Think Research Enhances Financial Flexibility with New Capital Injection and Announces Amendments to Convertible Loan Facility with Beedie Capital
- Additional $3 million to be received via second advance under $25 million convertible loan facility with Beedie Capital
- Infusion of $3 million of liquidity via non-brokered equity financing lead by Beedie Capital with $750,000 anchor investment at premium to market price per share
- Amendments to Beedie Capital's $25 million Convertible Loan Facility reflects continued support of Think's strategy
TORONTO, Nov. 21, 2022 /CNW/ - Think Research Corporation (TSXV: THNK) ("Think" or the "Company"), an innovative disruptor focused on transforming healthcare through digital health software solutions, is pleased to announce that Beedie Investments Ltd. ("Beedie Capital") has continued to show its support of the Company with amendments to the current outstanding credit agreement (the "Credit Agreement").
The Credit Agreement, which was announced on April 25, 2022, provided for a non-revolving term convertible loan facility (the "Convertible Facility") of up to $25 million with an expiry on May 10, 2026. Subsequent to closing and an initial draw, the remaining $15 million was available to Think for subsequent advances in minimum tranches of $3 million over the term of the Convertible Facility. Think is pleased to confirm that Beedie Capital has agreed to a second advance of $3 million under the Convertible Facility (the "Second Advance"), and has confirmed subscriptions for the significant majority of an equity raise with gross proceeds of a minimum $3 million via a non-brokered equity private placement (the "Equity Financing"), being completed at an 16.4% premium to Think's 20-day volume weighted average price ("VWAP") on the TSX Venture Exchange ("TSXV"). The additional capital in aggregate will be used for general working capital purposes, and to pay down a portion of the term loan under its existing credit agreement with The Bank of Nova Scotia (the "BNS Credit Facility").
Think has continued to gain sales momentum across its business lines into the fourth quarter of 2022 and remains excited by the growth in its software-as-a-service business and robust backlog of contracted revenue. Based on the Company's unaudited financial results for the current fiscal year to date, management is pleased to confirm its annualized fourth-quarter FY2022 run rate of between $84 million and $90 million, or $21 million to $22.5 million for the three months ending December 31, 2022. Management is also confirming its annualized fourth-quarter run rate Adjusted EBITDA target to between $6 million and $9 million, or $1.5 million to $2.3 million for the three months ending December 31, 2022.
"We continue to be excited about supporting Think Research's mission to transform digital health in Canada and internationally," said David Bell, Managing Director at Beedie Capital. "The outlook and demand for Digital Front Door and eReferrals to connect healthcare systems has never been greater and we are confident in Management's ability to execute their strategy and backlog. We view Think Research as uniquely undervalued and are confident that as the Company executes its strategic plan it will unlock significant value for stakeholders."
"This capital infusion and ongoing support from Beedie helps to strengthen our balance sheet while also supporting the Company's growth efforts in its SaaS revenue and to expedite the conversion of Think's backlog into revenue, and drive us further down the path to profitability," commented CEO, Sachin Aggarwal. "With greater visibility to growth in revenue and EBITDA into 2023, supported by a remarkable backlog of work, we believe Think is well positioned to prudently execute on our strategy, while continuing to prioritize cost synergies and disciplined growth. We greatly appreciate the continued support of all shareholders as we carve our path forward."
Second Advance
Under the Credit Facility, as amended by the Amendments (as defined below), the Second Advance will be drawn on the date that the conditions precedent under the Credit Agreement are satisfied, which conditions include conditional approval of the TSXV (the "Second Advance Closing Date"). Proceeds of the Second Advance will be used for general working capital purposes and to pay down a portion of the term loan under the BNS Credit Facility.
At any time during the term of the Convertible Facility, Beedie Capital may elect to convert the initial principal amount of the Second Advance into Common Shares at a conversion price of $0.43 per Common Share, subject to adjustment in accordance with the terms of the Credit Agreement (the "Second Advance Conversion Price"). The Second Advance Conversion Price represents a 25.2% premium above the 20-day VWAP of the Common Shares of the Company on the TSXV.
The Second Advance Closing Date and funding of the Second Advance is expected to take place in the coming days subject to the satisfaction of customary closing conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSXV.
Common Shares issued on conversion of the Second Advance will be subject to a statutory resale restriction in accordance with applicable Canadian securities laws, expiring four months and one day from the date of the applicable advance, in addition to such other restrictions as may apply under the policies of the TSXV.
Equity Financing
The Company has received subscription agreements representing a significant majority of the non-brokered private placement offering of a minimum of 7,500,000 Common Shares at a subscription price of $0.40 per Common Share for total aggregate gross proceeds of a minimum of $3 million. Beedie Capital has led and priced this Equity Financing with a commitment of $750,000 and pricing at a 16.4% premium to the Company's 20-day VWAP on the TSXV.
Pursuant to the Amendments, the Company is expected to complete the Equity Financing within 30 days following the Second Advance Closing Date.
The proceeds of the Equity Financing will be used as set forth above. None of the proceeds of the Equity Financing will be used to repay debt owing to Beedie Capital.
The Equity Financing is subject to TSXV approval.
