TORONTO, Oct. 13,
2023 /PRNewswire/ - Greenbrook TMS Inc. (NASDAQ:
GBNH) ("Greenbrook" or the "Company") today announced
that it has received an aggregate of US$1.5
million in unsecured subordinated debt financing from
certain affiliates of Madryn Fund Administration, LLC
("Madryn") through the issuance and sale by the Company to
Madryn of US$1.5 million aggregate
principal amount of unsecured subordinated convertible promissory
notes (the "New Subordinated Convertible Notes").
The New Subordinated Convertible Notes issued to Madryn are
identical to the US$8.2 million
aggregate principal amount of subordinated convertible notes
previously issued to, among others, Greybrook Health Inc. and
Madryn, other than with respect to the Reference Conversion Price
(as defined below) (together with the New Subordinated Convertible
Notes, the "Subordinated Convertible Notes"). Accordingly,
there is currently approximately US$9.7
million aggregate principal amount of Subordinated
Convertible Notes issued and outstanding.
The New Subordinated Convertible Notes bear interest at a rate
consistent with the Company's credit facility with Madryn (the
"Madryn Credit Facility") and mature on March 31, 2028,
or earlier in the event of a change of control, acceleration of
other indebtedness or six months following repayment or refinancing
of all loans under the Madryn Credit Facility (the "Madryn
Loans"). The New Subordinated Convertible Notes are
subordinated to the Madryn Loans and to the obligations of the
Company under the secured promissory note and guaranty agreement
with Neuronetics, Inc.
The New Subordinated Convertible Notes are convertible into
common shares of the Company ("Common Shares") at any time
at the election of holders of the New Subordinated Convertible
Notes, or on a mandatory basis by all noteholders at the request of
Madryn, at a conversion price (the "Conversion Price") equal
to the lesser of (a) 85% of the closing price per Common Share on
Nasdaq or any other market as of the closing date for the New
Subordinated Convertible Notes (as adjusted from time to time in
accordance with the note purchase agreement, the "Reference
Conversion Price"), with the Reference Conversion Price in
effect as of October 12, 2023 being US$0.2315 and
(b)(i) 85% of the 30-day volume weighted average trading price of
the Common Shares prior to conversion, or (ii) if the Common Shares
are not listed on any of Nasdaq or another trading market at the
time of conversion, a per share price based equal to 85% of the
fair market value per Common Share as of such date (for such
purposes, determined in good faith by the Company's board of
directors, acting reasonably); provided, that, in any event, the
Conversion Price shall not be lower than US$0.078. The
Conversion Price is also subject to customary anti-dilution
adjustments.
The proceeds of the New Subordinated Convertible Notes are
expected to be used by the Company for general corporate and
working capital purposes. The Company is also currently considering
additional near-term financing options to address its future
liquidity needs.
In addition, the Company entered into an amendment to the Madryn
Credit Facility to further defer the September 30, 2023 interest payment due date and
extend the period during which the Company's minimum liquidity
covenant is reduced from US$3,000,000
to US$300,000 to November 15, 2023.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy nor shall there be any sale of any
of the New Subordinated Convertible Notes or the Common Shares
issuable upon conversion thereof (collectively, the
"Securities") in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The Securities have not
been and will not be registered under the U.S. Securities Act of
1933, as amended (the "U.S. Securities Act") or any state
securities laws and may not be offered or sold within the United States or to, or for account or
benefit of, U.S. persons (as defined in Regulation S under the U.S.
Securities Act) except pursuant to an available exemption under the
U.S. Securities Act and compliance with, or exemption from,
applicable U.S. state securities laws.
MI 61-101 Disclosure
Madryn is an insider of the Company. Accordingly, the foregoing
transactions are considered "related party transactions" for
purposes of Multilateral Instrument 61-101 – Protection of
Minority Security Holders in Special Transactions ("MI
61-101"). The Company is relying on exemptions from the formal
valuation and minority shareholder approval requirements available
under MI 61-101. The Company is exempt from the formal valuation
requirement in section 5.4 of MI 61-101 in reliance on section
5.5(a) of MI 61-101 as the fair market value of the transaction,
insofar as it involves interested parties, is not more than 25% of
the Company's market capitalization. Additionally, the Company is
exempt from the minority shareholder approval requirement in
section 5.6 of MI 61-101 in reliance on section 5.7(1)(a) as the
fair market value of the transaction, insofar as it involves
interested parties, is not more than 25% of the Company's market
capitalization.
