Eat Well Group Announces Refinancing Transaction led by Business Development Bank of Canada (BDC)

Rhea-AI Summary

Eat Well Investment Group Inc. (CNSX:EWG, US:EWGFF) has entered into non-binding term sheets for refinancing credit facilities totaling up to $40MM with the Business Development Bank of Canada and a private lender. This refinancing is expected to decrease interest expenses significantly, enhancing cash flow by approximately $1.9MM annually. The refinancing includes a secured loan of $22.5MM at 5.65% over 20 years and converts $8MM of existing debt into a convertible loan with a 15% interest rate.

Positive

• Annual cash flow increase of approximately $1.9 million due to reduced interest payments.
• Interest rates reduced from 14% to a blended rate of 9.2%.
• Monthly interest savings of $158,500, or 34%.
• Debt maturity extended by up to 20 years.
• Establishes a long-term relationship with BDC, a supportive lender.

Negative

• Convertible loan accrues high interest at 15%, which could increase debt burden.
• The remaining $7.5 million of Existing Facilities stays on less favorable terms.

The refinanced credit facilities will provide significant interest savings, enabling approximately $1.9MM of added annual cash flow for accelerated support across its subsidiaries and investments

 

VANCOUVER, British Columbia--(BUSINESS WIRE)--

 

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Eat Well Investment Group Inc. (the “Company” or “Eat Well” or “EWG”) (CN:EWG) (US:EWGFF) (FRA:6BC0), a leading plant-based food ingredient and CPG company, is pleased to announce it has signed non-binding term sheets with the Business Development Bank of Canada (“BDC”) and a private lender (the “Private Lender”) to refinance the Company’s existing revolving credit facilities of up to $40,000,000 with its senior lender (the “Exiting Credit Facilities”) (collectively, the “Refinancing Transaction”). The Refinancing Transaction will significantly reduce the Company’s interest payments while amortizing repayment by up to 20 years.

The following is a summary of the material terms of the Refinancing Transaction:

• BDC will provide a secured loan of $22,500,000 at a fixed rate of 5.65% per annum, payable monthly and amortizing over a 20-year period, which will be used to repay a portion of the Existing Credit Facilities;
• BDC will provide a secured loan of $2,000,000 at a fixed rate of 8.8% per annum, payable monthly and amortizing over a 7-year period, which will be used to repay a portion of the Existing Credit Facilities;
• The Private Lender will convert $8,000,000 of the Existing Credit Facilities into a secured convertible loan (the “Convertible Loan”), convertible into common shares of the Company (“Common Shares”) at a price to be established in the context of the market price of the Common Shares on the date the Convertible Loan is issued, and accruing interest at a rate of 15% per annum, payable monthly, and repayable 18 months after closing;
• In connection with the Convertible Loan, the Company will issue warrants to the Private Lender to purchase such number of Common Shares as is equal to 50% of the number of Common Shares which may be issued upon conversion of the Convertible Loan at a price to be established in the context of the market price of the Common Shares on the date the warrants are issued; and
• The Company shall be required to repay all or a portion of the Convertible Loan, as applicable, upon the occurrence of certain future prepayment events, including but not limited to a sale of any assets of the Company, public or private offerings of securities of the Company, exercise of existing convertible securities of the Company and any merger, sale or similar transaction involving the Company; and
• The remainder of the Existing Credit Facilities (approximately $7.5 million) will remain outstanding on substantially the same terms as the Existing Credit Facilities, provided that the maturity date thereof will be concurrent with the Convertible Loan.

The Refinancing Transaction is anticipated to result in a number of benefits to the Company, including but not limited to the following:

• Providing the Company with approximately $1,900,000 of additional annual cash flow through a reduction in interest payments
• Interest rates to drop from 14% to a blended rate of 9.2%
• Debt restructuring will see monthly interest payment savings of $158,500, or 34%
• Extending the maturity of the Company’s outstanding credit facilities by up to 20 years
• BDC facility initiates a long-term relationship with a supportive lender that has the ability to scale with future growth plans

The Company is also pleased to announce that it has extended the maturity date of its Existing Credit Facilities for an additional month, to January 31, 2023, and has an option to extend such revised maturity date, subject to the approval by its current senior lenders, for an additional month, to February 28, 2023.

