Toronto-based pharmacy and healthcare services provider Centric Health Corp (TSX: CHH) has closed a convertible preferred shares financing, raising proceeds of $12 million.
The investor was Ewing Morris & Co Investment Partners, a Canadian boutique investment firm.
The transaction will give Ewing Morris a 12.2 percent interest in the company and the right to nominate a board director.
Centric Health, established in 2001 and led by President and CEO David Murphy, said the proceeds will be used to repay senior debt.
Centric Health Announces Closing of Private Placement of Convertible Preferred Shares
TORONTO, March 13, 2019 /CNW/ – Centric Health Corporation (“Centric Health” or “the Company”) (TSX: CHH), one of Canada’s leading healthcare services companies, announced today that it has completed a non-brokered private placement (the “Private Placement”) to funds and accounts managed by Ewing Morris & Co. Investment Partners Ltd.” (“Ewing Morris”) for gross proceeds of $12 million through the issuance by the Company of 30,000,000 convertible preferred shares of the Company at an issue price of $0.40 per share (the “Preferred Shares”).
Each Preferred Share is entitled to receive a cumulative annual dividend equal to $0.036 per share (9% per annum), payable in arrears semi-annually in cash. The Preferred Shares are convertible into common shares of the Company at the holder’s option on a one-for-one basis, and at the Company’s option in certain circumstances, subject to customary anti-dilution adjustments. The Preferred Shares will mature on March 13, 2024 at which time each outstanding Preferred Share will be redeemed by the Company for $0.40 plus any unpaid dividends.
The proceeds of the Private Placement will be used by the Company to repay senior indebtedness. Ewing Morris will receive the right to nominate one director to the Company’s Board of Directors for so long as it holds the Preferred Shares.
Following closing of the Private Placement, Ewing Morris would hold an approximate 12.2% ownership interest in the Company on an as-converted, partially diluted basis.
“We are excited to welcome Ewing Morris as a new significant investor in Centric Health,” said David Murphy, Centric Health’s President and Chief Executive Officer. “Ewing Morris understands Centric Health’s unique position in the Canadian healthcare landscape, and its investment demonstrates its belief in our ability to execute on the previously announced vision to become the leading provider of pharmacy and other healthcare services to Canadian seniors. The Ewing Morris investment will help reduce the Company’s existing senior debt and will increase financial flexibility as we move forward with the next phase of our strategy.”
“We are delighted to partner with Centric Health to support the Company’s next phase.” said John Ewing, co-founder of Ewing Morris.
Beacon Securities acted as the Company’s financial advisor on the Private Placement. Beacon Securities received customary advisory fees, including 1,050,000 broker warrants, with each broker warrant entitling the holder to acquire one common share in the capital of the Company for a period of 24 months from the closing date at an exercise price of $0.40 per share.
About Centric Health
Centric Health’s vision is to be the leading independent provider of pharmacy and other healthcare services to Canadian seniors. The Company aspires to be world renowned for delivering the highest levels of quality care and outcomes, innovative solutions and value to seniors, patients, clients and stakeholders. Centric Health has two main operating segments, its Specialty Pharmacy division and its Surgical and Medical Centres division.
The Specialty Pharmacy division is a “Seniors First” model composed of a growing national network of fulfilment centres that deliver high-volume solutions for the cost effective supply of chronic medication and other specialty clinical care services, serving more than 30,000 residents in over 450 seniors communities (long term care facilities, retirement homes and assisted living facilities) nationally. The Specialty Pharmacy division also provides pharmaceutical dispensing services for employees insured by corporate health plans.
The Surgical and Medical Centres division is Canada’s largest independent surgical provider operating five facilities across four provinces. It serves a diversified customer base with private paid non-insured surgeries and diagnostics, government outsourcing of insured surgeries and diagnostics and other procedures funded by third-party payors (including Workers Compensation) and is the proud owner of Canada’s first Centre of Excellence in Metabolic and Bariatric Surgery.
With national networks of facilities in each of its businesses, deep knowledge and experience of healthcare delivery and extensive, trusted relationships with payers, physicians, and government agencies, the Company is uniquely positioned to address current and future healthcare needs in growing markets as the Canadian healthcare industry goes through a major transformation over the medium to long term.
About Ewing Morris
Ewing Morris is an independent, value-driven Canadian investment firm established in 2011. The team consists of six investment professionals with over 75 years of collective experience investing in smaller cap North American companies with an emphasis on non-resource Canadian small cap. The firm manages approximately $350 million on behalf of individual and institutional investors.
This press release contains statements that may constitute “forward-looking statements” within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements regarding business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events, including the expected use of proceeds. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Centric Health and described in the forward-looking statements contained in this press release. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits Centric Health will derive there-from.
For further information: please visit the Company’s website at www.centrichealth.ca or contact: David Murphy, President & Chief Executive Officer, Centric Health Corporation, 416-619-9401, David.Murphy@centrichealth.ca; Trevor Heisler, Investor Relations, NATIONAL Capital Markets, 416-848-1434, THeisler@national.ca