Greenbrook TMS Inc. (NASDAQ:GBNH) (“Greenbrook” or the “Company“) today announced that it has entered into the twenty-first amendment (the “Amendment“) to the Company’s credit facility (the “Credit Facility“) with affiliates of Madryn Asset Management, LP (“Madryn“). As part of the Amendment, the Company secured an additional US$4,015,548.22 in senior secured term loans from Madryn under the Credit Facility (the “New Loan“). After giving effect to the New Loan, the Company has an aggregate amount of approximately US$76 million outstanding under the Credit Facility (collectively, the “Loans“).
The proceeds of the New Loan is expected to be used by the Company to fund certain debt service obligations of the Company and for general corporate and working capital purposes. The Company is also currently considering additional near-term financing options to address its future liquidity needs.
The Amendment also provides Madryn with the option to convert up to approximately US$365,050 of the outstanding principal amount of the New Loan into common shares of the Company (“Common Shares“) at a conversion price per share equal to US$1.90 (the “Conversion Price“), subject to customary anti-dilution adjustments (the “Conversion Instrument“). This conversion feature corresponds to the conversion provisions for the Loans previously issued under the Credit Facility, which provide Madryn with the option to convert a portion of the outstanding principal amount of the Loans into Common Shares at the Conversion Price. After giving effect to the issuance of the Conversion Instrument, Madryn has the option to convert up to an aggregate of approximately US$7.0 million of the outstanding principal amount of the Loans into Common Shares at the Conversion Price.
The Amendment also extends the period during which the Company’s minimum liquidity covenant is reduced from US$3,000,000 to US$300,000 to January 15, 2024.
MI 61-101 Disclosure
Madryn is an insider of the Company. Accordingly, the foregoing transactions are considered “related party transactions” for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“) which, absent any available exemption, would require a formal valuation and minority approval under MI 61-101. The board of directors of the Company (including all independent directors) unanimously determined in good faith that the Company may rely on the “financial hardship” exemption from the formal valuation and minority approval requirements set out in Section 5.5(g) and Section 5.7(e) of MI 61-101 with respect to such transactions, given that the Company is in serious financial difficulty, the transactions are designed to improve the financial position of the Company, and the exemption provided for in Section 5.5(f) of MI 61-101 is not available, as the transactions contemplated are not subject to court approval under bankruptcy or insolvency law. In addition, the Company has one or more independent directors who have determined that the terms and conditions of the transactions are reasonable for the Company in the circumstances and are in its best interests. Further information required by MI 61-101 in connection with the foregoing transactions will be set forth in the Company’s material change report to be filed under the Company’s issuer profile on SEDAR+ at www.sedarplus.com if and as required by MI 61-101. The material change report will be filed less than 21 days before the closing of the foregoing transactions, as the shorter period was necessary in order to permit the Company to complete the transactions in a timeframe consistent with usual market practice for transactions of this nature and in order to expeditiously address the Company’s immediate liquidity needs.
