Pathway Health (TSX-V:PHC) Corp has announced a proposed $1.25 million private placement of a secured promissory note with HEAL Global Holdings Corp, an entity controlled by the company’s largest indirect beneficial shareholder Avonlea-Drewry Holdings Inc.
The company said in a statement this was party to its previously announced letter of intent (LOI) in respect of a proposed business acquisition, recapitalization and debt restructuring transaction involving Pathway, HEAL and The Newly Institute Inc (the proposed transaction).
Per the promissory note’s terms and conditions, the company said it will have the ability to request drawdowns of up to $1.25 million in aggregate to further the integrated business platform of the enterprise that will result from the proposed transaction for working capital and general corporate purposes.
READ: Pathway Health inks LOI to acquire HEAL Global Holdings and The Newly Institute; proposes share consolidation
HEAL, the lender, has offered to advance the loan to Pathway to bridge the period between the date hereof the closing of the proposed transaction and the loan proceeds represent an advance on the aggregate capital otherwise available to Pathway's business within the larger combined enterprise, Pathway noted.
Promissory note terms
Pathway said the note will mature on the earlier of June 30, 2023, and the date on which the definitive agreement or LOI, as applicable, in respect of the proposed transaction is terminated or expired.
The principal amount outstanding under the note from time to time will bear interest at a rate of 15% per annum and is convertible at a conversion price of $0.05 per common share in the capital of Pathway.
HEAL will issue concurrently with the note 25,000,000 share purchase warrants, with each warrant exercisable for one share for $0.05 for 12 months.
Accrued and unpaid interest on the note will be convertible into shares in accordance with the policies of the TSX Venture Exchange, Pathway said.
Further details about the note can be found here.
Shares of Pathway were up 10% following the news, trading at about C$0.06.
Pathway provides out-of-hospital pain management services in Canada.
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