MONTREAL, June 26, 2015 /CNW Telbec/ - Extenway Solutions
Inc. ("Extenway") (TSXV: EY) is pleased to announce the
closing, as of June 26, 2015 (the
"Closing Date"), of a secured equipment loan from Knight
Therapeutics Inc. ("Knight") to Extenway in the amount of
$800,000 (the "Equipment
Loan") and a concurrent private placement of secured
convertible debentures of Extenway (the "Debentures") in the
aggregate principal amount of $800,000 (the "Offering"), for combined
gross proceeds to Extenway of $1,600,000.
The proceeds from the Equipment Loan and the Offering will be
used to finance the purchase of equipment (the "Equipment")
to be used in the installation of Extenway's integrated
bedside terminals in hospitals under existing contracts and
for working capital purposes.
"We are thrilled to announce this new financial and strategic
partnership with Knight which represents a new beginning for
Extenway, said John McAllister,
President and CEO of Extenway. "With access to financing from
Knight, we can now accelerate the installations in the hospitals
for which contracts have already been won and focus on our
execution strategy that will create long-term value for our
shareholders."
"Even though Knight is a specialty pharmaceutical company
engaged in developing, acquiring, licensing, marketing and
distributing pharmaceutical products, the uniqueness and
predictable cash flows of Extenway's business attracted us to
supporting Extenway's growth" commented Jonathan Ross Goodman, President and CEO of
Knight.
Recent Developments
On December
15, 2014, Extenway announced the signing of a contract with
Mount Sinai Hospital in Toronto,
Ontario to install its integrated bedside terminals and
provide "infotainment" services to 350 beds in the hospital
facility. Including these recently announced terminals, Extenway
now has 5,275 bedside terminals installed or selected to be
installed in 20 hospitals in the provinces of Quebec and Ontario. In addition, Extenway wishes to
announce the following current developments:
Current Tenders
Extenway has responded to a number of
calls for tenders in the provinces of Quebec and Ontario to install bedside terminals and
provide "infotainment" and medical services to 1,240 beds in
various hospitals.
Future Tenders
Extenway plans to respond to additional
tenders in the forthcoming twelve months, representing potential
contracts for the installation and services of an additional 7,850
bedside terminals.
US Market
Extenway has begun to penetrate the US
Market with its distributor, Flowcorn. Presentations to
hospital groups and to Federal government entities are ongoing.
Equipment Loan
The Equipment Loan was completed pursuant to the terms and
conditions of a secured loan agreement (the "Loan
Agreement") between Extenway, as borrower, and Knight, as
lender. The Equipment Loan shall bear interest at a rate of 15% per
annum to be paid quarterly and shall decrease to a rate of 13.5%
per annum upon satisfaction of certain conditions precedent,
including an equity raise requirement. The Equipment Loan shall
mature six (6) years from its conclusion, on June 25, 2021. Extenway shall pay to Knight an
amount equal to 6.5% of the Equipment Loan per quarter,
representing capital and interest, commencing on September 2017 and payable at the end of each
remaining quarter thereafter during the term of the Equipment Loan,
with the remaining outstanding principal and accrued and unpaid
interest being due and payable on maturity.
Offering
The Debentures are secured, bear interest at a rate of 10% per
annum, and will mature on the earlier of: (i) the closing date of a
subsequent equity financing by Extenway for minimum gross proceeds
of $4,200,000 (the "Subsequent
Equity Financing"); and (ii) five (5) years from the Closing
Date (collectively, the "Maturity Date").
