EMERGE Announces $10M Debt Paydown and Amended Credit Facility

• The Company has signed a new credit facility amendment with its existing lender (the "Amended Facility")
• The Amended Facility provides a term of up to 24 months, with an initial 18-month term plus an additional 6-month extension built-in
• In conjunction with the sale of WholesalePet, EMERGE has paid $10M towards its existing credit facility bringing the principal balance outstanding down to $5.85M from $15.85M prior to the completion of the transaction, and $25M originally
• Interest expense savings following the debt reduction is estimated to be $1.38M annually
• No additional fees were paid to the lender in connection with the Amended Facility

TORONTO, Jan. 31, 2024 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE" or the "Company"), a premium e-commerce brand portfolio, is pleased to announce that the Company has entered into a second amended and restated credit agreement (the "ARCA") with its existing lender, which amends and restates the Company's amended and restated credit agreement dated October 27, 2022, as amended (the "Previous Agreement"), pursuant to which, inter alia, the Company has agreed to repay $10,000,000 towards the outstanding balance under the Previous Agreement.

Ghassan Halazon, Founder and CEO of EMERGE commented, "We are pleased to see our lender support our plans over the next 18-24 months, providing us with more visibility than under our previous credit agreements. We intend to use this longer facility term and added flexibility to optimize our business, drive organic growth, and continue to reduce debt over time."

The Amended Facility provides a term of up to 24 months, which is comprised of an initial term of 18-months plus an additional 6-month extension option (the "Extension"), which may be exercised upon mutual agreement between the Company and the lender. Inclusive of the Extension, the Amended Facility is expected to mature on January 31, 2026.

In conjunction with the sale of WholesalePet (the "Transaction"), EMERGE has paid $10M towards its existing credit facility bringing the principal balance outstanding down to $5.85M from $15.85M prior to the completion of the Transaction, and $25M originally.

"Our original $25M credit facility is now down to $5.85M. Through our recent transactions, we believe we have demonstrated that our premium portfolio has substantial underlying value, despite the macro climate, with strong demand from reputable e-commerce buyers," continued Halazon.

The Company's interest expense savings following the repayment is expected to be approximately $1.38M annually.

"In recent years, the rising interest rate climate has resulted in significant cash flow drain to EMERGE, wiping out our positive Adjusted EBITDA⁽¹⁾ and cash flow from operations. This major debt reduction, coupled with the widely anticipated interest rate cuts in 2024-25, are expected to result in substantial interest savings, in turn allowing us to more efficiently convert EBITDA⁽¹⁾ to cash flow over time," added Halazon.

The interest rate on the principal amount owing under the Amended Facility remains unchanged at the greater of 9% per annum and the TD Prime Rate + 6.55% per annum. The Company's lender has also revised and relaxed certain financial covenants to offer the Company additional flexibility based on its go forward plan.

The Company remains in good standing with existing lender, which it has worked with since November 2019.

No additional fees were paid by the Company in consideration for the Amended Facility.

(1)	Non-GAAP Financial Measure. Refer to section "Non-GAAP financial Measures" below for additional information.

About EMERGE

EMERGE (TSXV: ECOM) is a premium e-commerce brand portfolio in Canada and the U.S. Our subscription and marketplace e-commerce properties provide our members with access to unique offerings across grocery and golf verticals. Our grocery businesses include truLOCAL.ca, our premium meat subscription brand, and Carnivore Club, our artisanal / cured meat brand. Our golf businesses include UnderPar, our discounted tee-times/ experiences business, and JustGolfStuff, our golf products & apparel brand.

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Cautionary notice
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Non-GAAP Measures

This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. EBITDA and Adjusted EBITDA should not be construed as alternatives to revenue or net income/loss determined in accordance with IFRS. EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.

Notice regarding forward-looking statements

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including, without limitation, statements related to the Extension, anticipated interest rate cuts, the conversion of EBITDA to cash flow, the expected interest rate savings as a result of any interest rate reductions and/or the paydown of debt in connection with the Company's existing credit facility, changes to the business and lending environment generally, and any other benefit that may be derived by the Company from the Amended Facility, including, without limitation, any material benefit to the working capital or earnings of the Company as a result of Amended Facility, and potential interest rate savings, including the reference to interest expense savings of approximately $1.38M annually, which is based on a principal repayment of $10,000,000 and an annual interest rate of 13.75% over a period of 12 months, as well as other statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The forward-looking information contained herein is based on the assumptions of management of the Company as of the date hereof including, without limitation, assumptions with respect to the financial position and working capital of the Company, continued positive relations with its existing lender, and conditions of the financial markets and the e-commerce markets generally, among others. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including risks that the benefits derived from the Amended Facility may not be as expected, risks that the Company may be subject to litigation as a result of the Amended Facility including allegations of misrepresentation or breach of conditions or covenants contained in the ARCA, changes to general economic factors which may be outside of the Company's control such as interest rates, as well as the risk factors discussed in the Company's MD&A, and other public disclosure filings which are available through SEDAR+ at www.sedarplus.ca. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

On Behalf of the Board
Ghassan Halazon
Director, President, and CEO

SOURCE EMERGE Commerce Ltd.

Kyle Burt-Gerrans, EMERGE Commerce Ltd., 416-479-9590, [email protected]