TORONTO, Aug. 15,
2023 /CNW/ - Greenbrook TMS Inc. (NASDAQ: GBNH)
("Greenbrook" or the "Company") today announced the
Company entered into a note purchase agreement (the "Note
Purchase Agreement") with Greybrook Health Inc. ("Greybrook
Health") and certain affiliates of Madryn Fund Administration,
LLC ("Madryn") whereby the Company issued and sold
$2 million aggregate principal amount
of unsecured subordinated convertible promissory notes (the
"Subordinated Convertible Notes") to Greybrook Health and
certain affiliates of Madryn.
![Greenbrook TMS logo (CNW Group/Greenbrook TMS Inc.) Greenbrook TMS logo (CNW Group/Greenbrook TMS Inc.)](https://mma.prnewswire.com/media/2186207/Greenbrook_TMS_Inc__GREENBROOK_TMS_OBTAINS_ADDITIONAL_DEBT_FINAN.jpg)
The Subordinated Convertible Notes bear interest at a rate
consistent with the Company's credit facility with Madryn (the
"Madryn Credit Facility") and mature on March 31, 2028, or earlier in the event of a
change of control, acceleration of other indebtedness or six (6)
months following repayment or refinancing of all loans under the
Madryn Credit Facility (the "Madryn Loans"). The
Subordinated Convertible Notes are subordinated to the Madryn Loans
and to the obligations of the Company under the secured promissory
note and guaranty agreement with Neuronetics, Inc.
The Subordinated Convertible Notes are convertible into common
shares of the Company ("Common Shares") at any time at the
election of holders of the Subordinated Convertible Notes, or on a
mandatory basis by all noteholders at the request of Madryn, at a
conversion price (the "Conversion Price") equal to the
lesser of (a) 85% of the closing price per Common Share on Nasdaq
or any other market as of the closing date for such Subordinated
Convertible Notes (as adjusted from time to time in accordance with
the note purchase agreement, the "Reference Conversion
Price"), with the Reference Conversion Price in effect as of
August 15, 2023 being
$0.3315 and (b)(i) 85% of the 30-day
volume weighted average trading price of the Common Shares prior to
conversion, or (ii) if the Common Shares are not listed on any of
Nasdaq or another trading market at the time of conversion, a per
share price based equal to 85% of the fair market value per Common
Share as of such date (for such purposes, determined in good faith
by the Company's board of directors, acting reasonably); provided,
that, in any event, the Conversion Price shall not be lower than
$0.078. The Conversion Price is
also subject to customary anti-dilution adjustments.
The proceeds of the Subordinated Convertible Notes are expected
to be used by the Company for general corporate and working capital
purposes. The Company is also currently considering additional
near-term financing options to address its future liquidity
needs.
In addition, the Company entered into an amendment to the Madryn
Credit Facility to extend the period during which the Company's
minimum liquidity covenant is reduced from $3,000,000 to $300,000 to August 31,
2023.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy nor shall there be any sale of any
of the Subordinated Convertible Notes or the Common Shares issuable
upon conversion thereof (collectively, the "Securities") in
any jurisdiction in which such offer, solicitation or sale would be
unlawful. The Securities have not been and will not be registered
under the U.S. Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and may not be
offered or sold within the United
States or to, or for account or benefit of, U.S. persons (as
defined in Regulation S under the U.S. Securities Act) except
pursuant to an available exemption under the U.S. Securities Act
and compliance with, or exemption from, applicable U.S. state
securities laws.
MI 61-101 Disclosure
Madryn and Greybrook Health are insiders 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"). The Company is relying on
exemptions from the formal valuation and minority shareholder
approval requirements available under MI 61-101. The Company is
exempt from the formal valuation requirement in section 5.4 of MI
61-101 in reliance on section 5.5(a) of MI 61-101 as the fair
market value of the transaction, insofar as it involves interested
parties, is not more than 25% of the Company's market
capitalization. Additionally, the Company is exempt from the
minority shareholder approval requirement in section 5.6 of MI
61-101 in reliance on section 5.7(1)(a) as the fair market value of
the transaction, insofar as it involves interested parties, is not
more than 25% of the Company's market capitalization.
About Greenbrook TMS
Inc.