About Greenbrook TMS Inc.
Operating through 133 Company-operated treatment centers,
Greenbrook is a leading provider of Transcranial Magnetic
Stimulation ("TMS") and Spravato® (esketamine nasal spray),
FDA-cleared, non-invasive therapies for the treatment of Major
Depressive Disorder ("MDD") and other mental health
disorders, in the United States.
TMS therapy provides local electromagnetic stimulation to specific
brain regions known to be directly associated with mood regulation.
Spravato® is offered to treat adults with treatment-resistant
depression and depressive symptoms in adults with MDD with suicidal
thoughts or actions. Greenbrook has provided more than 1.2 million
treatments to over 38,000 patients struggling with depression.
Cautionary Note Regarding Forward-Looking Information
Certain information in this press release, including, but not
limited to, information with respect to the New Subordinated
Convertible Notes and the anticipated proceeds therefrom,
constitute forward-looking information within the meaning of
applicable securities laws in Canada and the
United States, including the United States Private
Securities Litigation Reform Act of 1995. In some cases, but not
necessarily in all cases, forward-looking information can be
identified by the use of forward-looking terminology such as
"plans", "targets", "expects" or "does not expect", "is expected",
"an opportunity exists", "is positioned", "estimates", "intends",
"assumes", "anticipates" or "does not anticipate" or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might", "will" or "will
be taken", "occur" or "be achieved". In addition, any statements
that refer to expectations, projections or other characterizations
of future events or circumstances contain forward-looking
information. Statements containing forward-looking information are
not historical facts but instead represent management's
expectations, estimates and projections regarding future
events.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by the Company as of the date of this press release, are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements or future events or developments to
differ materially from those expressed or implied by the
forward-looking statements, including, without limitation:
macroeconomic factors such as inflation and recessionary
conditions, substantial doubt regarding the Company's ability to
continue as a going concern due to recurring losses from
operations; inability to increase cash flow and/or raise sufficient
capital to support the Company's operating activities and fund its
cash obligations, repay indebtedness and satisfy the Company's
working capital needs and debt obligations; prolonged decline in
the price of the Common Shares reducing the Company's ability to
raise capital; inability to satisfy debt covenants under the
Company's credit facility and the potential acceleration of
indebtedness; including as a result of an unfavorable decision in
respect of the litigation with Benjamin
Klein; risks related to the ability to continue to negotiate
amendments to the Company's credit facility to prevent a default;
risks relating to the Company's ability to deliver and execute on
the previously-announced restructuring plan (the "Restructuring
Plan") and the possible failure to complete the Restructuring
Plan on terms acceptable to the Company or its suppliers (including
Neuronetics, Inc.), or at all; risks relating to maintaining an
active, liquid and orderly trading market for Common Shares as a
result of the Company's potential inability to regain compliance
with the Nasdaq Stock Market's listing rules; risks relating to the
Company's ability to realize expected cost-savings and other
anticipated benefits from the Restructuring Plan; risks related to
the Company's negative cash flows, liquidity and its ability to
secure additional financing; increases in indebtedness levels
causing a reduction in financial flexibility; inability to achieve
or sustain profitability in the future; inability to secure
additional financing to fund losses from operations and satisfy the
Company's debt obligations; risks relating to strategic
alternatives, including restructuring or refinancing of the
Company's debt, seeking additional debt or equity capital, reducing
or delaying the Company's business activities and strategic
initiatives, or selling assets, other strategic transactions and/or
other measures, including obtaining bankruptcy protection, and the
terms, value and timing of any transaction resulting from that
process; claims made by or against the Company, which may be
resolved unfavorably to us; risks relating to the Company's
dependence on Neuronetics, Inc. as its exclusive supplier of TMS
devices. Additional risks and uncertainties are discussed in the
Company's materials filed with the Canadian securities regulatory
authorities and the United States Securities and Exchange
Commission from time to time, available at www.sedarplus.com and
www.sec.gov, respectively. These factors are not intended to
represent a complete list of the factors that could affect the
Company; however, these factors should be considered carefully.
There can be no assurance that such estimates and assumptions will
prove to be correct. The forward-looking statements contained in
this press release are made as of the date of this press release,
and the Company expressly disclaims any obligation to update or
alter statements containing any forward-looking information, or the
factors or assumptions underlying them, whether as a result of new
information, future events or otherwise, except as required by
law.
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SOURCE Greenbrook TMS Inc.