TORONTO, Sept. 17,
2024 /CNW/ - Invesque Inc. (the
"Corporation" or "Invesque") (TSX: IVQ) (TSX:
IVQ.U) announced today that it will seek the approval of holders
(the "Debentureholders") of its 7.00% Convertible Unsecured
Subordinated Debentures due January 31,
2025, of which US$24,850,000
aggregate principal amount is currently outstanding (the "2025
Debentures"), (TSX: IVQ.DB.U) and its 8.75% Convertible
Unsecured Subordinated Debentures due September 30, 2026, of which US$43,415,000 aggregate principal amount is
currently outstanding (the "2026 Debentures") (TSX:
IVQ.DB.V) (together the "Debentures"), to amend the terms of
the indentures governing the Debentures at meetings of holders of
each of the 2025 Debentures and 2026 Debentures. Meeting details
will be made available at a later date.
The proposed amendments to the indenture governing the 2025
Debentures, if approved by the Debentureholders, will:
- ADD a covenant that the outstanding principal amount of the
2025 Debentures, plus interest accrued thereon, will be exchanged
on a date specified by the Corporation, which date shall be on or
before January 31, 2025, for
a. a pro rata interest of new unsecured
subordinated debentures ("Amended Debentures") that will
have an aggregate principal amount of US$9,938,000; and
b. 39,164,705 common shares of the Corporation
("Common Shares") having an aggregate value equal to
US$6,658,000 based on a price per
Common Share of US$0.17, which is
equal to a 15% premium to the 15-day volume weighted average price
("VWAP") of the Common Shares as of September 13, 2024; and
- AMEND the definition of "Change of Control" to provide
that the Preferred Share Exchange (as defined below) shall not
constitute a "Change of Control".
The proposed amendments to the indenture governing the 2026
Debentures (together with the proposed amendments to the indenture
governing the 2025 Debentures, the "Debenture Amendments"),
if approved by the Debentureholders, will:
- ADD a covenant that the outstanding principal amount of the
2026 Debentures, plus interest accrued thereon, will be exchanged
on a date specified by the Corporation, which date shall be on or
before January 31, 2025, for
a. a pro rata interest of Amended Debentures that
will have an aggregate principal amount of US$17,362,000; and
b. 91,376,470 Common Shares having a value equal to
US$15,534,000 based on a price per
Common Share of US$0.17, which is
equal to a 15% premium to the 15–day VWAP of the Common Shares as
of September 13, 2024; and
- AMEND the definition of "Change of Control" to provide
that the Preferred Share Exchange shall not constitute a "Change of
Control".
The Amended Debentures will be substantially similar to the
Debentures, except that they will not be convertible for Common
Shares and will have the following terms:
- Interest Rate: 9.75% per annum, payable semi-annually on
June 30 and December 31, commencing on June 30, 2025.
- Redemption: The Corporation will have the right, at its option,
to redeem the Amended Debentures, in whole at any time or in part
from time to time, on not more than 60 days' and not less than 30
days' prior notice, at a redemption price equal to:
- if the redemption occurs on or prior to the one-year
anniversary of the issuance date of the Amended Debentures (the
"First Anniversary"), 102% of the principal amount of the
Amended Debentures to be redeemed, plus accrued and unpaid interest
thereon, if any, up to but excluding the redemption date; provided,
however, that the Corporation may redeem up to 25% of the principal
amount of the Amended Debentures during this period at a redemption
price equal to 100% of the principal amount of the Amended
Debentures to be redeemed, plus accrued and unpaid interest
thereon, if any, up to but excluding the redemption date; and
- if the redemption occurs after the First Anniversary and on or
prior to Maturity Date (as defined below), the principal amount of
the Amended Debentures to be redeemed, plus accrued and unpaid
interest thereon, if any, up to but excluding the redemption
date.
- Maturity Date: Third anniversary of the issuance date of the
Amended Debentures.
- Default: The Corporation will be in default under the Amended
Debentures if the Corporation is in default under a loan that is
recourse to the Corporation and has an aggregate principal amount
that is greater than US$50,000,000.
- Indenture: The Amended Debentures will be issued pursuant to a
new indenture, substantially similar to the existing indentures for
the Debentures, provided that certain sections, including Section
7.11 [Clear Market] (in respect of the 2026 Debentures) and
Article 11 [Successors], will be removed.
