Invesque Inc. Announces Transformational Proposed Amendments to the Terms of its Convertible Unsecured Subordinated Debentures and the Exchange of its Preferred Shares for Common Shares
The proposed amendments to the indenture governing the 2025 Debentures, if approved by the Debentureholders, will:
- ADD a covenant that the outstanding principal amount of the 2025 Debentures, plus interest accrued thereon, will be exchanged on a date specified by the Corporation, which date shall be on or before
January 31, 2025 , for
a. a pro rata interest of new unsecured subordinated debentures ("Amended Debentures") that will have an aggregate principal amount ofUS$9,938,000 ; and
b. 39,164,705 common shares of the Corporation ("Common Shares") having an aggregate value equal toUS$6,658,000 based on a price per Common Share ofUS$0.17 , which is equal to a 15% premium to the 15-day volume weighted average price ("VWAP") of the Common Shares as ofSeptember 13, 2024 ; and - AMEND the definition of "Change of Control" to provide that the Preferred Share Exchange (as defined below) shall not constitute a "Change of Control".
The proposed amendments to the indenture governing the 2026 Debentures (together with the proposed amendments to the indenture governing the 2025 Debentures, the "Debenture Amendments"), if approved by the Debentureholders, will:
- ADD a covenant that the outstanding principal amount of the 2026 Debentures, plus interest accrued thereon, will be exchanged on a date specified by the Corporation, which date shall be on or before
January 31, 2025 , for
a. a pro rata interest of Amended Debentures that will have an aggregate principal amount ofUS$17,362,000 ; and
b. 91,376,470 Common Shares having a value equal toUS$15,534,000 based on a price per Common Share ofUS$0.17 , which is equal to a 15% premium to the 15–day VWAP of the Common Shares as ofSeptember 13, 2024 ; and - AMEND the definition of "Change of Control" to provide that the Preferred Share Exchange shall not constitute a "Change of Control".
The Amended Debentures will be substantially similar to the Debentures, except that they will not be convertible for Common Shares and will have the following terms:
- Interest Rate: 9.75% per annum, payable semi-annually on
June 30 andDecember 31 , commencing onJune 30, 2025 . - Redemption: The Corporation will have the right, at its option, to redeem the Amended Debentures, in whole at any time or in part from time to time, on not more than 60 days' and not less than 30 days' prior notice, at a redemption price equal to:
- if the redemption occurs on or prior to the one-year anniversary of the issuance date of the Amended Debentures (the "First Anniversary"), 102% of the principal amount of the Amended Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the redemption date; provided, however, that the Corporation may redeem up to 25% of the principal amount of the Amended Debentures during this period at a redemption price equal to 100% of the principal amount of the Amended Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the redemption date; and
- if the redemption occurs after the First Anniversary and on or prior to Maturity Date (as defined below), the principal amount of the Amended Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the redemption date.
- Maturity Date: Third anniversary of the issuance date of the Amended Debentures.
- Default: The Corporation will be in default under the Amended Debentures if the Corporation is in default under a loan that is recourse to the Corporation and has an aggregate principal amount that is greater than
US$50,000,000 . - Indenture: The Amended Debentures will be issued pursuant to a new indenture, substantially similar to the existing indentures for the Debentures, provided that certain sections, including Section 7.11 [Clear Market] (in respect of the 2026 Debentures) and Article 11 [Successors], will be removed.
If the Debenture Amendments are approved by the Debentureholders (i) other than the interest payment on the 2026 Debentures to be made by the Corporation on
Preferred Share Exchange
Further, certain funds (the "Exchanging Magnetar Funds") managed by
Pursuant to the Exchange Agreement, the Corporation, Magnetar and the Magnetar Funds will enter into an investor rights agreement (the "IRA"), providing for, among other things, the following rights of Magnetar and the Magnetar Funds: (i) board nomination rights in respect of a certain number of directors of the Corporation (based on the size of the Corporation's board and the securityholder percentage of Magnetar and the Magnetar Funds at the relevant times), (ii) customary demand and piggyback registration rights, (iii) customary pre-emptive rights with respect to equity securities of the Corporation, and (iv) approval and consent rights in respect of certain actions of the Corporation. The IRA will also provide for certain standstill restrictions on Magnetar and the Magnetar Funds until
Support Agreements
Debentureholders holding approximately 33% of the outstanding 2025 Debentures and Debentureholders holding approximately 37% of the outstanding 2026 Debentures have signed voting support agreements to vote the Debentures beneficially owned or controlled by them FOR the Debenture Amendments. The directors and officers of the Corporation, as well as the Corporation's largest holder of Common Shares (holding approximately 31% of the issued and outstanding Common Shares) have each signed a voting support agreement to vote the Common Shares beneficially owned or controlled by them FOR the Preferred Share Exchange and FOR the issuance of Common Shares pursuant to the Preferred Share Exchange and the Debenture Exchange.
Board of Directors Recommendation
The Corporation's Board of Directors (the "Board"), following its review and after receiving a unanimous recommendation from its governance committee comprised of independent directors, has unanimously determined that each of the Debenture Amendments, the Debenture Exchange and the Preferred Share Exchange are in the best interests of the Corporation. The Board unanimously approved the Debenture Amendments, the Debenture Exchange and the Preferred Share Exchange and will recommend that the Debentureholders vote FOR the Debenture Amendments and that the shareholders vote FOR the Preferred Share Exchange and FOR the issuance of Common Shares pursuant to the Preferred Share Exchange and the Debenture Exchange.
Update on Asset Sales
In the Corporation's
"Executing on both the Debenture Amendments and the Preferred Share Exchange represents an important next step in
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Forward-Looking Information
Certain statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These forward-looking statements include statements regarding: the proposed Debenture Amendments, the Debenture Exchange, the Preferred Share Exchange and proposed asset sales. In some cases forward-looking information can be identified by such terms as "will", "would", "anticipate", "anticipated", "expect" and "expected". The forward-looking statements in this news release are based on certain assumptions, including assumptions regarding the Corporation's ability to complete the Debenture Amendments, the Debenture Exchange, the Preferred Share Exchange and the proposed asset sales and that existing trends being observed by the Corporation's seniors housing operating partners will continue. Such statements are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Such risks include the risk that the Debenture Amendments will not be approved by Debentureholders or that the issuance of Common Shares pursuant to the Preferred Share Exchange and the Debenture Exchange will not be approved by shareholders or by the TSX, the closing conditions to the Debenture Amendments, the Debenture Exchange, the Preferred Share Exchange and/or the proposed asset sales, as applicable, will not be satisfied or waived, and that existing trends being observed by the Corporation's seniors housing operating partners will not continue, as well as those risks described in the Corporation's current annual information form and management's discussion and analysis, available on SEDAR+ at www.sedarplus.ca, which risks may be dependent on market factors and not entirely within the Corporation's control. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations of the Corporation as at the date of this news release and speak only as at the date of this news release. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.
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