Premier Diversified Holdings Inc. ("
Premier" or
the "
Company") (TSXV: PDH) announces that it has
entered into a debt settlement agreement ("
Debt
Settlement") with MPIC Fund I, LP
("
MPIC") to settle USD$1,400,000 (approximately
CAD$1,775,900) in debt owed by the Company, together with accrued
and unpaid interest thereon. MPIC has agreed to convert
USD$1,400,000 of principal and interest into Common shares of the
Company at a deemed price of CAD$0.03 per Common share, subject to
receipt of approval from the TSX Venture Exchange
("
TSXV"). It is expected that upon completion of
the Debt Settlement and subject to receipt of any requisite
approvals, the Company will issue a total of 64,199,016 Common
shares ("
Settlement Shares") to MPIC or its
nominee(s). The Company anticipates that the Debt Settlement will
improve its financial position.
Any Settlement Shares issued in connection with
the Debt Settlement will be issued in reliance on prospectus and
registration exemptions under applicable securities laws and will
be subject to a hold period of four months and a day imposed by
securities laws and by the TSXV.
The Debt Settlement is subject to review and
acceptance by the TSX Venture Exchange.
Related party transaction disclosure
MPIC is a related party of Premier by virtue of
its corporate general partner, and by that corporation's parent
company. Corner Market Capital Corporation
("CMCC") is a private B.C. company of which
Sanjeev Parsad (President, CEO and director of Premier) and Alnesh
Mohan (CFO and director of Premier) are directors, officers and
majority shareholders. CMCC holds 65% of Corner Market Capital US
Inc. ("CMC US"), a private Delaware company. The
directors and officers of CMC US include Sanjeev Parsad, Alnesh
Mohan and G. Andrew Cooke. Mr. Cooke is also a director of
Premier.
CMC US is the corporate general partner of MPIC.
To the Company's knowledge, MPIC is the registered holder of
45,278,351 Common Shares of Premier, approximately 26.43% (on an
undiluted basis) of the issued and outstanding Common shares of the
Company.
Sanjeev Parsad and Alnesh Mohan, both directors
and officers of Premier have control or direction over CMCC. Mr.
Cooke is not involved in the management of CMCC or in investment
decisions.
As MPIC is a related party to and a control
person of Premier and the transaction involves the issuance of
securities, the Debt Settlement constitutes a "related party
transaction" within the meaning of Multilateral Instrument 61-101
Protection of Minority Security holders in Special Transactions
("MI 61-101"). The Debt Settlement has been
determined to be exempt from the requirements to obtain a formal
valuation or minority shareholder approval based on sections 5.5(b)
and 5.7(1)(e) of MI 61-101.
Premier does not have securities listed or
quoted on any of the specified markets listed in section 5.5(b) of
MI 61-101. Premier is relying on the exemption from minority
shareholder approval in 5.7(1)(e) of MI 61-101 as the Debt
Settlement addresses financial hardship of the issuer. The Debt
Settlement is designed to improve the financial position of Premier
and meets the criteria set out in section 5.5(g) of MI 61-101: (i)
the Company is in serious financial difficulty as it is indebted to
a secured creditor, MPIC, in the total amount of USD$2.485M and the
Company may not be able to repay all of the outstanding loans and
interest; (ii) the transaction is designed to improve the financial
position of the Company and management believes this is achieved as
it removes USD$1.4M in debt from the balance sheet of the Company,
leaving the Company with a principal loan amount of USD$1.085M owed
to MPIC which management anticipates the Company may repay; (iii)
the transaction is not subject to court approval or a court order
that the transaction be effected under bankruptcy or insolvency
law; (iv) the Company has one independent director in respect of
the transaction, Dr. Simon Sutcliffe; and (v) the Company's board
of directors, acting in good faith, has determined that the Company
is in serious financial difficulty, that the transaction will
improve the Company's financial position and that the terms of the
transaction are reasonable in the Company's circumstances.
The Board of Premier reviewed and approved the
Debt Settlement considering the following factors: Premier's
financial position as shown on its most recent financial
statements; actual and projected revenues for its two operating
subsidiaries, Purposely Platform Inc. and MyCare MedTech Inc.;
anticipated returns from its investment in the Arcola townhouse
development; and Premier's ongoing general and administrative
expenses and monthly burn rate. The Board concluded that the
Company does not expect to have sufficient funds to repay all of
the loans made by MPIC prior to or on their respective maturity
dates, and MPIC has already granted extensions on maturity dates
for several loans. The Board is of the view that PDH expects to be
able to repay its remaining debt following the Debt Settlement, but
the prolonged monetization of certain assets due to
the COVID-19 pandemic, requires the Company to be pro-active
now and enter into the Debt Settlement to restore financial
stability to the Company.
There were no materially contrary views. The
interested directors abstained from voting to the extent they had a
conflict of interest.
Immediately following the Debt Settlement, MPIC
will directly own (and CMCC and CMC US will indirectly own and
exercise control or direction over) a total of 109,477,367 Shares
of the Company, representing approximately 46.48% of the issued and
outstanding Shares of the Company following issuance of the
Settlement Shares (on an undiluted basis).
About Premier Diversified Holdings
Inc.
Premier Diversified Holdings Inc. participates
in diversified industries through its acquisitions of securities
and/or assets of public and private entities which it believes have
potential for significant returns. It may act as a holding company
(either directly or through a subsidiary) and may participate in
management of subsidiary entities to varying degrees.
On behalf of the Board of Directors
"Sanjeev Parsad"
Sanjeev ParsadPresident, CEO and Director
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.
This press 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 jurisdictions in which such
offer, solicitation or sale would be unlawful. Any offering made
will be pursuant to available prospectus exemptions and restricted
to persons to whom the securities may be sold in accordance with
the laws of such jurisdictions, and by persons permitted to sell
the securities in accordance with the laws of such
jurisdictions.
Further information regarding the Company can be
found on SEDAR at www.sedar.com.
Not for dissemination in the United States of
America.
Legal Notice Regarding Forward Looking
Statements: This news release contains "forward-looking statements"
within the meaning of applicable Canadian securities legislation.
Forward-looking statements are indicated expectations or
intentions. Forward-looking statements in this news release include
statements regarding the issuance of securities by PDH, the
improvement of the Company's financial position relating to the
Debt Settlement, PDH's ability to repay a portion of the loans from
MPIC, statements regarding current and projected revenues from
Premier's operating subsidiaries and anticipated returns from its
investment in the Arcola townhouse project, and management's
expectations regarding Premier's monthly general and administrative
expenses. Factors that could cause actual results to be materially
different include but are not limited to the following: that
Premier's financial position will not improve by virtue of the Debt
Settlement, that any revenue which PDH makes from its operating
subsidiaries or from the Arcola project will be insufficient to
repay all or a portion of the loans to MPIC that are not included
in the Debt Settlement, that the issuer's financial position will
not improve, will stay the same or will decline further, that the
timing of receipt of anticipated revenues or returns may be
delayed, that its ongoing expenses including general and
administrative expenses will increase and that complications or
unforeseen obstacles from COVID-19 or other factors may negatively
impact Premier and/or MPIC. Investors are cautioned against placing
undue reliance on forward-looking statements. It is not our policy
to update forward looking statements.
For further information, contact:
Sanjeev Parsad, President and CEO
Phone: (604) 678.9115
Fax: (604) 678.9279
E-mail: sparsad@pdh-inc.com
Web: www.pdh-inc.com
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