If the Debenture Amendments are approved by
the Debentureholders (i) other than the interest payment on
the 2026 Debentures to be made by the Corporation on September 30, 2024, Debentureholders will receive
no additional interest payments under the 2025 Debentures or 2026
Debentures and the next interest payment to be received by
Debentureholders (in respect of the Amended Debentures) will be on
June 30, 2025, and (ii) the effective
date of the Debenture Amendments will be on the date that Invesque
enters into the respective supplemental trust indentures embodying
the Debenture Amendments and the exchange of the Debentures for
Amended Debentures and Common Shares (the "Debenture
Exchange") will occur on the same date as the supplemental
trust indentures or on such later date as set forth in such
supplemental trust indentures. The Debenture Amendments and the
Debenture Exchange will be subject to certain conditions, including
contemporaneous closing of the Preferred Share Exchange and
approval of the Toronto Stock Exchange ("TSX").
Preferred Share Exchange
Further, certain funds (the "Exchanging Magnetar Funds")
managed by Magnetar Financial LLC ("Magnetar"), have entered
into an exchange agreement with the Corporation (the
"Exchange Agreement") pursuant to which such Exchanging
Magnetar Funds have agreed to exchange their class A convertible
preferred shares ("Preferred Shares") for 674,705,882 Common
Shares (the "Preferred Share Exchange"), having a value of
US$114,700,000 based on a price per
Common Share of US$0.17, being a 15%
premium to the 15-day VWAP of the Common Shares as of September 13, 2024. The value of the Common
Shares to be issued to the Exchanging Magnetar Funds pursuant to
the Preferred Share Exchange represents a discount to the current
liquidation value of the Preferred Shares agreed to by the
Corporation and Magnetar. The Preferred Shares held by the
Exchanging Magnetar Funds represent all of the issued and
outstanding Preferred Shares in the capital of the Corporation.
Based on the number of Common Shares and Preferred Shares
outstanding as of the date hereof, following the Debenture Exchange
and the Preferred Share Exchange, Magnetar, the Exchanging Magnetar
Funds and certain other funds managed by Magnetar (together with
the Exchanging Magnetar Funds, the "Magnetar Funds") will
own and exercise control over approximately 80% of the Common
Shares, and there will be no Preferred Shares outstanding. The
Preferred Share Exchange will be subject to certain conditions,
including the substantially contemporaneous closing of the
Debenture Exchange, approval of the TSX and shareholder approval,
as required under the rules of the TSX. Meeting details will be
made available at a later date.
Pursuant to the Exchange Agreement, the Corporation, Magnetar
and the Magnetar Funds will enter into an investor rights agreement
(the "IRA"), providing for, among other things, the
following rights of Magnetar and the Magnetar Funds: (i) board
nomination rights in respect of a certain number of directors of
the Corporation (based on the size of the Corporation's board and
the securityholder percentage of Magnetar and the Magnetar Funds at
the relevant times), (ii) customary demand and piggyback
registration rights, (iii) customary pre-emptive rights with
respect to equity securities of the Corporation, and (iv) approval
and consent rights in respect of certain actions of the
Corporation. The IRA will also provide for certain standstill
restrictions on Magnetar and the Magnetar Funds until March 31, 2025.
Support Agreements
Debentureholders holding approximately 33% of the outstanding
2025 Debentures and Debentureholders holding approximately 37% of
the outstanding 2026 Debentures have signed voting support
agreements to vote the Debentures beneficially owned or controlled
by them FOR the Debenture Amendments. The directors and officers of
the Corporation, as well as the Corporation's largest holder of
Common Shares (holding approximately 31% of the issued and
outstanding Common Shares) have each signed a voting support
agreement to vote the Common Shares beneficially owned or
controlled by them FOR the Preferred Share Exchange and FOR the
issuance of Common Shares pursuant to the Preferred Share Exchange
and the Debenture Exchange.
Board of Directors Recommendation
The Corporation's Board of Directors (the "Board"),
following its review and after receiving a unanimous recommendation
from its governance committee comprised of independent directors,
has unanimously determined that each of the Debenture Amendments,
the Debenture Exchange and the Preferred Share Exchange are in the
best interests of the Corporation. The Board unanimously approved
the Debenture Amendments, the Debenture Exchange and the Preferred
Share Exchange and will recommend that the Debentureholders vote
FOR the Debenture Amendments and that the shareholders vote FOR the
Preferred Share Exchange and FOR the issuance of Common Shares
pursuant to the Preferred Share Exchange and the Debenture
Exchange.