The principal amount of the Debentures and, subject to the prior
acceptance of the TSX Venture Exchange (the "Exchange"), any
accrued interest thereon, shall automatically be converted into
common shares of Extenway (each, a "Share") upon closing of
the Subsequent Equity Financing. The conversion price of the
capital and interest (subject, for the interest, to the prior
approval of the Exchange) shall be equal to the price per Share of
the securities to be issued under the Subsequent Equity
Financing. The principal amount may be converted, at the
option of the holder, from the date that is twelve (12) months
after the Closing Date until the Maturity Date. Subject to
customary adjustment provisions, the conversion price of the
capital shall be equal to $0.08 per
Share, if conversion is effected within twelve (12) months of the
Closing Date, or $0.10 per Share, if
conversion is effected thereafter. The conversion price of
the interest shall be equal to a price per Share that is not less
than the market price of the Shares at the time the accrued
interest become payable.
Caisse de dépôt et placement du Québec and John McAllister
Holdings Inc. (each, a "Related Party") reiterated their
confidence in Extenway and participated in the Offering by
subscribing for Debentures in the principal amounts of $600,000 and $100,000, respectively. The participation of each
Related Party in the Offering is considered a "related party
transaction" under Regulation 61-101 respecting Protection of
Minority Security Holders in Special Transactions (Québec)
("Regulation 61-101") and the corresponding Policy 5.9 of
the Exchange. Extenway relied on Sections 5.5(a) and 5.7(1)(a) of
Regulation 61-101, respectively, for exemptions from the formal
valuation and minority approval requirements under Regulation
61-101, as neither the fair market value of the Debentures issued
to the Related Parties, nor the amount of consideration paid
therefor, exceeds 25% of Extenway's market capitalization.
A material change report in respect of the related party
transactions was not filed at least 21 days in advance of the
Offering, as the terms of the Offering were not settled until
shortly before this announcement and Extenway wished to close the
Offering on an expedited basis for sound business reasons.
The Debentures and all underlying Shares which may be issued
upon the conversion of the Debentures (collectively, the
"Securities") are subject to a four-month plus one-day hold
period from the Closing Date, ending on October 27, 2015, pursuant to securities
legislation and the policies of the Exchange. The Securities have
not been nor will they be registered under the United States
Securities Act of 1933, as amended, or state securities laws, and
may not be offered or sold in the United
States or to an account for the benefit of U.S. persons,
absent such registration or an exemption from registration.
The Offering remains subject to the final approval of the
Exchange.
Security Interest
Extenway's obligations under the Loan Agreement and the terms of
the Debentures are secured by a first ranking security interest and
movable hypothec over the Equipment granted in favour of Knight and
the Debenture holders, with Knight retaining a 64% fractional
security interest in the Equipment and the Debenture holders
retaining a 36% fractional security interest in the Equipment.
About Extenway Solutions Inc.
Extenway Solutions is a supplier of client-focused solutions for
the healthcare industry. Services offered by Extenway include
interactive television, healthcare integrated bedside terminals for
patients, internet, entertainment, content integration,
advertising, education and the most promising and attractive
function, the medical integrated solutions. Extenway allows
organizations to optimize management and coordination of human
interactions as well as communications, information and
coordination. For further information, please visit extenway.com or
follow us on Twitter @Extenway.
About Knight Therapeutics Inc.
Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty
pharmaceutical company focused on acquiring or in-licensing
innovative pharmaceutical products for the Canadian and select
international markets. Knight's shares trade on TSX under the
symbol GUD. For more information about Knight Therapeutics Inc.,
please visit the Knight's web site at www.gud-knight.com or
www.sedar.com.
Disclaimer
Certain statements that appear in this news release constitute
forward-looking statements. These forward-looking statements relate
to future financial conditions, results of operations or business
of Extenway. These statements may be current expectations and
estimates about the markets in which Extenway operates and
management's beliefs and assumptions regarding these markets. These
statements involve significant risks and uncertainties which are
difficult to predict and assumptions which may prove to be
inaccurate. The results or events predicted in forward-looking
statements may differ materially from actual results or events.
Extenway disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. In particular,
forward-looking statements do not reflect the potential impact of
any merger, acquisitions or other business combinations or
divestitures that may be announced or completed after such
statements are made.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Extenway Solutions Inc.