Operating through 133 Company-operated Treatment Centers
(following completion of the Restructuring Plan), Greenbrook is a
leading provider of Transcranial Magnetic Stimulation
("TMS") and Spravato® (esketamine nasal spray), FDA-cleared,
non-invasive therapies for the treatment of Major Depressive
Disorder ("MDD") and other mental health disorders, in
the United States. TMS therapy
provides local electromagnetic stimulation to specific brain
regions known to be directly associated with mood regulation.
Spravato® is offered to treat adults with treatment-resistant
depression and depressive symptoms in adults with MDD with suicidal
thoughts or actions. Greenbrook has provided more than 1.2 million
treatments to over 38,000 patients struggling with depression.
Cautionary Note Regarding
Forward-Looking Information
Certain information in this press release, including, but not
limited to, information with respect to the Subordinated
Convertible Notes and the anticipated proceeds therefrom, ,
constitute forward-looking information within the meaning of
applicable securities laws in Canada and the
United States, including the United States Private
Securities Litigation Reform Act of 1995. In some cases, but not
necessarily in all cases, forward-looking information can be
identified by the use of forward-looking terminology such as
"plans", "targets", "expects" or "does not expect", "is expected",
"an opportunity exists", "is positioned", "estimates", "intends",
"assumes", "anticipates" or "does not anticipate" or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might", "will" or "will
be taken", "occur" or "be achieved". In addition, any statements
that refer to expectations, projections or other characterizations
of future events or circumstances contain forward-looking
information. Statements containing forward-looking information are
not historical facts but instead represent management's
expectations, estimates and projections regarding future
events.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by the Company as of the date of this press release, are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements or future events or developments to
differ materially from those expressed or implied by the
forward-looking statements, including, without limitation:
macroeconomic factors such as inflation and recessionary
conditions, substantial doubt regarding the Company's ability to
continue as a going concern due to recurring losses from
operations; inability to increase cash flow and/or raise sufficient
capital to support the Company's operating activities and fund its
cash obligations, repay indebtedness and satisfy the Company's
working capital needs and debt obligations; prolonged decline in
the price of the Common Shares reducing the Company's ability to
raise capital; inability to satisfy debt covenants under the
Company's credit facility and the potential acceleration of
indebtedness; including as a result of an unfavorable decision in
respect of the litigation with Benjamin
Klein; risks related to the ability to continue to negotiate
amendments to the Company's credit facility to prevent a default;
risks relating to the Company's ability to deliver and execute on
the Restructuring Plan and the possible failure to complete
the Restructuring Plan on terms acceptable to the Company or its
suppliers (including Neuronetics Inc.), or at all; risks relating
to maintaining an active, liquid and orderly trading market for
Common Shares as a result of the Company's potential inability to
regain compliance with the Nasdaq Stock Market's listing rules;
risks relating to the Company's ability to realize expected
cost-savings and other anticipated benefits from the Restructuring
Plan; risks related to the Company's negative cash flows, liquidity
and its ability to secure additional financing; increases in
indebtedness levels causing a reduction in financial flexibility;
inability to achieve or sustain profitability in the future;
inability to secure additional financing to fund losses from
operations and satisfy the Company's debt obligations; risks
relating to strategic alternatives, including restructuring or
refinancing of the Company's debt, seeking additional debt or
equity capital, reducing or delaying the Company's business
activities and strategic initiatives, or selling assets, other
strategic transactions and/or other measures, including obtaining
bankruptcy protection, and the terms, value and timing of any
transaction resulting from that process; claims made by or against
the Company, which may be resolved unfavorably to us; risks
relating to the Company's dependence on Neuronetics Inc. as its
exclusive supplier of TMS devices. Additional risks and
uncertainties are discussed in the Company's materials filed with
the Canadian securities regulatory authorities and the United
States Securities and Exchange Commission from time to time,
available at www.sedarplus.ca and www.sec.gov, respectively.
These factors are not intended to represent a complete list of the
factors that could affect the Company; however, these factors
should be considered carefully. There can be no assurance that such
estimates and assumptions will prove to be correct. The
forward-looking statements contained in this press release are made
as of the date of this press release, and the Company expressly
disclaims any obligation to update or alter statements containing
any forward-looking information, or the factors or assumptions
underlying them, whether as a result of new information, future
events or otherwise, except as required by law.
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SOURCE Greenbrook TMS Inc.