Amendments to Convertible Facility
Following is a summary of the material amendments (the "Amendments") that have been made to the Convertible Facility, with additional details available in the Credit Agreement filed on SEDAR:
- Revision to the "Initial Advance Conversion Price" (as defined within the Credit Agreement) to $0.97 from $1.443;
- Addition of new "Second Advance Conversion Price" of $0.43 representing a 25.2% premium to Think's 20-day VWAP on the TSXV;
- Reduce the cash interest rate payable to 6%, with a 3.5% per annum compounded monthly in arrears component that is added to the outstanding principal amount of the loan, for a total interest rate of 9.5% per annum for the period commencing on the Second Advance Closing Date (as defined therein) and ending on November 30, 2023, as such date may be extended by written agreement between the Company and Beedie Capital, and 8.5% payable in cash after such period;
- Agreement between the parties to limit the amount of indebtedness under the revolving and term loan credit facilities under the BNS Credit Facility from $28 million in the aggregate to $26.75 million following the Second Advance and $25.75 million following completion of the Equity Financing (as defined below) to align with the company's planned strengthening of its balance sheet; and
- Amendments to financial covenants including, among other things, a reduction in the minimum liquidity financial covenant from $2 million to $1 million and a waiver of the minimum EBITDA financial covenant, in each case, during the period commencing on the Second Amendment Closing Date until December 31, 2022.
The Company also expects to make certain conforming changes to its Credit Agreement to reflect the aforementioned amendments to the Convertible Facility. For further information on the terms of the Convertible Facility, see the Company's press releases dated April 25, 2022, May 10, 2022 and September 26, 2022.
Related Party Transaction
Beedie Capital is a "related party" of the Company as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), and the Amendments, Beedie Capital's participation in the Equity Financing and transactions described above, would constitute a "related party transaction" as defined in MI 61-101 and within the meaning of TSXV Policy 5.9. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and (b) and 5.7(1)(a) of MI 61-101.
Think Research Corporation is an industry leader in delivering knowledge-based digital health software solutions. The Company's focused mission is to organize the world's health knowledge so everyone gets the best care. Its evidence-based healthcare technology solutions support the clinical decision-making process, standardize care, to facilitate better health care outcomes. The Company gathers, develops, and delivers knowledge-based solutions globally to customers which typically includes enterprise clients, hospitals, health regions, healthcare professionals, and / or governments. The Company has gathered a significant amount of data by building its repository of knowledge through its network and group of companies, including acquired companies.
Think licenses its solutions to over 13,000 facilities for over 300,000 primary care, acute care, and long-term care doctors, nurses and pharmacists that rely on the content and data provided by Think to support their practices. Millions of patients and residents annually receive better care due to the essential data that Think produces, manages and delivers.
In addition, the Company collects and manages pharmaceutical and clinical trial data via the BioPharma Services entity that Think acquired on September 10, 2021. BioPharma Services is a leading provider of bioequivalence and Phase 1 clinical research services to pharmaceutical companies globally. Think's other services include a network of digital-first primary care clinics and medical clinics that provide elective surgery. Visit: www.thinkresearch.com.
Beedie Capital is a multi-strategy direct investment platform that manages the alternative investments and assets for Beedie, one of the largest private companies in British Columbia. It deploys capital using a flexible, evergreen mandate, and applies a highly agnostic approach to the duration, structure and size of its investments. Beedie Capital provides its partners the time to deliver on their strategic plans, while providing capital in the right structure to optimize cost of capital and shareholder return.
Beedie Capital invests in any sector, with a core focus on Technology, Tech-enabled Services, and Metals and Mining, and seeks to grow its invested capital alongside the enterprise value of its investments. Visit: www.beedie.ca/capital
This press release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information may be identified by statements including words such as: "anticipate," "intend," "plan," "budget," "believe," "project," "estimate," "expect," "scheduled," "forecast," "strategy," "future," "likely," "may," "to be," "could,", "would," "should," "will" and similar references to future periods or the negative or comparable terminology, as well as terms usually used in the future and the conditional. Statements including forward-looking information may include, without limitation, statements regarding the funding of the Second Advance and the availability of subsequent advances, the use of the proceeds of the Second Advance and the Equity Financing, Beedie Capital's commitment to the Equity Financing, the anticipated closing dates of the Second Advance and the Equity Financing, and the receipt of all necessary approvals, including the approvals of the TSXV.
Forward-looking information is based on assumptions that may prove to be incorrect, including but not limited to the Company's business objectives, results of operations, financial results and trading activity in the Common Shares. The Company considers these assumptions to be reasonable in the circumstances. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. By its nature, forward-looking information involves known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company's control which may cause the Company's actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. The Company's actual results may differ materially from those indicated in the forward-looking information. Important factors that could cause actual results to differ materially from those indicated in the forward-looking information include, among others, the risk factors described in the Company's filings on www.sedar.com. The Company has assumed that the risk factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
Other than as specifically required by applicable Canadian law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, whether as a result of new information, future events or results, or otherwise.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The Company's securities have not been and will not be registered under the United States Securities Act of 1933 (the "US Securities Act") or any state securities laws and may not be offered or sold within the United States or to US Persons (as defined in Regulation S under the US Securities Act) unless registered under the US Securities Act and applicable state securities laws or an exemption from such registration is available.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For more information: https://www.thinkresearch.com/ca/investors/
SOURCE Think Research Corporation
Mark Sakamoto, Executive Vice President, Think Research Corporation, Direct: 416.388.7119, [email protected]
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