TORONTO, ON. – September 12, 2020 – The Clinic Network Canada, Inc. (“TCN” or the “Company”), through its parent holding corporation, is pleased to announce that it has entered into a non-binding letter of intent with Colson Capital Corp. (“Colson”) dated September 12, 2020 (the “LOI”) with respect to a proposed reverse takeover whereby Colson will acquire all of the issued and outstanding shares of a newly incorporated federal corporation, Pathway Health Corp. (“Pathway”), following the acquisition by of all of the business and assets of TCN in consideration for the issuance of common shares of (the “Transaction”).
Colson intends that the Transaction will constitute its Qualifying Transaction, as such term is defined in the Policy 2.4 – Capital Pool Companies (the “CPC Policy”) of the TSX Venture Exchange (the “TSXV”). The deemed price of the Qualifying Transaction is $1.428 million. Colson, upon completion of the Transaction, expects to change its name to “Pathway Health Corporation”, such entity to be referred to herein as the “Resulting Issuer”. The Transaction does not constitute a Non-Arm’s Length Qualifying Transaction, as such term is described in the CPC Policy of the TSXV.
The Resulting Issuer will own and operate medical clinics across Canada that offer multidisciplinary therapies for patients that suffer from chronic pain and certain other disease states. The price paid for the TCN assets by Colson shall be satisfied by the payment of between $4 – $5 million in cash with the remainder to be paid by such number of shares of Pathway equal to the balance of the purchase price owed to TCN divided by the final purchase price of a Subscription Receipt (as described below) under the Offering (as described below).
General Information Regarding the Transaction
The Transaction is expected to be structured as a reverse takeover (“RTO”) under the rules and policies of the TSXV. Upon completion of the Transaction, the Resulting Issuer will continue to carry on the business of TCN.
The purchase price for the acquisition of the outstanding equity securities of Pathway will be satisfied through the issuance of common shares of Colson to the shareholders of Pathway, to ultimately form the Resulting Issuer.
The transaction terms outlined in the LOI are non-binding, and the Transaction is subject to the parties successfully entering into a definitive agreement (the “Definitive Agreement”) in respect of the Transaction by January 15, 2021, or such other date as Colson and TCN’s parent holding corporation may mutually agree. The LOI also contemplates other material conditions precedent to the closing of the Transaction (the “Closing”), including the completion by Pathway of a concurrent financing of subscription receipts (“Subscription Receipts”) at a price of $0.50 per Subscription Receipt, to raise minimum aggregate gross proceeds of $10,000,000 (the “Offering”), Pathway owning or holding all intellectual property assets necessary for the operation of the business of TCN as it is currently conducted and contemplated, customary due diligence, compliance with all applicable regulatory requirements and receipt of all necessary regulatory, corporate, third-party, board and shareholder approvals being obtained.
Summary of the Offering
In connection with the Transaction, Colson, TCN and TCN’s parent holding corporation have entered into an engagement letter with Canaccord Genuity Corp. (the “Agent”), as agent, in connection with the Offering. Under the terms of the Offering, the Agent has been granted an over-allotment option to place up to an additional 15% of the number of Subscription Receipts issuable under the Offering for additional gross proceeds of up to $1,500,000.
On closing of the Offering, the proceeds of the Offering will be held in escrow pursuant to a subscription receipt agreement. Proceeds of the Offering will be used to expand the Resulting Issuer’s portfolio of clinics across Canada, expand its distribution channels and add interdisciplinary pain services to its clinics.
Each Subscription Receipt will be automatically converted into one unit of Pathway (each, a “Unit”), on the date that: (i) all conditions precedent to the completion of the Transaction have been satisfied to the satisfaction of the parties but for payment of the cash portion of the purchase price to be paid by Pathway for the operating assets of TCN; (ii) the Agent has received an officers’ certificate from the officers of each of Colson and Pathway that each party has instructed its counsel to issue the underlying securities upon the release of funds; and (iii) a joint notice from Colson and Pathway to the Agent stating that the Transaction has been completed and all conditions precedent to the Transaction have been satisfied or waived (the “Escrow Release Date”). Each Unit shall consist of one common share of Pathway and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant shall be exercisable to acquire one common share of Pathway for a period of 24 months from the Escrow Release Date at an exercise price of $0.75 per common share.
If and when a Definitive Agreement between Colson and Pathway is executed, Colson will issue a subsequent press release in accordance with the policies of the TSXV containing the details of the Definitive Agreement and additional terms of the Transaction including information relating to sponsorship, summary financial information in respect of TCN and Pathway, and additional information with respect to the Offering and the proposed directors, officers, and insiders of the Resulting Issuer upon completion of the Transaction.
Completion of the Transaction is subject to a number of conditions including, but not limited to, completion of the Offering, the satisfaction of Colson and TCN’s parent holding corporation in respect of the due diligence investigations to be undertaken by each party, the completion of a Definitive Agreement in respect of the Transaction, closing conditions customary to transactions of the nature of the Transaction, approvals of all regulatory bodies having jurisdiction in connection with the Transaction, TSXV acceptance of the Transaction as the Qualifying Transaction of Colson and, if required by the TSXV policies, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Transaction or the Offering will be completed as proposed or at all.
About The Clinic Network Canada, Inc.
The Clinic Network Canada, Inc. (“TCN”) is a diversified healthcare company that provides clinical services and healthcare products to patients living with chronic pain. The clinical services are delivered in community-based, interdisciplinary pain clinics and through virtual care by trained pain specialists, general and nurse practitioners and other health care providers who are trained in managing chronic pain through a variety of evidence-based approaches. TCN has also developed an expertise in harm reduction and medicinal cannabis as an alternative to traditional opioids. With anticipated changes in Health Canada’s Cannabis Act, TCN is partnering with Canadian pharmacy companies as they prepare to begin selling Cannabis Health Products (“CHPs”) in their retail locations across Canada.
For more information, visit The Clinic Network website: www.theclinicnetwork.ca
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Notice Regarding Forward Looking Statements
Certain statements in this news release related to the Company are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “could”, “would”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe”, “working on” or “continue”, or the negative thereof or similar variations. There are numerous risks and uncertainties that could cause actual results and TCN’s plans and objectives to differ materially from those expressed in the forward-looking information, including: business disruption risks relating to COVID-19; regulatory risks, including those related to healthcare, privacy, and data security; and integration risks relating to newly acquired businesses. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company does not intend to update these forward-looking statements.
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