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Greenbrook TMS Draws an Additional US$3.0 Million in Debt Financing
Rhea-AI Impact
(Moderate)
Rhea-AI Sentiment
(Very Positive)
Tags
Rhea-AI Summary
Greenbrook TMS Inc. (NASDAQ: GBNH) announced it has secured an additional US$3.0 million in debt financing from Madryn Asset Management and Greybrook Health to address liquidity needs. This includes a US$2.0 million New Loan under its amended credit facility with Madryn, which allows conversion of up to US$182,000 into shares at US$1.90 per share. Additionally, a US$1.0 million unsecured note was issued to Greybrook, with a conversion option and the issuance of warrants. Proceeds will be used for general corporate and working capital purposes.
Positive
Secured US$3.0 million in additional financing to enhance liquidity.
Amended credit facility with Madryn provides favorable loan terms.
Potential for share conversion may strengthen shareholder interest.
Negative
Continued reliance on debt financing raises concerns about long-term financial stability.
No new revenue sources mentioned; liquidity depends on existing financing.
TORONTO--(BUSINESS WIRE)--
Greenbrook TMS Inc. (TSX: GTMS, NASDAQ: GBNH) (“Greenbrook” or the “Company”), announces today that it has received an aggregate of US$3.0 million in additional debt financing from its existing lender, Madryn Asset Management, LP (“Madryn”), alongside Greybrook Health Inc. (“Greybrook Health”), one of the Company’s existing significant shareholders to manage the company’s current liquidity requirements. The Company is also currently considering additional near-term financing options to address its future liquidity needs.
Madryn Debt Financing
The Company announces that it has entered into an amendment to its previously-announced credit facility with Madryn (the “Credit Facility”), whereby Madryn and its affiliated entities have extended an additional tranche of debt financing to the Company in an aggregate principal amount of US$2.0 million, which was fully-funded at closing (the “New Loan”). The terms and conditions of the New Loan are consistent with the terms and conditions of the Company’s existing aggregate US$57.0 million loan under the Credit Facility (the “Existing Loan”) in all material respects. In addition, the Credit Facility was amended to provide that, commencing March 31, 2023, all advances under the Credit Facility (including the New Loan) will cease to accrue interest using the London Interbank Offered Rate benchmark and instead will accrue interest using the 3-month Term Secured Overnight Financing Rate benchmark plus 0.10%. In connection with the New Loan, Madryn was also granted the right to appoint one observer to the board of directors of the Company.
The New Loan also provides Madryn with the option to convert up to approximately US$182,000 of the outstanding principal amount of the New Loan into common shares of the Company at a conversion price per share equal to US$1.90 (the “Conversion Price”), subject to customary anti-dilution adjustments and approval of the Toronto Stock Exchange (“TSX”). This conversion feature corresponds to the conversion provisions for its Existing Loan, which provide Madryn with the option to convert up to approximately US$5.2 million of the outstanding principal amount of the Existing Loan into common shares of the Company at the Conversion Price.
Shareholder Loan
The Company also announces that, alongside the New Loan, it has issued and sold an additional US$1.0 million aggregate principal amount of an unsecured note (the “Note”) to Greybrook Health (the “Greybrook Note Purchase”) under the previously-announced note purchase agreement (the “Note Purchase Agreement”) with certain significant shareholders and management of the Company (the “Noteholders”) for gross proceeds to the Company of US$1.0 million. The Note bears interest at a rate consistent with the Credit Facility and matures on September 30, 2027.
In conjunction with the Greybrook Note Purchase, the Company has agreed to grant Greybrook Health an option to convert up to approximately US$1.0 million of the outstanding principal amount of the Note held by Greybrook Health into common shares of the Company at a conversion price per share equal to 85.0% of the volume-weighted average trading price of the common shares on the TSX for the five trading days immediately preceding the date of conversion (the “Conversion Price”), subject to customary anti-dilution adjustments and approval of the TSX.
As additional consideration for the Greybrook Note Purchase, Greenbrook has agreed to issue 135,870 common share purchase warrants to Greybrook Health (the “Warrants”). Each Warrant will be exercisable for one common share of Greenbrook at an exercise price of US$1.84, subject to customary anti-dilution adjustments and approval of the TSX. The Warrants will expire five years from the date of issuance.
The proceeds of the New Loan and the Note are expected to be used by the Company for general corporate and working capital purposes.
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 securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Notes 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.
About Greenbrook TMS Inc.
Operating through 183 Company-operated treatment centers, Greenbrook is a leading provider of Transcranial Magnetic Stimulation (“TMS”) therapy 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 one million treatments to over 27,000 patients struggling with depression.
Cautionary Note Regarding Forward-Looking Information
Certain information in this press release, including statements regarding the New Loan, the Note and the Warrants and the expected use of proceeds from the New Loan and the Note, as well as the ability to obtain future financing to satisfy its near-term liquidity needs, 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 to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, challenges relating to raising additional financing, difficulty in satisfying cash requirements, as well as macroeconomic factors such as inflation and recessionary conditions, and the other factors described in greater detail in the “Risk Factors” section of the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2021, in the “Risks and Uncertainties” section of the Company’s management’s discussion and analysis for the three and nine months ended September 30, 2022, and in the Company’s other materials filed with the Canadian securities regulatory authorities and the United States Securities and Exchange Commission from time to time, available at www.sedar.com 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.
