TORONTO, Dec. 22,
2022 /CNW/ - Pathway Health
Corp. (TSXV: PHC) (Frankfurt: KL1) ("Pathway" or the "Corporation")
is pleased to announce it has entered into a non-binding letter of
intent dated December 16, 2022
("LOI") whereby it is proposed that Pathway will acquire all of the
issued and outstanding common shares of each of HEAL Global
Holdings Corp. ("HEAL") and The Newly Institute Inc. ("The Newly")
from their respective shareholders, in exchange for common shares
in the capital of Pathway ("Shares") currently intended to be by
way of an arrangement ("Proposed Transaction") pursuant to a plan
of arrangement under the Business Corporations Act
(Alberta). It is expected
that a definitive agreement for the Proposed Transaction, if
agreed, executed and delivered among the parties, will provide for
the Proposed Transaction to be subject to all necessary TSX Venture
Exchange ("Exchange"), court and shareholder (including, as
necessary, disinterested shareholder) approvals.
In connection with the Proposed Transaction it is proposed
that the Shares will be consolidated on up to a 5-for-1 basis as a
step in the plan of arrangement (the "Consolidation"). As a
result, it is expected that approximately 139 million
post-Consolidation Shares will be issued by Pathway pursuant to the
Proposed Transaction (which includes the payment of a structuring
fee and other fees in Shares proposed to be issued to ADH (as
defined below)), with the (a) former holders of (i) HEAL shares
owning approximately 28% of the issued and outstanding Shares and
(ii) The Newly shares owning approximately 38% of the issued and
outstanding Shares; and (b) the current holders of Pathway Shares
owning approximately 34% of the issued and outstanding Shares, in
each case after giving effect to the Proposed Transaction (as
currently proposed).
The Newly is an Alberta
based private company, that pioneers an innovative approach to
mental health treatment by fusing a bio-psycho-social-spiritual
treatment model into medically managed intensive outpatient
programs. The Newly operates with an interdisciplinary team
working together to care for the patient. The team includes
psychiatrists, psychologists, nurses, pain doctors, addiction
doctors, occupational therapists, social workers, physiotherapists
and kinesiologists. The program takes a personalized approach to
health and is directed at first responders, veterans, health care
workers and other Canadians who are suffering with mental illness,
chronic pain or addiction.
HEAL, a privately held company existing under the laws of
the Province of Alberta, was
established with the goal of becoming a global leader in
personalized, curated healthcare. Avonlea-Drewry Holdings
Inc. ("ADH"), a related party to Pathway as its largest indirect
beneficial shareholder, is also a majority shareholder of HEAL and
a significant indirect shareholder of The Newly. ADH has
capitalized HEAL with $7.5 million,
which will be used to support the Proposed Transaction and the
continuing businesses of the resulting entity. Each of ADH,
HEAL and The Newly are non-arm's length parties of
Pathway.
In addition, in connection with the Proposed Transaction,
ADH has agreed to restructure its $3.5
million loan to Pathway (the "Debt Settlement") (see press
release dated July 29, 2022) through
the conversion of all the outstanding principal, accrued interest
and fees into common shares of Pathway at a price of $0.15 per post-Consolidation Share (the
"Settlement Shares"). Assuming completion of the
Consolidation, the Debt Settlement is expected to result in the
issuance of approximately 27 million post-Consolidation Shares to
ADH. Upon issuance of the Settlement Shares, the total
accrued obligations will be definitively extinguished. The
Settlement Shares are expected to be issued at the time of the
closing of the Proposed Transaction, subject to shareholder and
Exchange approval as well as execution of a definitive debt
settlement agreement.
In addition to the Settlement Shares, the parties have
agreed that ADH will receive a structuring fee payable in
post-Consolidation Shares (the "Structuring Fee"), which is
expected to result in an issuance of approximately 6.6
million post-Consolidation Shares to ADH for substantially
planning, arranging and implementing the Proposed
Transaction.