Closing of the Refinancing Transaction is expected to occur in January 2023, subject to the satisfaction of a number of customary conditions precedent. However, there is no guarantee that closing will occur on such timeline, if at all.

“We are proud to be refinancing our debt with world-class Canadian lenders who share our vision of building a leading global plant-based food platform. Reducing our 14% interest rate to approximately 9.2% blended provides savings of approximately $1,900,000 per year,” commented Marc Aneed, the Company’s President, and CEO. “This accomplishment is a testament to our team’s passion and determination, delivering enhanced profitability in a macro environment that is especially challenging.”

ABOUT BDC

As Canada’s development bank, BDC is a partner of choice for all entrepreneurs looking to access the financing and advice they need to build their businesses and tackle the big challenges of our time. The investment arm, BDC Capital, offers a wide range of risk capital solutions to help grow the country’s most innovative firms. They are one of Canada’s Top 100 Employers and Canada’s Best Diversity Employers.

ABOUT EAT WELL GROUP

Eat Well Group is a publicly-traded Company primarily focused on high-growth companies in the agribusiness, food tech, plant-based and ESG (environmental, social and governance) sectors. Eat Well Group’s management team has an extensive record of sourcing, financing and building successful companies across a broad range of industries and maintains a current focus on the health/wellness industry. The team has financed and invested in early-stage venture companies for greater than 25 years, resulting in unparalleled access to deal flow and the ability to construct a portfolio of opportunistic investments intended to generate superior risk-adjusted returns.

Disclaimer for Forward-Looking Statements

This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable Canadian and United States securities legislation (collectively “forward-looking statements”). Forward-looking information are often, but not always, identified by the use of words such as “seek,” “anticipate,” “believe,” “plan,” “estimate,” “expect,” “likely” and “intend” and statements that an event or result “may,” “will,” “should,” “could” or “might” occur or be achieved and other similar expressions. These forward-looking statements include, but are not limited to, statements related to the Recapitalization Transaction, including the anticipated timing for closing the Refinancing Transaction and use of proceeds, the extension of the Existing Credit Facilities, future developments and the business and operations of the Company. Such forward-looking statements should not be unduly relied upon. Forward-looking information is based on assumptions that may prove to be inaccurate. The Company considers these assumptions to be reasonable in the circumstances. However, forward-looking information is subject to business and economic risks and uncertainties and other factors that could cause actual results of operations to differ materially from those expressed or implied in the forward-looking information, including the business, financial, credit and other market risks. The forward-looking statements in this news release are made as of the date of this release. The Company disclaims any intention or obligation to update or revise such information, except as required by applicable law. For more information on the Company, its investee companies and the risks and challenges of their businesses, investors should review the Company’s continuous disclosure filings that are available at www.sedar.com.

The Canadian Securities Exchange has neither approved nor disapproved the information contained herein and does not accept responsibility for the adequacy or accuracy of this news release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221223005201/en/

Eat Well Investment Group Inc.

Marc Aneed, CEO

ir@eatwellgroup.com

www.eatwellgroup.com

Source: Eat Well Investment Group Inc.

FAQ

What is the significance of Eat Well Investment Group's refinancing announcement on January 2023?

Eat Well Investment Group announced refinancing of up to $40 million, leading to reduced interest payments and an expected increase in annual cash flow of $1.9 million.

How much is Eat Well Investment Group's debt reduced through its refinancing deal?

The refinancing deal is expected to lower the interest rate from 14% to a blended rate of 9.2%, improving annual cash flow by approximately $1.9 million.

What are the terms of the loans provided by the Business Development Bank of Canada to Eat Well Investment Group?

BDC will provide a $22.5 million loan at a fixed rate of 5.65% for 20 years and a $2 million loan at 8.8% for 7 years.

What impact does the refinancing have on the maturity of Eat Well Investment Group's debt?

The refinancing extends the maturity of outstanding credit facilities by up to 20 years.

When is the expected closing date for Eat Well Investment Group's refinancing deal?

The closing of the refinancing transaction is expected in January 2023, subject to customary conditions.