Centric Health converts all C$9.08 million 6.5% notes due July 2017

By Wendy Van Sickle

Columbus, Ohio, March 2 – Centric Health Corp. said holders converted all of its outstanding C$9.08 million of 6.5% unsecured convertible notes due July 31, 2017 into 17,461,538 common shares of the company at a conversion price of C$.052 a share into common shares.

In consideration for the early conversion, holders will receive a total of 500,000 three-year warrants to buy Centric Health common shares, exercisable at C$1.00 per share, the company said in a press release.

The exercise price is a 26.6% premium to the shares’ closing price of C$0.79 on Feb. 16, the day before the approval of the early conversion terms by disinterested and independent directors.

Interest of C$441,437 will also be paid in cash.

The lone holder of the C$5 million unsecured convertible loan maturing April 30, 2018, which bore interest at 6%, also agreed to convert the loan into common shares.

The loan was converted into 10,869,565 commons shares at a conversion price of C$0.46 a share.

About 74% of the convertible notes were held by insiders of the company, and the full convertible loan was held by Jamon Investments, LLC, an associated entity of Jack Shevel, chairman of Centric Health and founder and president of its largest shareholder, Global Healthcare Investments & Solutions, Inc.

The conversion of the two debt instruments reduces Centric Health's outstanding debt by C$14.08 million – bringing its total net debt as of Dec. 31, pro forma the conversions, to C$85.2 million – and cuts its annual interest expense by C$900,000.

Jamon Investments will receive 1.4 million three-year warrants to purchase common shares, exercisable at C$1.00 a share and will receive a cash interest payment of C$397,808.

In the press release, Centric Health president and chief executive officer David Cutler called the early conversions “an important next step in our balance sheet optimization plan to refinance the largest components of our debt, with the overall objective to simplify our debt structure, meaningfully reduce our overall interest rate, extend the maturity of our debt and generate additional free cash flow.”

Following the conversions, the company has a total of 203,914,644 shares outstanding.

Centric Health also announced that it has signed an indicative term sheet with a tier-one Canadian bank for a proposed credit facility to repay its remaining outstanding borrowings and for potential acquisitions, growth initiatives and general working capital.

Centric Health is a Toronto-based health care business operating fulfilment centers in its specialty pharmacy division and providing surgical care through its surgical and medical centers division.

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