To the extent that the payment of the Structuring Fee and
completion of the Debt Settlement constitute related party
transactions as defined under Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special
Transactions, Pathway intends to rely on available exemptions
from the formal valuation and shareholder approval requirements.
The shares issued upon payment of the Structuring Fee and on
closing of the Debt Settlement will be subject to a statutory
4-month hold period. There are currently plans to pay finder's fees
or commissions in connection with the Debt Settlement.
"The recent acquisition of IRP and now the proposed merger
with The Newly and HEAL, represents a strategic opportunity to
create a leader in chronic pain, mental health and wellness with
the resources to scale and expand across Canada into a truly national
inter-disciplinary clinical network, reaching more first
responders, veterans, and other Canadians", said Ken Yoon, Chief Executive Officer of Pathway
Health.
The Company expects to announce additional details
regarding the proposed business combination when a definitive
agreement is executed, which is expected in Q1 2023. No
assurances can be made that the parties will successfully negotiate
and enter into a definitive agreement, or that the Proposed
Transaction will be consummated on the terms or timeframe currently
contemplated, or at all.
About
Pathway
Pathway is an integrated healthcare company that provides
products and services to patients suffering from chronic pain and
related conditions. The Corporation owns and operates eleven
community-based clinics across four provinces where its team of
health professionals work together to help patients through a
variety of evidence-based approaches and products, including
medical cannabis. Pathway's patient care programs utilize an
interdisciplinary approach that is guided by trained pain
specialists, physical and occupational therapists, psychologists,
nurses, and other healthcare providers. Pathway is also the leading
provider of medical cannabis services in Canada and has established itself as the
leading partner with national and regional pharmacy companies for
the delivery of medical cannabis services to their customers.
Pathway is working with several pharmacy companies on the
development of Cannabis Health Products (CHPs) for OTC product
distribution through retail pharmacy locations across the country
following anticipated changes to the Cannabis Act.
For more information, visit Pathway's website:
www.pathwayhealth.ca
About The Newly
Institute
The Newly Institute Inc., a Calgary, Alberta based
private company, believes mental health treatment is in
drastic need of a paradigm shift. Their vision is to
provide long-lasting change within the industry, community and
patients. They have pioneered an intensive
bio-psycho-social-spiritual treatment model that can be
supplemented by medically managed psychedelic-assisted
therapies when appropriate. Their medical professionals help
patients overcome deeply embedded traumas, addiction and pain
that are preventing them from living fully
in their everyday lives. While their programs are based on
evidence and data, the approach remains personal as it is
vital that people feel safe as together the
patient and The Newly do the difficult
work necessary to achieve wellness.
The Company strives to become Canada's largest
and premier operator of inter-disciplinary mental health
clinics. They currently operate clinics in Calgary,
Fredericton, and Edmonton with additional locations planned
across Canada.
For more information, visit The Newly Institute's
website: www.thenewly.ca
About HEAL
HEAL, a privately held company existing under the laws of
the Province of Alberta, was
established with the goal of becoming a global leader in
personalized, curated healthcare.
Cautionary Note Regarding
Forward Looking Statements
This news release includes certain
"forward-looking statements"
under applicable Canadian securities legislation, including
statements with respect to the intention and timing of entering
into a definitive agreement with respect to the Proposed
Transaction and the completion thereof. Forward-looking statements
are necessarily based upon a number of estimates and assumptions
that, while considered reasonable, are subject to known and unknown
risks, uncertainties, and other factors that may cause the actual
results and future events to differ materially from those expressed
or implied by such forward-looking statements. Such factors include
but are not limited to: the ability of Pathway, HEAL and The Newly
to negotiate satisfactory terms for, and to execute, a definitive
agreement; the satisfaction of all conditions precedent to the
completion of the Proposed Transaction, including receipt of all
regulatory and shareholder approvals; the Company's ability to
continue as a going concern, general business, economic,
competitive, political, and social uncertainties; delay or failure
to receive applicable approvals; and the results of operations.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements. Pathway disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
law.
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.
SOURCE Pathway Health Corp.