/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
TORONTO,
April 25,
2023 /CNW/ - Pathway Health Corp. (TSXV: PHC)
(Frankfurt: KL1) ("Pathway" or the "Company") is
pleased to announce that Avonlea-Drewry Holdings Inc.
("ADH"), the Company's largest indirect shareholder and
secured creditor, has made a secured loan of $1.0 million to the Company pursuant to a secured
promissory grid note (the "Loan"). The proceeds of the Loan
will assist Pathway with working capital obligations and ongoing
transaction expenses prior to closing of the previously announced
proposed business acquisition, recapitalization and debt
restructuring transaction pursuant to the arrangement of Pathway,
HEAL Global and Newly by way of a plan of arrangement under the
Business Corporations Act (Alberta) in accordance with an arrangement
agreement among Pathway, HEAL Global and Newly dated March 31, 2023 (see press releases dated
December 22, 2022, March 1, 2023 and March
31, 2023) (the "Proposed Transaction"). Pursuant to
the terms and conditions of the promissory note issued by Pathway
in respect of the loan (the "Note"), the Company will
receive the drawdowns of up to $1.0
million in aggregate (the "Principal Amount") in two
tranches, the first of which will occur today in the amount of
$600,000 and the second of
$400,000 is expected to occur on
May 15, 2023.
"We appreciate ADH's continued and future support
of Pathway. We believe the Proposed Transaction will result in the
strategic combination of two innovative leaders who will be
well-positioned to address a growing global market for mental
health, chronic pain services and products," said Ken Yoon, CEO of Pathway.
The Note is secured by the same security granted
to ADH under the credit facility between the Company and ADH (see
press release dated July 29, 2022).
The Note will mature on July 21, 2023
(the "Maturity Date").
The Principal Amount outstanding under the Note
from time to time will bear interest at a rate of 15% per annum and
it is intended to be repaid from the proceeds of a proposed
$10.0 million financing that is to be
conducted in connection with the Proposed Transaction and general
working capital.
Ms. Alison Wright, a director of the
Company, is a director, officer and shareholder of ADH (the
"Insider Position"). As a result, ADH is a "related party"
of the Company and the issuance of the Note is considered to be
"related party transaction" within the meaning of Multilateral
Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions ("MI 61-101"), requiring the
Company, in the absence of exemptions, to obtain a formal valuation
of, and minority shareholder approval of, the related party
transaction. Pursuant to MI 61-101, the Company is relying on an
exemption from the formal valuation requirements as no securities
of the Company are listed or quoted on certain specified exchanges,
and on an exemption from the minority shareholder approval
requirements as the fair market value of the Note does not exceed
$2.5 million, as determined in
accordance with MI 61-101. Neither the Company nor, to the
knowledge of the Company after reasonable inquiry, ADH, has
knowledge of any material information concerning the issuer or its
securities that has not been generally disclosed. The Company
intends to file a material change report within the required
timeframe relating to this related party transaction.
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 Note, the
use of proceeds of the Note, the Proposed Transaction and the
Company's future financing or transactional or operational
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 Note as described,
legal or regulatory impediments regarding the Note, accrued and
unpaid interest thereon, the Proposed Transaction not completing as
proposed or at all, the Company defaulting on the Note leading to,
among other things, enforcement under the security, increased
accrued interest and ADH extending the maturity date of the Note
(and increased accrued interest in respect thereof) or availing
itself of other available remedies, the proceeds being insufficient
for the Company's purposes, the Company's inability to repay the
Note on the Maturity Date or at all and the Company being unable to
raise additional funds on terms acceptable to the Company or at all
necessary to repay the Note. 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.