– Holders of $9,080,000 principal amount $15 Million Notes Agree to Extend Maturity to July 31, 2017 –
TORONTO, April 11, 2016 /CNW/ - Centric Health Corporation ("Centric Health" or the "Company") (TSX: CHH) today announced that holders of $9,080,000 principal amount of the Company's $15,000,000 subordinated, unsecured 5.5% convertible notes (the "Noteholders") maturing April 30, 2016 ("Convertible Notes") have agreed to extend the maturity date of their Convertible Notes to July 31, 2017 in accordance with the terms and conditions of a previously announced extension offer (the "Extension Offer"). This represents approximately 61% of the principal outstanding Convertible Notes with the remaining approximately 39% to be redeemed in cash at 100% of par value. An aggregate of approximately 75% of the Noteholders that agreed to the Extension Offer are insiders of the Company.
"The refinancing and reduction of the April 2016 Convertible Note's represents another meaningful step by Centric Health to significantly reduce leverage and interest expense and simplify its balance sheet," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "These actions pave the way for increased financial flexibility to execute on our strategy and create meaningful, sustainable stakeholder value. The support for the strategy is demonstrated by the significant participation by insiders in the Amended and Restated Convertible Notes."
Extension of 5.5% April 2016 Convertible Notes
The Extension Offer was made on March 22, 2016 pursuant to which the Company made an offer to the Noteholders on the following terms: (i) the maturity date would be extended from April 30, 2016 to July 31, 2017, (ii) the interest rate payable under the Notes would be increased from 5.5% to 6.5% from and including May 1, 2016 to July 31, 2017 and (iii) the conversion price would be decreased from $0.9229 to $0.52 from and including May 1, 2016 to July 31, 2017 (collectively, the "Amended 2016 Note Terms"). The Noteholders were notified by the Company that if such election was not made in accordance with the terms and conditions set out under the Extension Offer, their Convertible Notes would be repaid in cash at par plus accrued and unpaid interest on May 2, 2016. The Noteholders were further notified that on completion of the offer on April 8, 2016 (the "Offer Extension Date"), the holders of the Convertible Notes who accepted the Company's offer would receive an amended subordinated, unsecured convertible note of the Company on the Amended 2016 Note Terms (the "Amended and Restated Convertible Note") and would receive a cash consent fee of 1.333% of the principal amount of the Convertible Notes that the Noteholders choose to extend, to be paid on May 2, 2016 (the "Cash Consent Fee").
The Company will deliver Amended and Restated Convertible Notes to the Noteholders who agreed to the Extension Offer on or before April 15, 2016 and will pay such Noteholders the Cash Consent Fee on May 2, 2016. The Noteholders holding the remaining $5,920,000 principal outstanding Convertible Notes will be repaid at par plus accrued and unpaid interest on May 2, 2016.
As of completion of the partial repayment of the Convertible Notes, since the beginning of 2016, the Company will have repaid more than $213 million of debt, reducing its outstanding debt as of December 31, 2015 by more than two-thirds, lowering its total net debt to Adjusted EBITDA ratio to 5.7 times from 9.7 times, and reducing its annual interest expense by $18.7 million.
The partial repayment of the Convertible Notes will be funded by proceeds from the sale of the Company's Physiotherapy, Rehabilitation and Medical Assessments operations on December 31, 2015. Immediately following redemption of the Convertible Notes, the Company will have $20.5 million in proceeds remaining.
About Centric Health
Centric Health's vision is to be Canada's most respected provider and brand in the independent healthcare sectors in which it operates, world renowned for delivering the highest levels of quality care and outcomes, innovative solutions and value to patients, clients and stakeholders. To this end, Centric Health primarily focuses on two core healthcare businesses:
- The Specialty Pharmacy division is composed of a growing national network of fulfilment centres that offer high-volume solutions for the cost effective supply of chronic medication and other speciality clinical services, serving more than 25,000 residents in over 300 seniors communities (long term care facilities, retirement homes and assisted living facilities) nationally. The Specialty Pharmacy division also provides pharmaceutical dispensing services for employees insured by corporate health plans.
- The Surgical & Medical Centres division is Canada's largest independent surgical provider operating six facilities across four provinces. It serves a diversified customer base with private paid non-insured surgeries and diagnostics, government outsourcing of insured surgeries and diagnostics and other procedures funded by third-party payors (including Workers Compensation) and is the proud owner of Canada's first Centre of Excellence in Metabolic and Bariatric Surgery.
With national networks of facilities in each of its businesses, deep knowledge and experience of healthcare delivery and extensive, trusted relationships with payers, physicians, and government agencies, the Company is uniquely positioned to address current and future healthcare needs in growing markets as the Canadian healthcare industry continues to evolve over the medium to long term.
This press release contains statements that may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements specifically related to the intention to purchase Notes, payment of the Offer Price, statements regarding business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Centric Health and described in the forward-looking statements contained in this press release. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits Centric Health will derive there-from.
SOURCE Centric Health Corporation
For further information: Daniel Gagnon, Chief Financial Officer, Centric Health, 416-619-9417, email@example.com; Lawrence Chamberlain, Investor Relations, NATIONAL Equicom, 416-848-1457, firstname.lastname@example.org