Aleafia Health Announces Amendments to Credit Facility and Strategic Review Process
Aleafia Health announces an amendment to its loan agreement with NE SPC, allowing for forbearance until May 31, 2023. The company is currently in breach of certain financial covenants and has initiated a strategic review process to explore potential alternatives.
Positive
Aleafia Health has secured forbearance on its loan agreement until May 31, 2023, providing temporary relief for the company's financial situation.
Negative
Aleafia Health is currently in breach of certain financial covenants under its loan agreement, which could negatively impact the company's financial stability.
05/25/2023 - 07:30 AM
TORONTO, May 25, 2023 (GLOBE NEWSWIRE) -- Aleafia Health Inc. (TSX: AH, OTCQB: ALEAF) (“Aleafia Health ” or the “Company ”) announces that the Company has entered into an amendment to the terms of the loan agreement with NE SPC II LP (“NE SPC ”) dated as of December 24, 2021 and as previously amended by agreements dated March 28, 2022 and June 17, 2022 (the “Loan Agreement ”).
While the original Loan Agreement provided that the indebtedness owed to NE SPC could be made payable on demand, NE SPC has agreed in the amendment (the “Amendment ”) to forbear on enforcing the Loan Agreement until the earlier of (a) an event of default, or (b) May 31, 2023. The amended terms also provide for additional circumstances that would constitute an event of default as well as additional covenants imposed on the Company including an obligation to repay the entire balance owing under the Loan Agreement in certain circumstances. The Company is currently in breach of certain financial covenants under the Loan Agreement.
In connection with the Amendment, and in anticipation of the May 31, 2023 deadline, disinterested members of the Company’s board of directors (the “Committee ”) have commenced a strategic review process (the “Strategic Review Process ”) to explore and evaluate potential strategic alternatives that may be available to the Company with the goal of maximizing value for Aleafia Health shareholders (the “Shareholders ”) and other stakeholders of the Company. These alternatives may include, but are not limited to, the refinancing of the indebtedness under the Loan Agreement, a sale of all or a portion of the assets of the Company, a sale of all or a portion of the common shares of the Company, a business combination transaction, new debt or equity financings or refinancings, a strategic investment in the Company or other strategic transaction structure (each, a “Potential Transaction ”).
The Committee is leading the process and will manage any expressions of interest related to any Potential Transaction and will work with professional advisors to assess the fairness of any Potential Transaction to Shareholders and other stakeholders and make recommendations to the Board in respect of all such matters.
No decisions relating to any specific Potential Transaction have been made as at the date of this news release and there are no assurances that any Potential Transaction will result from the Strategic Review Process by May 31, 2023, or at all. The Company does not intend to comment further with respect to the Strategic Review Process unless and until it determines that additional disclosure is appropriate in the circumstances and in accordance with applicable securities laws.
For Investor & Media Relations
Matthew Sale, CFOIR@Aleafiahealth.com www.AleafiaHealth.com
About Aleafia Health:
The Company is a federally licensed Canadian cannabis company offering cannabis products in Canadian adult-use and medical markets and in select international markets, including Australia and Germany. The Company operates a virtual medical cannabis clinic staffed by physicians and nurse practitioners which provide health and wellness services across Canada.
The Company owns three licensed cannabis production facilities and operates a strategically located distribution centre all in the province of Ontario, including the largest, outdoor cannabis cultivation facility in Canada. The Company produces a diverse portfolio of cannabis and cannabis derivative products including dried flower, pre-roll, milled, vapes, oils, capsules, edibles, sublingual strips and topicals.
Cautionary Note Regarding Forward-Looking Statements
Certain statements herein relating to the Company constitute “forward-looking information” within the meaning of applicable securities laws. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things, statements regarding: the potential results and timing of the Strategic Review Process, the ability of the Company to maximize value for Shareholders and other stakeholders and the potential structure and timing of one or more Potential Transactions. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; the inability of the Company to obtain adequate financing; the delay or failure to receive regulatory approvals; and other factors discussed in the Company’s filings, available on the SEDAR website at www.sedar.com . There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change.
What is the amendment to Aleafia Health's loan agreement with NE SPC?
The amendment allows for forbearance on enforcing the loan agreement until May 31, 2023.
What is the strategic review process initiated by Aleafia Health?
Aleafia Health has started a strategic review process to explore potential alternatives and maximize value for shareholders and stakeholders.
What are the potential alternatives being considered by Aleafia Health?
The potential alternatives include refinancing the loan agreement, selling assets or common shares, business combination transactions, new debt or equity financings, strategic investments, or other transaction structures.
Is there a deadline for the Strategic Review Process?
The Strategic Review Process is expected to be completed by May 31, 2023, but there is no guarantee that any potential transaction will result from it.
