Toronto, Ontario, June 26, 2023 – Pathway Health Corp. (TSXV: PHC) (“Pathway” or the “Company“) is pleased to announce that Avonlea-Drewry Holdings Inc. (“ADH”), the Company’s largest indirect shareholder and secured creditor, has agreed to advance the Company a further $200,000 pursuant to a secured promissory grid note (the “Loan”) previously announced on April 25, 2023. The additional proceeds will assist Pathway with working capital requirements prior to closing of the proposed business acquisition, recapitalization and debt restructuring transaction involving Pathway, HEAL Global Holdings Corp. and The Newly Institute Inc. (see press releases dated December 22, 2022, March 1, 2023 and March 31, 2023) (the “Proposed Transaction”). Pursuant to the terms and conditions of the promissory note issued by Pathway in respect of the loan (the “Note”), the Company has received $1.0 million in aggregate (the “Principal Amount”) and received an additional $200,000 today.
The Note is secured by the same security granted to ADH under the credit facility between the Company and ADH (see press release dated July 29, 2022). The Note will mature on July 21, 2023 (the “Maturity Date”).
The Principal Amount outstanding under the Note from time to time will bear interest at a rate of 15% per annum and it is intended to be repaid from the proceeds of $10.0 million financing that is to be conducted in connection with the Proposed Transaction and general working capital.
Ms. Alison Wright, a director of the Company, is a director, officer and shareholder of ADH (the “Insider Position“). As a result, the ADH is a “related party” of the Company and the issuance of the Note is considered to be “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“), requiring the Company, in the absence of exemptions, to obtain a formal valuation of, and minority shareholder approval of, the related party transaction. Pursuant to MI 61-101, the Company is relying on an exemption from the formal valuation requirements as no securities of the Company are listed or quoted on certain specified exchanges, and on an exemption from the minority shareholder approval requirements as the fair market value of the Note does not exceed $2.5 million, as determined in accordance with MI 61-101. Neither the Company nor, to the knowledge of the Company after reasonable inquiry, ADH, has knowledge of any material information concerning the issuer or its securities that has not been generally disclosed. The Company intends to file a material change report within the required timeframe relating to this related party transaction.
None of the securities sold in connection with the private placement will be registered under the United States Securities Act of 1933, as amended, and no such securities may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
For further information, please contact:
Pathway Health Corp.
Robin Cook, Corporate Development