Centric Health Strengthens Balance Sheet with Closing of $35.24 Million Private Placement

TORONTO, Nov. 26, 2019 /CNW/ - Centric Health Corporation ("Centric Health" or the "Company") (TSX: CHH), one of Canada's leading healthcare services companies, has now closed its previously announced private placement of common shares and convertible debentures for gross proceeds of $35,240,000 (the "Private Placement").

The Private Placement was approved by shareholders of the Company at a special meeting of shareholders held on November 14, 2019 (the "Meeting"). Pursuant to the Private Placement, the Company issued 64,500,000 common shares of the Company ("Common Shares") at $0.12 per share for gross proceeds of $7,740,000 and 8.25% unsecured debentures convertible into Common Shares in the aggregate principal amount of $27,500,000 (the "Convertible Debentures"). The net proceeds of the Private Placement will be used by the Company to repay senior indebtedness and for working capital purposes.

The investors in the Private Placement included Yorkville Asset Management Inc. for and on behalf of certain managed funds ("Yorkville"), and certain existing major shareholders of the Company, including Ewing Morris & Co. Investment Partners Ltd., for and on behalf of certain funds and accounts managed by it ( "Ewing Morris") and Dr. Jack Shevel and certain entities over which Dr. Shevel exercises control or direction, together with certain related parties and joint actors ("Dr. Shevel"), and the Company's President and Chief Executive Officer, David Murphy.

Contemporaneously with the closing of the Private Placement, the Company also exchanged 30,000,000 convertible preferred shares of the Company (the "Preferred Shares") for $12,540,000 of 8% unsecured convertible debentures (the "Exchange Convertible Debentures") held by Ewing Morris (the "Exchange Transaction"). The Exchange Transaction was also approved by shareholders of the Company at the Meeting.

The Company is pleased to welcome Ralph Desando and Lyle Oberg to the Board of Directors (the "Board"), who are Yorkville's director nominees and were elected to the Board by shareholders at the Meeting as part of the approval of the Private Placement.

Mr. Desando has served as the Managing Director of Private Investments & Financial Planning at Yorkville since 2010. Previously, he was a Senior Manager of Tax at Deloitte LLP and has been a financial and management consultant for various companies.

Mr. Oberg has served as a member of Yorkville's Board of Directors since December 2018. He is also the Chief Policy and Medical Officer of The Flowr Corporation, a position which he has held since May 2017. Mr. Oberg has also held a number of positions within the Alberta Government, including, Minister of Social Services (1997-1999), Minister of Learning (1999-2005), Minister of Infrastructure and Transportation (2005-2006) and Minister of Finance (2006-2008).

"We are excited to welcome Yorkville as a new significant shareholder of Centric," said Kevin Dalton, Chairman of the Board. "The investment by Yorkville, Dr. Shevel and Ewing Morris demonstrates confidence in our Board and management, and better positions us for achieving our growth and acquisition objectives. On behalf of the Board, I would also like to welcome Ralph and Lyle as new directors. Their diverse backgrounds and significant industry experience and relationships will provide important strategic insight as we seek to achieve our stated objectives."

ADDITIONAL INFORMATION

Origin Merchant Partners acted as the Company's financial advisor on the Private Placement, and in connection therewith, received customary advisory fees, including 9,458,333 broker warrants (the "Broker Warrants"). 3,125,000 Broker Warrants entitle the holder to acquire one Common Share per Broker Warrant for a period of 24 months from the closing date at an exercise price of $0.12 per Common Share, and 6,333,333 Broker Warrants entitle the holder thereof to acquire one Common Share per Broker Warrant for a period of 24 months from the closing date at an exercise price of $0.15 per Common Share. 

Prior to closing the Private Placement and the Exchange Transaction, Yorkville did not own any securities of the Company. Pursuant to the Private Placement, Yorkville acquired 62,500,000 Common Shares, Convertible Debentures convertible into 133,333,333 Common Shares, and 4,400,000 warrants (the "Fee Warrants"), with each Fee Warrant entitling the holder to acquire one Common Share per Fee Warrant for a period of five years from the closing date at an exercise price of $0.25 per Common Share. Assuming the conversion of all of Yorkville's outstanding securities in the Company but no other conversion of convertible securities, Yorkville would own or exercise control or direction over 200,233,333 Common Shares, representing a 47.69% ownership interest in the Company.

Prior to closing the Private Placement and the Exchange Transaction, Dr. Shevel owned or exercised control or direction over 55,442,706 Common Shares, 314,998 Restricted Stock Units and 1,754,515 warrants, representing 26.17% of the Company's issued and outstanding shares on a partially diluted basis. Pursuant to the Private Placement, Dr. Shevel acquired Convertible Debentures convertible into 33,333,333 Common Shares. Assuming the conversion of all of Dr. Shevel's outstanding securities in the Company but no other conversion of convertible securities, Dr. Shevel would own or exercise control or direction over 90,845,552 Common Shares, representing a 28.61% ownership interest in the Company.

Prior to closing the Private Placement and the Exchange Transaction, Ewing Morris owned or exercised control or direction over 30,000,000 Preferred Shares with a liquidation preference value of $12,540,000 and John Ewing owned 182,917 Restricted Stock Units, representing 12.18% of the Company's issued and outstanding shares on a partially diluted basis. Pursuant to the Private Placement and Exchange Transaction, Ewing Morris acquired Convertible Debentures convertible into 16,666,667 Common Shares and Exchange Convertible Debentures convertible into 50,160,000 Common Shares. Assuming the conversion of all of Ewing Morris' outstanding securities in the Company but no other conversion of convertible securities, Ewing Morris would own or exercise control or direction over 67,009,584 Common Shares, representing a 19.19% ownership interest in the Company.

The securities acquired by Yorkville, Ewing Morris and Dr. Shevel (collectively, the "Principal Subscribers") were acquired for investment purposes. In the future, each of the Principal Subscribers, directly or indirectly, may acquire and/or dispose of securities of the Company through the market, privately or otherwise, as circumstances or market conditions may warrant.

Copies of the early warning reports to be filed by each Principal Subscriber in connection with the Private Placement and Exchange Transaction will be available on the Company's SEDAR profile once they have been filed in accordance with applicable securities laws, or, in the case of the early warning reports to be filed by Yorkville and Ewing Morris, may be obtained from Yorkville or Ewing Morris, respectively, at the addresses set out below:

For Yorkville:
Ralph Desando, Managing Director, Private Investments and Financial Planning
647-776-7481
Yorkville Asset Management Inc.
220 Bay Street, Suite 802
Toronto, ON
M5J 2W4

For Ewing Morris:
Ewing Morris & Co. Investment Partners Ltd.
1407 Yonge Street, Suite 500
Toronto, ON
M4T 1Y7

ABOUT CENTRIC HEALTH

Centric Health's vision is to be the leading provider of pharmacy and other healthcare services to Canadian seniors. The Company is one of Canada's leading, and most trusted providers of comprehensive Specialty Pharmacy services and solutions to seniors. We operate a large national network of pharmacy fulfilment centres that deliver high-volume solutions for the cost-effective supply of chronic medication and other specialty clinical pharmacy services, serving more than 31,000 residents in over 460 seniors communities (long-term care, retirement homes, and assisted living facilities) nationally.

With services that address the growing demand within the Canadian healthcare system, Centric Health's unparalleled national care delivery platform provides significant potential for future expansion and growth.

For more information, please visit www.centrichealth.ca.

SOURCE Centric Health Corporation