EARLY WARNING RELEASE
TORONTO, March 24, 2020 /CNW/ - Remedy Capital Corporation ("RCC"), 2642943 Ontario Inc. ("264"), KAM Trust, The Calderwood 2015 Family Trust, The Peter K. Brown 2015 Trust and Jeff May (collectively, the "Acquirors") report that they have entered into an agreement with Centric Health Corporation ("Centric Health"), 2745995 Ontario Inc., The Moody (2019) Family Trust and Bruce Moody (the "Purchase Agreement") pursuant to which Centric Health has agreed to acquire Remedy Holdings Inc. and the Remedy'sRx specialty pharmacy business for a purchase price of up to $44 million (the "Transaction").
Pursuant to the Purchase Agreement and subject to the satisfaction of certain closing conditions, it is expected that RCC, KAM Trust, The Calderwood 2015 Family Trust, The Peter K. Brown 2015 Trust and Jeff May will acquire beneficial ownership of an aggregate of $23,000,000 of common shares of Centric Health ("Common Shares") upon closing of the Transaction at an implied price of $0.184 per Common Share, subject to certain adjustments in the event that Centric Health on or prior to closing of the Transaction announces or enters into a definitive agreement in respect of, or consummates, any offering or private placement or other issuance of Common Shares (or securities which are exchangeable or convertible into Common Shares) to any person for consideration of less than $0.184 per Common Share (the "Consideration Share Price").
It is presently anticipated that upon closing of the Transaction, and based on an issuance price of $0.184 per Common Share and the 295,126,763 issued and outstanding Common Shares presently outstanding (i) 119,946,554 Common Shares will be issued to RCC and will represent approximately 28.6% of the issued and outstanding Common Shares, (ii) 1,145,489 Common Shares will be issued to KAM Trust and will represent approximately 0.3% of the issued and outstanding Common Shares, (iii) 981,934 Common Shares will be issued to The Calderwood 2015 Family Trust and will represent approximately 0.2% of the issued and outstanding Common Shares, (iv) 981,934 Common Shares will be issued to The Peter K. Brown 2015 Trust and will represent approximately 0.2% of the issued and outstanding Common Shares, and (v) 1,944,086 Common Shares will be issued to Jeff May and will represent approximately 0.5% of the issued and outstanding Common Shares.
The consideration payable to RCC and 264 also includes (i) $4 million in cash payable in one year after closing, or if Centric Health is unable to pay any portion thereof in cash, in Common Shares at a price equal to the lower of the Consideration Share Price or the 60-day volume-weighted average share price of the Common Shares at such time and (ii) a $4 million promissory note payable in 18 months after closing in cash, which if unpaid, is convertible by RCC and 264 into Common Shares at a price equal to the lower of the Consideration Share Price or the 60-day volume-weighted average share price of the Common Shares at such time. In addition, up to $5 million of additional cash consideration is payable during the two year period after closing of the Transaction if certain performance targets are achieved.
The Transaction is expected to close in the second quarter of 2020, subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals and the consent of Centric Health shareholders. Under applicable Toronto Stock Exchange policies, Centric Health is required to obtain shareholder approval for the Transaction, which Centric Health expects to satisfy by providing the Toronto Stock Exchange with written evidence that holders of more than 50% of the Common Shares support the Transaction.
RCC and 264 are controlled by Bruce Moody and are joint actors. Each of the KAM Trust, The Calderwood 2015 Family Trust, The Peter K. Brown 2015 Trust and Jeff May may be joint actors with RCC and 264 as a result of entering into the Purchase Agreement together with RCC and 264. However, none of KAM Trust, The Calderwood 2015 Family Trust, The Peter K. Brown 2015 Trust or Jeff May intends to act jointly or in concert with Bruce Moody, RCC, 264 or any of their respective joint actors with respect to any securities of Centric Health from and after closing of the Transaction.
The Acquirors are acquiring their Common Shares for investment purposes. The Acquirors may, from time to time, acquire additional Common Shares or securities convertible into Common Shares, dispose of such securities or continue to hold the securities of Centric Health. The Acquirors intend to evaluate their investment in Centric Health on a continuing basis and such holdings may be decreased or increased in the future, subject to certain contractual restrictions agreed to with Centric Health.
In accordance with National Instrument 62-103, an Early Warning Report with additional information in respect of the foregoing matters will be filed in respect of the Transaction. A copy of such report may be obtained from the SEDAR profile of Centric Health at www.sedar.com.
Centric Health's head office is located at 20 Eglinton Avenue West, Suite 2100, Toronto, Ontario, Canada M4R 1K8. The head office of RCC and 264 is located at 675 Cochrane Drive, Suite 110, North Tower, Markham, Ontario, Canada L3R 0B8.
SOURCE Remedy Capital Corporation
For further information: Please refer to the early warning report filed on SEDAR or contact Michelle Bertagnolli on behalf of the Acquirors at 647.794.3385.