Update on Asset Sales
In the Corporation's June 30,
2024, financial statements which were released on
August 8, 2024, Invesque had
classified 13 assets as held for sale. The Corporation sold one
asset on August 14, 2024, for
US$2,500,000 and expects to sell
eight additional assets in the next 30 days for a gross sales price
of more than US$78,000,000. Any net
available proceeds from these sales will be used to pay down the
Corporation's credit facility with KeyBank. Closing of each of
these asset sales is subject to various closing conditions and
there are no assurances that any or all of these transactions will
close on the terms contemplated or at all.
"Executing on both the Debenture Amendments and the Preferred
Share Exchange represents an important next step in Invesque's
journey," commented Adlai Chester,
Chief Executive Officer. "Management and the Board worked very hard
to negotiate transactions that benefit the Corporation and all
stakeholders, and we believe that the discounts taken by the
Debentureholders and Magnetar, as well as the premium to the
current Common Share price, is a win for all of Invesque's
stakeholders, including the current common shareholders. These
transactions will substantially improve the balance sheet and the
go-forward cashflow of the Corporation. Invesque has worked closely
with Magnetar since our inception eight years ago, and Magnetar's
flexibility to help facilitate this transaction represents their
continued support of the Corporation, management and the
Board."
About Invesque
Invesque is a North American health care real estate company
with an investment thesis focused on the premise that an aging
demographic in North America will
continue to utilize health care services in growing proportion to
the overall economy. Invesque currently capitalizes on this
opportunity by investing in a portfolio of income-generating
predominantly private pay seniors housing communities. Invesque's
portfolio includes investments primarily in independent living,
assisted living, and memory care, which are operated under
long-term leases and joint venture arrangements with
industry-leading operating partners. Invesque's portfolio also
includes investments in owner-occupied seniors housing properties
in which Invesque owns the real estate, the licensed operations,
and provides management services through Commonwealth Senior
Living, LLC, a Delaware limited
liability company. For more information, please
visit www.invesque.com.
Forward-Looking Information
Certain statements contained in this news release are
forward-looking statements and are provided for the purpose of
presenting information about management's current expectations and
plans relating to the future. Readers are cautioned that such
statements may not be appropriate for other purposes. These
forward-looking statements include statements regarding: the
proposed Debenture Amendments, the Debenture Exchange, the
Preferred Share Exchange and proposed asset sales. In some cases
forward-looking information can be identified by such terms as
"will", "would", "anticipate", "anticipated", "expect" and
"expected". The forward-looking statements in this news release are
based on certain assumptions, including assumptions regarding the
Corporation's ability to complete the Debenture Amendments, the
Debenture Exchange, the Preferred Share Exchange and the proposed
asset sales and that existing trends being observed by the
Corporation's seniors housing operating partners will continue.
Such statements are subject to significant known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those expressed or implied by such
statements and, accordingly, should not be read as guarantees of
future performance or results and will not necessarily be accurate
indications of whether or not such results will be achieved. Such
risks include the risk that the Debenture Amendments will not be
approved by Debentureholders or that the issuance of Common Shares
pursuant to the Preferred Share Exchange and the Debenture Exchange
will not be approved by shareholders or by the TSX, the closing
conditions to the Debenture Amendments, the Debenture Exchange, the
Preferred Share Exchange and/or the proposed asset sales, as
applicable, will not be satisfied or waived, and that existing
trends being observed by the Corporation's seniors housing
operating partners will not continue, as well as those risks
described in the Corporation's current annual information form and
management's discussion and analysis, available on SEDAR+ at
www.sedarplus.ca, which risks may be dependent on market factors
and not entirely within the Corporation's control. Although
management believes that it has a reasonable basis for the
expectations reflected in these forward-looking statements, actual
results may differ from those suggested by the forward-looking
statements for various reasons. These forward-looking statements
reflect current expectations of the Corporation as at the date of
this news release and speak only as at the date of this news
release. The Corporation does not undertake any obligation to
publicly update or revise any forward-looking statements except as
may be required by applicable law.
SOURCE Invesque Inc.