Entourage Health and LiUNA Pension Fund Close on $15 Million of Previously Announced Debt Financing
Company also confirms it has signed an amended and restated credit agreement with LiUNA
Toronto, Canada, February 1, 2023 – Entourage Health Corp. ( (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE) (“Entourage” or the “Company”), a Canadian producer and distributor of award-winning cannabis products and brands, is pleased to announce it has successfully closed the second $15 million tranche of its upsized credit facility (the “Credit Facility”) with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”), as announced on October 31, 2022. The Credit Facility will be used by Entourage for general working capital purposes as the Company continues to execute its commercial goals to achieve profitable growth by the end of 2023.
Amended and Restated Credit Agreement
Concurrent with the closing, the Company and LPF entered into an amended and restated credit agreement (the “ARCA”) in connection with the Credit Facility, which reflects amendments to the Credit Facility up to and including the date of the ARCA, as well as revised financial covenants consistent with the amendments to the Company’s senior secured credit agreement; namely, (i) the EBITDA target covenant was modified to reflect the Company’s updated strategic plan as announced by the Company on November 15, 2022, (ii) the liquidity covenant was amended to provide that the Company must maintain liquidity coverage of not less than $5 million at all times, and (iii) additional security in the form of $2 million must be maintained in a blocked account held by the senior lender, which can be applied against the Company’s senior secured credit facility in certain events.
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 on December 31, 2024. 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, as well as typical conditions precedent for a transaction of this nature. LPF’s security under the Credit Facility is in the 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 (“MI 61-101”). 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.
A copy of the ARCA will be available under the Company’s profile on SEDAR at www.sedar.com.
About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent Company of Entourage Brands Corp. and CannTx Life Sciences Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a state-of-the-art hybrid greenhouse and processing facility located on 158-acres in Strathroy, ON; a fully licensed 26,000 sq. ft. Aylmer, ON processing facility. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups complements Entourage’s direct sales to medical patients. With the launch of Syndicate, Entourage now hosts another unique medical marketplace that offers patients a collective of Canadian micro-cultivators’ products, along with Entourage’s family of brands. Entourage’s elite adult-use product portfolio includes Color Cannabis and Saturday Cannabis – sold across eight provincial distribution agencies. It is the exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary’s Medicinals sold in both medical and adult-use channels. Under a collaboration with The Boston Beer Company subsidiary, Entourage is also the exclusive distributor of cannabis-infused beverages ‘TeaPot’ in Canada, which launched in summer 2022, starting in select provinces.
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For additional information, or investor or media inquiries:
Catherine Flaman
Senior Director, Communications & Corporate Affairs
416-910-0279
catherine.flaman@entouragecorp.com
Forward Looking Information
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon Entourage's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy. Forward-looking information included in this press release includes, but is not limited to, statements with respect of the Company’s anticipated achievement of profitability.
The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions, and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of Entourage to implement its business strategies; the COVID-19 pandemic; competition; crop failure; and other risks.
Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, Entourage does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Entourage to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in Entourage’s disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.
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