TORONTO, July 04, 2022 (GLOBE NEWSWIRE) -- Entourage Health Corp. (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE) (“Entourage” or the “Company”), a Canadian producer and distributor of award-winning cannabis products, is pleased to announce it has amended its existing senior secured credit facility entered into on March 29, 2019 (the “Senior Credit Facility”) between the Company and Bank of Montreal, and its existing second secured credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”), entered into on September 30, 2020 (the “Second Credit Facility”). The latest amendments to the Senior Credit Facility and Second Credit Facility modify the respective terms under which Entourage secured debt financing (the “Credit Facilities Amendments”).
Under the terms of the Credit Facilities Amendments, Entourage secured an extension of the maturity date of the Senior Credit Facility from June 30, 2022 to June 30, 2024, and of the Second Credit Facility from August 15, 2022 to December 31, 2024, subject to certain conditions, the terms for which are described herein.
“Today’s announcement reflects an important strategic advancement in securing improvements to our debt position and long-term capital structure as we align our liquidity resources with ongoing growth plans – all with the crucial support from our lenders,” said George Scorsis, CEO and Executive Chairman, Entourage. “As part of our corporate transformation, we are continuing to finesse our business operations to produce premium products for added market share growth, whilst assuring that our financial footing is stabilized. This added security provides all our stakeholders with confidence that we are moving tactically in the right direction to reach our profitability goals for long-term success.”
Senior Credit Facility Terms
Under the terms of the amendment of the Senior Credit Facility, the maturity date is extended to June 30, 2024, subject to the satisfaction of certain conditions subsequent by July 31, 2022, failing which the maturity date will instead become October 31, 2023. The Company will report on the completion of the applicable conditions subsequent on or before July 31, 2022.
The amendment of the Senior Credit Facility includes changes to certain financial covenants which are applicable to the Company, including but not limited to the inclusion of an EBITDA target covenant, as more particularly set out in the Credit Facilities Amendments. Additionally, the Company secured deferral of certain of its financial covenants to January 1, 2024.
The Senior Credit Facility is secured by the assets of the Company and its subsidiaries, including the Company’s production facilities. Bank of Montreal’s security under the Senior Credit Facility is in first position.
Second Credit Facility Terms
Under the terms of the amendment of the Second Credit Facility, the maturity date is extended to December 31, 2024, subject to the satisfaction of certain conditions subsequent by July 31, 2022, failing which the maturity date will instead become April 30, 2024. The amendment of the Second Credit Facility includes amendments to the financial covenants that mirror those amendments to the Senior Credit Facility. The Company also secured deferral of certain of its financial covenants to January 1, 2024.
The Second Credit Facility continues to bear an interest rate of 15.25% per annum with the option, at the Company’s discretion, to capitalize interest in lieu of cash payments of interest. The Second Credit Facility is secured by the assets of the Company and its subsidiaries, including the Company’s production facilities, and contains customary financial and other covenants. LPF’s security under the Second Credit Facility is in second position to the Company’s senior creditor.
A copy of the Senior Credit Facility amendments and Second Credit Facility amendments will be made available under the Company’s profile on SEDAR at www.sedar.com.
Related Party Transaction
LPF is an insider of the Company as it owns greater than 10% of the common shares of the Company. Accordingly, the amending of the Second Credit Agreement represents a “related party transaction” under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on the exemption from minority shareholder approval requirements under MI 61-101 as the Second Credit Facility is considered a non-equity loan as described under Section 5.7(f) of MI 61-101, and obtained by the Company on reasonable terms that are no less advantageous to the Company than if the Second Credit Facility was obtained from an arm’s length party. The funds borrowed under the Second Credit Facility are not convertible into or repayable by the issuance of equity or voting securities of the Company. The material change report will not be filed more than 21 days prior to the entering into of the amended Second Credit Agreement due to the timing of the announcement and closing thereof occurring in less than 21 days.
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About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent company of Entourage Brands Corp. (formerly WeedMD RX Inc.) and CannTx Life Sciences Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a state-of-the-art hybrid greenhouse and processing facility located on 158-acres in Strathroy, ON; a fully licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction; and a micropropagation, tissue culture and genetics centre-of-excellence in Guelph, Ontario. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channeled distribution strategy. Starseed’s industry-first, exclusive partnership with LiUNA, the largest construction union in Canada, along with employers and union groups complements Entourage’s direct sales to medical patients. Entourage’s elite adult-use product portfolio includes Color Cannabis, Saturday Cannabis and Royal City Cannabis Co.– sold across eight provincial distribution agencies. The Company also maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart. It is the exclusive Canadian producer and distributor of award-winning U.S.-based wellness brand Mary’s Medicinals sold in both medical and adult-use channels. Under a collaboration with The Boston Beer Company subsidiary, Entourage is also the exclusive distributor of cannabis-infused beverages ‘TeaPot’ in Canada, expected to launch in 2022.
For more information, please visit us at www.entouragehealthcorp.com
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For further information, please contact:
For Investor Enquiries:
Valter Pinto or Scott Eckstein
KCSA Strategic Communications
1-212-896-1254
entourage@kcsa.com
investor@entouragecorp.com
For Media Enquiries:
Marianella delaBarrera
SVP, Communications & Corporate Affairs
416-897-6644
marianella@entouragecorp.com
Forward Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon Entourage's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified by the use of forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy. Forward-looking information included in this press release includes, but is not limited to, statements in respect of the satisfaction of certain conditions of the Credit Facilities Amendments.
The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of fact. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada generally; the ability of Entourage to implement its business strategies; the COVID-19 pandemic; competition; crop failure; and other risks.
Any forward-looking information speaks only as of the date on which it is made, and, except as required by law, Entourage does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Entourage to predict all such factors. When considering this forward-looking information, readers should keep in mind the risk factors and other cautionary statements in Entourage’s disclosure documents filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com. The risk factors and other factors noted in the disclosure documents could cause actual events or results to differ materially from those described in any forward-looking information.
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