or conversion price, as applicable, then in effect to the average VWAP of the five trading days with the lowest VWAP of the Common Shares in the preceding fifteen trading days in the case of the Notes and twenty trading days in the case of the Warrants. If the Company is not able to amend such provisions or obtain a waiver of such provisions in connection with its efforts to address the challenges to its capital structure, the Company may elect not to proceed with the reverse stock split.