Nightingale announces closing of $4.2 million investment led by Beedie Capital Partners
22 Sep, 2014, 07:00 ET
MARKHAM, ON, Sept. 22, 2014 /CNW/ - Nightingale Informatix Corporation ("Nightingale" or the "Company") (TSX-V: NGH), a provider of cloud-based electronic health record (EHR) software and related services is pleased to announce that on September 19, 2014, the Company closed a $4.2 million investment in the form of a secured term loan (the "Term Loan") by Beedie Capital Partners Fund I Limited Partnership, by its general partner, Beedie Capital Partners Inc. (the "Lender" or "BCP") and 1604697 Ontario Inc. (the "Participating Lender"), a company controlled by a related party to a director of the Company. The Term Loan represents an increase to the loan previously announced by the Company on August 25, 2014, resulting from the participation of the Participating Lender by way of a participation agreement.
"We are pleased to be investing in Nightingale at an important time in its evolution. We believe that with its strong existing customer base and the current financing supporting the introduction of Nexia, Nightingale can reinvigorate itself as a leader in the EMR space." says Randy Garg, Managing Partner of BCP.
"Beedie Capital is the right investor at this stage of the company. Their investment will help fuel our growth as we near the end of our transition phase to a pure SaaS business" said Sam Chebib, CEO of Nightingale." This investment will fund Nightingale's plan to launch Nexia, our next generation product to the Canadian and US markets."
The Term Loan bears interest at a rate of 12% per annum with monthly interest payments being due on the last day of each month and will mature on December 31, 2016. In connection with the Term Loan, the Lender and the Participating Lender were each issued 3,750,000 warrants to purchase common shares of the Company with an exercise price of $0.16 per common share. The warrants will expire on December 31, 2016 if not exercised prior to that time.
The Term Loan is secured by the Company's assets and is subordinated to certain defined senior indebtedness in the aggregate amount of up to $3.3 million. The Term Loan contains the customary covenants, including specific financial and change of control covenants. The Company paid a commitment fee equal to 2% of the principal amount of the Term Loan at the time of the closing of the Term Loan.
Proceeds from the Term Loan will be used for general working capital, to retire the $1.5 million bridge financing advanced by the Participating Lender in August 2014 and for general corporate purposes.
The participation in the Term Loan by the Participating Lender constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") and Policy 5.9 of the TSXV Corporate Finance Manual, because the Participating Lender is a company controlled by a party related to a director of the Company. Accordingly, prior to signing the Term Loan, the Board of Directors of the Company, excluding the director related to the party controlling the Participating Lender, approved the entry into the Term Loan. MI 61-101 requires a formal valuation and minority shareholder approval for a related party transaction unless an exemption is available. An exemption from the valuation requirement is available to the Company as no securities of the Company are listed on a specified exchange and an exemption from the minority shareholder approval requirement is available as the Term Loan is on commercial terms and is not convertible into or repayable in securities of the Company. The Company expects to release a material change report including details with respect to the related party transaction less than 21 days prior to the close of the Term Loan, which the Company deemed reasonable in the circumstances so as to be able to avail itself of the financing opportunity and complete the Term Loan in an expeditious manner.
The Company's outstanding $5 million aggregate principal amount of 10% Series C secured subordinated debentures ("Series C Debentures") are secured on all of the Company's and certain of its subsidiaries' present and after acquired property and assets and is subordinated to certain defined senior indebtedness in the aggregate amount of $7.5 million. Although the Series C Debentures may have been described as unsecured in certain of the Company's prior disclosure documents, the Company wishes to clarify and confirm that Series C Debentures are, and always have been, secured as disclosed in the press release announcing the issuance of the Series C Debentures on March 12, 2013 and as detailed in the Trust Indenture dated March 12, 2013 among the Company and Equity Financial Trust Company, as trustee, with respect to the Series C Debentures which is available on SEDAR.
For more than a decade, Nightingale (TSX-V: NGH) has been delivering innovative cloud-based Electronic Health Record (EHR) and Practice Management solutions to healthcare organizations across the United States and Canada. Our goal is to uncomplicate the day-to-day challenges of healthcare providers. We achieve this by creating software that is truly intuitive—minimizing training and maximizing adoption. We believe so strongly in building easy-to-use software that we structured our entire product team around user-centric design. Our clients are benefiting from this focus through a well-supported and robust solution that presents a holistic view of a person's well-being in a simple, clean interface, so that the best health decisions can be made. Nightingale – One Patient. One Record. www.nightingalemd.com
About Beedie Capital Partners
Beedie Capital Partners ("BCP") www.beediecapital.com provides highly flexible growth financing solutions (debt and/or equity) for small to mid-market companies across a wide variety of industry sectors. Managed by a small core team of decision makers, BCP is highly responsive, creative and flexible with terms, timing and transaction structure. BCP has been actively investing since its establishment in early 2011, with 14 portfolio investments (current and past) and now over $75 million invested or committed since inception. BCP is fully funded by Beedie Development Group, British Columbia's largest private industrial landlord and developer, established in 1954.
Forward Looking Statement
This press release contains "forward-looking statements" respecting the issuance and cancellation of securities of the Company within the meaning of applicable Canadian securities legislation. Generally, forward-looking statements can be identified by the use of forward- looking terminology such as "plans", "expects" or "does not expect", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may" ,"could", "would", "might", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Nightingale to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the speculative nature of the medical software industry, which is affected by numerous factors beyond Nightingale's control; the ability of Nightingale to successfully secure customer contracts and the timing of securing such contracts; the ability of Nightingale to launch its Nexia product on a timely and cost-effective basis; the ability of Nightingale to complete and successfully integrate its acquisitions on an accretive basis, Nightingale's access to debt and capital facilities, including compliance with current debt arrangements; the existence of present and possible future government regulation; the significant competition that exists in the EHR industry; the early stage of Nightingale's business, and risks associated with early stage companies, including uncertainty of revenues, markets and profitability and the need to raise additional funding. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Certain material factors or assumptions applied by management in making forward-looking statements, include without limitation, factors and assumptions regarding future trends in healthcare spending, economic conditions affecting Nightingale and North American economies; Nightingale's ability to continue to fund its business, rates of customer defaults, relationships with, and payments to lenders, as well as Nightingale's operating cost structure. In connection with the current announcement, there is no assurance that the Term Loan will be funded on the terms stated or at all.
Although Nightingale has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Nightingale does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws. Further information on Nightingale Informatix Corporation is available at www.sedar.com.
Neither the 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: Nightingale Informatix Corporation
For further information: Peter Cauley, CFO, Nightingale Informatix Corporation, Tel: 905-307-7870, [email protected]; Marc Lakmaaker, Senior Account Executive, TMX Equicom, Tel: 416-815-0700 ext. 248, [email protected]
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