Entourage Health Corp. (OTCQX:ETRGF) (TSXV:ENTG) (FSE:4WE) has amended and upsized its existing credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”), adding an additional $8.9 million in non-dilutive funding availability. Net proceeds from the credit facility will be used by Entourage to repay the debentures and for general working capital purposes as the company continues to execute a balanced approach to achieving sustainable profitable growth.
Entourage has implemented the previously announced amendments to the trust indenture dated as of September 25, 2019 between TSX Trust Company and the company governing the company’s 8.5% unsecured convertible debentures. As a result of the debenture amendments, the maturity date for the debentures has been amended to June 30, 2022 and, on the new maturity date, the debentures will be repaid, in cash, in an amount equal to 60% of the principal amount of debentures then outstanding, together with any accrued and unpaid interest earned on 100% of the principal amount of the debentures from the last interest payment date, less any tax required by law to be deducted.
Entourage has received consent for each of the amendments from its senior lender under the company’s senior secured credit facility entered into on March 29, 2019.
Credit Facility Terms
The credit facility continues to bear an interest rate of 15.25% with the option, at the company’s discretion, to capitalize interest in lieu of cash payments of interest and is set to mature in August, 2022. The credit facility is secured by the assets of the company and its subsidiaries, including the company’s production facilities, and contains customary financial and other covenants. LPF’s security under the credit facility is in second position to the company’s senior creditor.
Related Party Transaction
LPF is an insider of the company as it owns greater than 10% of the common shares of the company. Accordingly, the amending of the credit agreement represents a “related party transaction” under Multilateral Instrument 61-101 - protection of minority security holders in special transactions. The company is relying on the exemption from minority shareholder approval requirements under MI 61-101 as the credit facility is considered a non-equity loan as described under Section 5.7(f) of MI 61-101, and obtained by the company on reasonable terms that are no less advantageous to the company than if the credit facility was obtained from an arm’s length party. The funds borrowed under the credit facility are not convertible into or repayable by the issuance of equity or voting securities of the company. The material change report will not be filed more than 21 days prior to the entering into of the amended credit agreement due to the timing of the announcement and closing thereof occurring in less than 21 days.
Photo by Giorgio Trovato on Unsplash
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