The company expects to use the proceeds of the New Loan for working capital and general business purposes, as well as to pay down some of its debt. Additionally, the company is now thinking about other short-term financing solutions to meet its demands for liquidity in the future.
The Amendment also gives Madryn the option to convert common shares of the company (“Common Shares”) at a conversion price per share of US$1.90 (the “Conversion Price”), subject to customary anti-dilution adjustments (the “Conversion Instrument”), into up to approximately US$365,050 of the outstanding principal amount of the New Loan. This conversion feature is equivalent to the conversion clauses in the Loans that were previously made available under the Credit Facility. These clauses provide Madryn the choice to convert some of the Loans’ outstanding principal into Common Shares at the Conversion Price. Madryn has the ability to convert up to a total of around US$7.0 million following the issue of the Conversion Instrument.
For the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the aforementioned transactions are therefore deemed “related party transactions” and, barring any applicable exemption, would necessitate a formal valuation and minority approval under MI 61-101. Given that the company is experiencing serious financial difficulties, the board of directors of the company, which includes all independent directors, unanimously decided in good faith that the company may rely on the “financial hardship” exemption from the formal valuation and minority approval requirements set out in Section 5.5(g) and Section 5.7(e) of MI 61-101 with regard to such transactions.
The planned transactions are not subject to court clearance under bankruptcy or insolvency legislation, thus the exemption mentioned in Section 5.5(f) of MI 61-101 is not applicable. The transactions are intended to strengthen the Company’s financial condition. The terms and conditions of the transactions are also in the best interests of the company and fair for it under the circumstances, according to one or more independent directors of the company. If and when required by MI 61-101, additional information pertaining to the aforementioned transactions will be included in the Company’s material change report, which will be submitted under the Company’s issuer profile on SEDAR+ at www.sedarplus.com.
Less than 21 days will pass before the closing of the aforementioned transactions before the material change report is filed. This shorter time frame was required to enable the Company to close the transactions in a manner that aligns with customary market practice for similar transactions and to quickly meet the Company’s urgent liquidity needs.
With 130 treatment centres run by the Company, Greenbrook is one of the top providers in the US of FDA-approved, non-invasive treatments for Major Depressive Disorder (“MDD”) and other mental health conditions, including Spravato® (esketamine nasal spray) and Transcranial Magnetic Stimulation (“TMS”) therapy. With TMS treatment, some brain areas that are intimately linked to mood control get local electromagnetic stimulation. Adults with MDD who exhibit suicidal thoughts or behaviours and depressed symptoms who are resistant to therapy can be treated with Spravato®. Greenbrook has treated over 40,000 individuals with depression with over 1.3 million treatments.
Some of the statements in this press release, such as those about the New Loan and how the proceeds are expected to be used, might be considered “forward-looking information” under Canadian securities laws and “forward-looking statements” under the US Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking information”). In addition to information about the Company’s operations, financial position, business strategy, growth plans and strategies, technological development and implementation, and other topics, forward-looking information may also relate to the Company’s future financial and liquidity outlook and anticipated events or results.
strategies and objectives, budgets, operations, financial outcomes, taxes, and dividend policy. Information on the New Loan in particular, as well as how the proceeds are anticipated to be used, may be forward-looking. Certain terms, like “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, or statements that certain actions, events, or results “may”, “should”, “could”, “might”, “will”, “will”, “will be taken”, “occur” or “be achieved” can be used to identify forward-looking information in certain situations.
Furthermore, forward-looking information is included in any comments that make reference to plans, objectives, projects, or other descriptions of events or situations that may occur in the future. Statements that contain forward-looking information are not facts; rather, they are forecasts, estimates, and assumptions of management about what may happen in the future.
Although deemed reasonable by the company on the date of this press release, forward-looking information is inherently based on a number of opinions, assumptions, and estimates that are subject to known and unknown risks, uncertainties, assumptions, and other factors that could 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 information.
statements, including but not limited to: macroeconomic variables like inflation and recessionary conditions; a reasonable doubt as to the Company’s ability to continue as a going concern because of ongoing operational losses; an inability to generate enough cash flow or raise enough money to support the Company’s operations, pay off debt, and meet its working capital requirements; extended drop in the price of common shares, which would make it harder for the business to obtain money; failure to meet the requirements of the credit facility’s debt covenants and possible acceleration of debt;
The Company may be subject to various risks and uncertainties, such as obtaining bankruptcy protection, selling assets, reducing or postponing business activities and strategic initiatives, seeking additional debt or equity capital, and the terms, value, and timing of any transaction resulting from that process. Additionally, the Company may face claims made by or against it, which may not end well for us. Finally, the Company may face risks related to its exclusive reliance on Neuronetics, Inc. as its supplier of TMS devices.