Entourage Health announces changes to its credit facilities to improve its debt position and support its long-term strategic growth
TORONTO, July 04 2022 (GLOBE NEWSWIRE) — Entourage Health Corp. (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE) (“Surroundings“or the”Company), a Canadian producer and distributor of award-winning cannabis products, is pleased to announce that it has amended its senior secured credit facility entered into on March 29, 2019 (the “Senior credit facility”) between the Company and Bank of Montreal, and its second existing secured credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“FPL“), concluded on September 30, 2020 (the “Second credit facility”). The latest amendments to the Senior Credit Facility and the Second Credit Facility amend the respective terms under which Entourage has guaranteed the debt financing (the “Amendments to credit facilities”).
Pursuant to the amendments to the credit facilities, Entourage obtained an extension of the maturity date of the senior credit facility from June 30, 2022 to June 30, 2024 and the second credit facility from August 15, 2022 to December 31 2024, subject to certain conditions, the terms of which are described here.
“Today’s announcement reflects an important strategic step in securing the improvement of our long-term debt position and capital structure as we align our liquidity resources with growth plans in course – all with the crucial support of our lenders,” said George Scorsis, CEO and Executive Chairman. , Entourage. “As part of our business transformation, we continue to refine our business operations to produce premium products for further growth in our market share, while ensuring that our capital base is stabilized. This added security gives all of our stakeholders certainty that we are tactically moving in the right direction to achieve our profitability goals for long-term success.
Senior Credit Facility Terms
Under the terms of the Senior Credit Facility amendment, the maturity date is extended to June 30, 2024, subject to the satisfaction of certain conditions after July 31, 2022, failing which the maturity date will instead become on October 31, 2023. The Company will report on the fulfillment of the subsequently applicable conditions no later than July 31, 2022.
The amendment to the senior credit facility includes changes to certain financial covenants applicable to the Company, including, but not limited to, the inclusion of an EBITDA target covenant, as set forth below. particularly in modifications to credit facilities. In addition, the Company obtained the postponement of some of its financial commitments to January 1, 2024.
The Senior Credit Facility is secured by the assets of the Company and its subsidiaries, including the Company’s production facilities. Bank of Montreal’s guarantee under the senior credit facility is in first position.
Conditions of the second credit facility
Under the terms of the amendment to the Second Credit Facility, the maturity date is extended to December 31, 2024, subject to the satisfaction of certain conditions after July 31, 2022, failing which the maturity date will instead become on April 30, 2024. The amendment to the second credit facility includes amendments to the financial covenants that reflect these amendments to the senior credit facility. The Company also obtained the postponement of some of its financial commitments to January 1, 2024.
The second credit facility continues to bear interest at the rate of 15.25% per annum with the option, at the option of the Company, to capitalize the interest in lieu of cash interest payments. The second 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 second credit facility is second only to the Company’s primary creditor.
A copy of the Amendments to the Senior Credit Facility and the Amendments to the Second Credit Facility will be available under the Company’s profile on SEDAR at www.sedar.com.
Transaction with a related party
LPF is an insider of the Company since it holds more than 10% of the common shares of the Company. Accordingly, the amendment to the second credit agreement represents a “related party transaction” within the meaning of multilateral instrument 61-101 – Protection of holders of minority securities in special transactions (“MI 61-101”). The Company is relying on the exemption from minority shareholder approval requirements under NI 61-101 as the second credit facility is considered a non-capital loan as described in Section 5.7 (f) of NI 61-101, and obtained by the Company at a reasonable price. terms that are no less favorable to the Company than if the second credit facility had been obtained from an arm’s length party. Funds borrowed under the Second Credit Facility are not convertible or repayable by the issuance of shares or voting securities of the Company. The Material Change Report will not be filed more than 21 days prior to the execution of the Second Amended Credit Agreement due to the timing of the announcement and the closing thereof occurring in less than 21 days.
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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., licensees producing and distributing cannabis products for the medical and adult markets. The Company owns and operates a state-of-the-art hybrid greenhouse and processing facility located on 158 acres in Strathroy, Ontario; a 26,000 square foot fully licensed processing facility in Aylmer, Ontario specializing in cannabis extraction; and a center of excellence in micropropagation, tissue culture and genetics in Guelph, Ontario. With its medical-centric brand Starseed Medicinal, Entourage has expanded its multi-channel distribution strategy. Starseed’s industry-first exclusive partnership with LiUNA, Canada’s largest construction union, as well as employers and labor groups complements Entourage’s direct sales to medical patients. Entourage’s portfolio of elite adult-use products includes Color Cannabis, Saturday Cannabis and Royal City Cannabis Co., sold through 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 marketer of the award-winning American wellness brand Mary’s Medicinals sold in the medical and adult channels. As part of a collaboration with the subsidiary of The Boston Beer Company, Entourage is also the exclusive distributor of cannabis-infused beverages. ‘Tea-pot’ in Canada, slated for launch in 2022.
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Marianella de la Barrera
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Forward-looking information This press release contains “forward-looking information” within the meaning of applicable Canadian securities laws, which is based on Entourage’s current internal expectations, estimates, projections, assumptions and beliefs and beliefs regarding 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”, “estimated” and other similar words, including negative and grammatical variants thereof, or statements that certain events or conditions “could”, “would” or “will” occur, or through strategy discussions. Forward-looking information included in this press release includes, but is not limited to, statements regarding the satisfaction of certain conditions of the Credit Facility Amendments.
The forward-looking information contained in this press release is based on expectations, estimates, projections, assumptions and views of future events that management believes are reasonable under 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 involves 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 favorable terms; the cannabis industry in Canada in general; Entourage’s ability to implement its business strategies; the COVID-19 pandemic; competition; bad harvests; 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 undertakes no obligation to update or revise any forward-looking information, whether as a result new information, future events or the like. New factors appear from time to time and it is not possible for Entourage to predict all of these factors. When reviewing such forward-looking information, readers should keep in mind the risk factors and other cautionary statements contained in Entourage’s disclosure documents filed with applicable Canadian securities regulators on SEDAR at ‘address www.sedar.com. The risk and other factors set forth in the disclosure statements could cause actual events or results to differ materially from those described in the forward-looking information.
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