Pathway Health (TSX-V:PHC) Corp said it has entered into a non-binding letter of intent (LOI) to acquire all of the issued and outstanding common shares of each of HEAL Global Holdings Corp and The Newly Institute Inc, in exchange for Pathway Health common shares.
The integrated healthcare company said in connection with the LOI, it is proposing to consolidate its shares on up to a 5-for-1 basis as a step in the plan of arrangement, which would result in HEAL shareholders owning about 28% of the newly-merged company, while Newly Institute shareholders would own approximately 38%, and current Pathway shareholders would own about 34% of the expected approximately 139 million post-consolidation shares.
“The recent acquisition of IRP and now the proposed merger with The Newly and HEAL, represents a strategic opportunity to create a leader in chronic pain, mental health and wellness with the resources to scale and expand across Canada into a truly national inter-disciplinary clinical network, reaching more first responders, veterans, and other Canadians,” Pathway Health CEO Ken Yoon said in a statement.
READ: Pathway Health 3Q results show focus on streamlining operations
The Newly Institute is an Alberta-based private company that pioneers an innovative approach to mental health treatment by fusing a bio-psycho-social-spiritual treatment model into medically managed intensive outpatient programs, while privately-held HEAL Global was established with the goal of becoming a global leader in personalized, curated healthcare, according to the company.
Pathway noted that Avonlea-Drewry Holdings Inc (ADH), Pathway’s largest indirect beneficial shareholder, is also a majority shareholder of HEAL and a significant indirect shareholder of The Newly and has capitalized HEAL with $7.5 million, which will be used to support the proposed transaction.
The company added that in connection with the proposed transaction, ADH has agreed to restructure its $3.5 million loan to Pathway Health through the conversion of all the outstanding principal, accrued interest and fees into Pathway common shares at a price of $0.15 per post-consolidation share.
Pathway stated that it expects to announce additional details regarding the proposed business combination when a definitive agreement is executed, which is anticipated to occur in the first quarter of 2023.
Pathway Health is one of the largest providers of out-of-hospital pain management services in Canada, owning and operating nine-community based clinics across four provinces.
Contact Sean at sean@proactiveinvestors.com