Entourage Health Announces $8.9 Million Upsize to Credit Facility and Implementation of Proposed Amendments to 8.5% Unsecured Convertible Debentures
Toronto, Canada, June 27, 2022 – Entourage Health Corp. (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE) (“Entourage” or the “Company”), a Canadian producer and distributor of award-winning cannabis products, announced today it has amended and upsized its existing credit facility (the “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 (the “Credit Facility Amendments”). Net proceeds from the Credit Facility will be used by Entourage to repay the Debentures (as defined herein) and for general working capital purposes as the Company continues to execute a balanced approach to achieving sustainable profitable growth.
Entourage is also pleased to announce it has implemented the previously announced amendments (the “Debenture Amendments”, and, together with the Credit Facility Amendments, the “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 (the “Debentures”). As a result of the Debenture Amendments, the maturity date for the Debentures has been amended to June 30, 2022 (the “New Maturity Date”) 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 (as defined in the Indenture), 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.
A copy of the Credit Facility amendment will be made available under the Company’s profile on SEDAR at www.sedar.com.
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.
About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent company of Entourage Brands Corp. (formerly WeedMD RX Inc.) 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, specializing in cannabis extraction; and a micropropagation, tissue culture and genetics centre-of-excellence in Guelph, Ontario. 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. Entourage’s elite adult-use product portfolio includes Color Cannabis, Saturday Cannabis and Royal City Cannabis Co.– sold across eight provincial distribution agencies. The Company also maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart. 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, expected to launch in 2022.
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For further information, please contact:
For Investor Enquiries:
Valter Pinto or Scott Eckstein
Managing Director
KCSA Strategic Communications
1-212-896-1254
entourage@kcsa.com
investor@entouragecorp.com
For Media Enquiries:
Marianella delaBarrera
SVP, Communications & Corporate Affairs
416-897-6644
marianella@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 in respect of the use of proceeds from the Credit Facility Amendments and the repayment of the Debentures in accordance with the Debenture Amendments and the timing thereof.
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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