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TORONTO, Oct. 28, 2015 /CNW/ - Quantum International Income Corp. ("Quantum" or the "Corporation") (TSXV: QIC / QIC.U) provides this update further to its prospectus offering (the "Offering") of 47,620,000 subscription receipts of the Corporation ("Subscription Receipts") at a price of $0.42 per Subscription Receipt (the "Offering Price"), which closed on July 28, 2015 (the "Closing Date"). On the Closing Date, 9,524,000 of the Subscription Receipts were converted into one common share of the Corporation ("Common Share") and one-half of one Common Share purchase warrant (each whole warrant a "Warrant") of the Corporation for each Subscription Receipt held, following which an amount equal to the Offering Price per Subscription Receipt was released from escrow to the account of the Corporation.
The Corporation was not able to satisfy the Release Conditions (as defined herein) prior to the Release Deadline. Accordingly, the Corporation is obligated to return to the holders of 38,096,000 Subscription Receipts an amount equal to the Offering Price per Subscription Receipt on November 2, 2015, being the timeframe prescribed by the agreement governing the outstanding Subscription Receipts. The Corporation is currently working with the subscription receipt agent to satisfy this obligation but does not expect to be in position to return an amount equal to the full Offering Price per Subscription Receipt currently outstanding to the holders thereof. The Corporation anticipates that, on November 2, 2015, the subscription receipt agent will return to holders of outstanding Subscription Receipts substantially all of the amount required to be returned to such holders.
Acquisition of Columbus Hospital LTACH
The Corporation intended to use the net proceeds from the Offering primarily to fund a portion of the purchase price of the previously announced acquisition of Columbus Hospital LTACH d/b/a Columbus Hospital LTACH (the "Proposed LTACH Acquisition"). The Corporation is not in a position to complete the Proposed LTACH Acquisition.
"While we are disappointed that we are not in a position to close the Proposed LTACH Acquisition, we will continue to explore other funding options as potential catalysts to acquire the business in the future," said Manu Sekhri, CEO of Quantum. "For the time being, our focus will be on managing the performance of the promising businesses already in our portfolio, in order to achieve profitability and to drive growth in shareholder value of Quantum."
The balance of 38,096,000 Subscription Receipts were to be converted, if at all, without payment of additional consideration or further action on the part of the holders thereof into the underlying Common Shares and Warrants, upon satisfaction of all Release Conditions, following which the remaining escrowed funds, being $15,025,307 plus interest thereon, (the "Remaining Escrow Funds") less the remaining commission payable to Mackie Research Capital Corporation and Canaccord Genuity Corp. (together, the "Underwriters") (being $650,013) were to be released from escrow to the account of the Corporation. As noted above, the Release Conditions have not been met. The conversion of the Subscription Receipts will not occur. The Corporation will not receive any of the Remaining Escrow Funds and the Underwriters will not receive the remaining commission.
The release conditions (collectively, the "Release Conditions"), which were to be satisfied on or prior to October 26, 2015 (the "Release Deadline") were as follows: (i) the Corporation having secured the necessary additional debt financing required to, taking into account the net proceeds of the Offering, fund the acquisition of Columbus LTACH, LLC d/b/a Columbus Hospital LTACH ("Columbus Hospital LTACH") on terms that are satisfactory to the Underwriters, acting reasonably; (ii) all conditions precedent to the closing of the acquisition of Columbus Hospital LTACH having been satisfied or waived; (iii) the Corporation having (a) internalized the management services provided by Quantum International Asset Management Corp., an external third party (the "External Manager"), currently provided pursuant to the management agreement dated August 28, 2014 between the Corporation and the External Manager (the "Management Agreement"), by acquiring the External Manager in exchange for the issuance of 11,000,000 Common Shares, on terms satisfactory to the Underwriters, acting reasonably, (b) terminated the Management Agreement immediately after completing (a) above, and (c) caused the External Manager to terminate any employment or consulting agreement it is party to with Grant White and Manu Sekhri (collectively, the "External Manager Internalization"); (iv) receipt by the Corporation of all applicable regulatory approvals in connection with the Offering; and (v) delivery of a notice from Mackie Research Capital Corporation confirming satisfaction of all conditions set out in (i) to (iv) above.
Termination of External Manager
The Corporation will no longer be pursuing the External Manager Internalization.
The independent directors of the Corporation unanimously voted to terminate the Management Agreement upon 30 days' notice to the External Manager. The board of directors of the Corporation has also appointed Manu Sekhri as Chief Executive Officer replacing Grant White in that role. It is expected that Manu Sekhri will enter into an employment agreement with the Corporation on terms to be agreed.
About Quantum International Income Corp.
Quantum is a healthcare company focused on delivering national integrated health solutions in the United States. The Corporation seeks to back management teams with strong operational track records and deep healthcare experience. The Corporation intends for acquired businesses or assets to fit synergistically within a strategic framework, have a proven operating history, opportunities for standalone growth and, potentially in some cases, national expansion. Potential acquisition targets will be in various related areas of the United States healthcare industry in different geographic regions to allow for diversification.
Cautionary Statement Regarding Forward-Looking Information
This release contains certain information which, as presented, constitutes "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information involves statements that relate to future events and often addresses expected future business and financial performance, containing words such as "expect" and "intend", statements that an action or event "may" or "will" be taken or occur, or other similar expressions and includes, but is not limited to, statements about the obligation and ability of the Corporation to return to the holders of 38,096,000 Subscription Receipts an amount equal to the Offering Price per Subscription Receipt; the Corporation's possible acquisition of Columbus Hospital LTACH; that the Corporation will no longer will be pursuing the External Manager Internalization and that the External Manager will be terminated upon 30 days' notice; and that the Corporation will enter into an employment agreement with Manu Sekhri on terms to be agreed. These statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of the Corporation to control or predict, and which may cause Quantum's actual results, performance or achievements to be materially different from those expressed or implied thereby, including, but not limited to, risks related to the inability by Quantum or other parties to return to the holders of 38,096,000 Subscription Receipts an amount equal to the Offering Price per Subscription Receipt, to continue to pursue to the Proposed LTACH Acquisition, as well as other factors discussed in the Corporation's annual information form dated July 23, 2015, (the "Annual Information Form") and the Corporation's final short form prospectus supplement dated July 21, 2015, which are available on SEDAR under Quantum's profile at www.sedar.com. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, in the Annual Information and Prospectus, and as otherwise disclosed from time to time on SEDAR under Quantum's profile at www.sedar.com.
Unless otherwise specified in this press release, information contained in this press release is current as of the date of this press release. Unless otherwise specified, all dollar amounts herein refer to Canadian dollars. The Corporation undertakes no obligation to update forward-looking statements except as may be required by applicable Canadian securities laws. Readers are cautioned against attributing undue certainty to forward-looking statements.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Quantum International Income Corp
For further information: Please contact Quantum International Income Corp: Manu K. Sekhri, Chief Executive Officer, Tel. (416) 477-3414, firstname.lastname@example.org; Investor Relations: LodeRock Advisors Inc., Ross Marshall - Investor Relations, 1-416-526-1563, email@example.com