TORONTO, July 29, 2022 /CNW/ - Pathway Health Corp. (TSXV: PHC) (Frankfurt: KL1) ("Pathway" or the "Company") announces that it has entered into an agreement (the "Credit Agreement") with the Company's largest indirect beneficial shareholder Avonlea-Drewry Holdings Inc. (the "Lender") to establish a $3.5 million credit facility (the "Facility") (inclusive of all amounts advanced under the Company's bridge loan announced on May 27, 2022). The Facility has a term of two years (the "Term"), is secured against all of the assets of the Company, pledges of the shares of the Company's subsidiaries, and is supported by guarantees from the Company's subsidiaries Pathway Health Services Corp., 2563367 Ontario Limited, Pathway Healthcare Technologies Corp. and Slawner Ortho Ltee. Principal amounts outstanding under the Facility from time to time will bear interest at the greater of: (i) 12% per annum; or (ii) a variable rate per annum benchmarked to the Bank of Canada prime rate as at May 1, 2022 (which, for certainty, was 3.20% (the "Prime Rate") plus 8.8%. An amount equal to 2% of the aggregate principal amount outstanding as at the day immediately preceding the first and second anniversaries of the date of the Credit Agreement will be added to the principal amount outstanding under the Credit Facility. Additionally, an annual work fee equal to 1% of the aggregate principal amount outstanding as at the day immediately preceding the first and second anniversaries of the date of the Credit Agreement will be added to the principal amount outstanding under the Credit Facility.
The Company may draw on the available proceeds of the Facility and repay without penalty from time to time during the Term, and intends to use available proceeds for general working capital and potential future acquisition purposes. The Credit Agreement contains certain other customary financial and other covenants, and will be made available on the Company's SEDAR profile at www.sedar.com.
The Facility is not subject to any bonuses, including cash bonuses, future bonuses, or bonus of common shares in the capital of the Company. The Lender is a company of which Mr. Michael Steele, Chairman of Pathway, and Ms. Alison Wright, a director of the Company, are directors, officers and shareholders (the "Insider Position"). Entering into of the Facility between the Corporation and the Lender is considered to be a "related party transaction" as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company has relied on exemptions from the formal valuation and minority shareholder approval requirements contained in sections 5.5(b) and 5.7(1)(f) of MI 61-101 in respect of the Facility as the Company is not listed on certain specified markets and the Credit Facility is a loan from a related party that is on reasonable commercial terms and is not convertible into or repayable in equity of the Company. The Company did not file a material change report more than 21 days before issuing the Credit Facility as the details of the above mentioned Insider Position were included in the Company's management information circular dated June 10, 2022.
The Credit Facility was approved by the members of the board of directors of the Company who are independent for the purposes of the Credit Facility, being all directors other than Mr. Steele and Ms. Wright, and by the Company's disinterested shareholders at its annual and special meeting held on July 15, 2022. No special committee was established in connection with the Credit Facility, and no materially contrary view or abstention was expressed or made by any director of the Company in relation thereto.
None of the securities sold in connection with the private placement will be registered under the United States Securities Act of 1933, as amended, and no such securities may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press Release. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
This news release contains forward‐looking statements and forward‐looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward‐looking statements or information. Forward‐looking statements and information are often, but not always, identified by the use of words such as "appear", "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. More particularly and without limitation, this news release contains forward-looking statements and information concerning the use of proceeds of the Facility and the Company's future financing or transactional activities. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company. Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable in the circumstances, undue reliance should not be placed on the forward-looking statements and information because the Company can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to the Company being unable to use the proceeds of the Facility as described, legal or regulatory impediments regarding the Facility, the Company defaulting on the Facility leading to enforcement under the security, the proceeds being insufficient for the Company's purposes, the Company's inability to repay the Facility at the end of the Term and the Company being unable to raise additional funds on terms acceptable to the Company or at all. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. The Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law or the TSX Venture Exchange.
SOURCE Pathway Health Corp.
Pathway Health Corp., Robin Cook, Corporate Development, Telephone: 416-809-1738, Email: [email protected]
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