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.
Cautionary and Forward-Looking
Statements
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.