TORONTO, Oct. 17,
2024 /CNW/ - Invesque Inc. (TSX: IVQ.U) and
(TSX: IVQ) (the "Company" or "Invesque") today
announced several transaction and refinancing updates, as well as
changes to the previously announced proposed amendments to the
Company's debentures and preferred share exchange.
Transaction & Refinancing Updates
- On September 23, 2024, the
Company sold a skilled nursing facility in Illinois for US$16.5
million. Proceeds from the sale were used to reduce
borrowings under the KeyBank credit facility. Following the
completion of this sale, Invesque owns only two skilled nursing
facilities.
- On October 15, 2024, the Company
sold seven seniors housing assets in Maryland (3), Virginia (3) and Tennessee (1) that were previously managed by
Commonwealth Senior Living ("CSL") for US$65.4 million (US$184k per unit). The Company used sale proceeds
to pay off the property level mortgage debt associated with the
communities, and further reduce borrowings under the KeyBank credit
facility by US$6.1 million. The
remaining cash in the amount of US$7.8
million was retained by the Company to maintain appropriate
liquidity levels.
- During the first three quarters of 2024, Invesque has completed
nearly US$270.0 million in
refinancings, better positioning its balance sheet and current debt
maturities. More than US$53.0 million
of these refinancings have been on assets previously encumbered by
the Company's KeyBank credit facility, under which borrowings have
been reduced by over US$100.0 million
to date in 2024.
- The Company has entered into a definitive agreement to sell its
interest in twenty seniors housing assets currently managed by CSL
and the Company's interests in the CSL management company. The
proposed sale transaction includes pricing above the Company's
depreciated book value and after the release of US$222.0 million in mortgage debt, the release of
US$58.6 million in preferred equity
plus any accrued and unpaid preferred return, and payment of other
standard working capital adjustments, will provide cash proceeds
which will be used to further reduce borrowings under the KeyBank
credit facility and retained to maintain appropriate liquidity
levels. Invesque expects this sale to close during the first
quarter of 2025, subject to satisfaction or waiver of a due
diligence condition in favour of the purchaser and other customary
closing conditions. Accordingly, there is no certainty that this
transaction will close on the expected timeline or at all.
Update to Proposed Amendments to the Terms of Convertible
Unsecured Subordinated Debentures and the Exchange of Preferred
Shares for Common Shares
Following the September 17, 2024
press release noting proposed amendments to the Company's 7.00%
Convertible Unsecured Subordinated Debentures due January 31, 2025 (the "2025 Debentures")
and its 8.75% Convertible Unsecured Subordinated Debentures due
September 30, 2026 (the "2026
Debentures"), Invesque has continued discussions with holders
of the 2025 Debentures and 2026 Debentures (collectively, the
"Debentureholders") and Magnetar Financial LLC
("Magnetar") which resulted in further changes to the
proposed deal terms as outlined below.
The updated proposed amendments to the indentures governing the
2025 Debentures and the 2026 Debentures (the "Debenture
Amendments"), if approved by the Debentureholders, will provide
that:
- in exchange for the 2025 Debentures, Debentureholders of 2025
Debentures will receive (i) a pro rata interest of an aggregate
principal amount of US$9,938,000 in
new unsecured subordinated debentures ("Amended Debentures")
and (ii) 52,306,874 common shares of the Company ("Common
Shares") having an aggregate value equal to US$8,369,100 based on a price per Common Share of
US$0.16; and
- in exchange for the 2026 Debentures, Debentureholders of 2026
Debentures will receive (i) a pro rata interest of an aggregate
principal amount of US$17,362,000 in
Amended Debentures and (ii) 88,210,068 Common Shares having an
aggregate value equal to US$14,113,611 based on a price per Common Share
of US$0.16 (collectively, the
"Debenture Exchange").
In connection with the updates to the Debenture Amendments
described above, certain funds (the "Exchanging Magnetar
Funds") managed by Magnetar Financial LLC and the Company have
also entered into an amendment to the previously executed exchange
agreement dated September 16, 2024
(the "Exchange Agreement"), pursuant to which such
Exchanging Magnetar Funds have agreed to exchange their class A
convertible preferred shares for 716,875,000 Common Shares
(the "Preferred Share Exchange"), having a value of
US$114,700,000 based on a price per
Common Share of US$0.16.
All other terms of the Amended Debentures and the Preferred
Share Exchange remain the same as previously outlined by the
Company in its September 17, 2024
press release. In connection with the recent discussions relating
to the Debenture Amendments, Invesque now has obtained voting
support agreements in favor of the Debenture Amendments totaling
54.5% of the outstanding principal amount of 2025 Debentures and
44.4% of the outstanding principal amount of 2026 Debentures. The
directors and officers of the Company, as well as the Company'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 in favour of the Preferred Share Exchange and
the issuance of Common Shares pursuant to the Debenture
Exchange.
The meetings of holders of each of the 2025 Debentures and the
2026 Debentures to approve the Debenture Amendments (the
"Debentureholder Meetings") are scheduled to be held on
November 26, 2024 at the offices of
the Company at 8701 E. 116th Street, Suite 260, Fishers, Indiana. The record date for
determining the Debentureholders entitled to receive notice of and
vote at the Debentureholder Meetings is October 25, 2024. Further information and voting
instructions with respect to the Debenture Amendments will be
outlined in the management information circular of the Company to
be sent to Debentureholders in connection with the Debentureholder
Meetings, which will also be available on the Company's SEDAR+
profile at www.sedarplus.ca.
The meeting of holders of Common Shares to approve the Preferred
Share Exchange and the issuance of Common Shares pursuant to the
Debenture Exchange (the "Shareholder Meeting") is scheduled
to be held on November 26, 2024 at
the offices of the Company at 8701 E. 116th Street, Suite 260,
Fishers, Indiana. The record date
for determining the holders of Common Shares entitled to receive
notice of and vote at the Shareholder Meeting is October 25, 2024. Further information and voting
instructions will be outlined in the management information
circular of the Company to be sent to holders of Common Shares in
connection with the Shareholder Meeting, which will also be
available on the Company's SEDAR+ profile at www.sedarplus.ca.
CEO Remarks
Adlai
Chester, Invesque CEO stated, "I am pleased to highlight the
continued execution of our strategy to reduce our overall leverage
while retaining a core portfolio of strong cash flowing seniors
housing assets. The recent dispositions and the KeyBank paydowns
associated with them, as well as several refinancings over the last
120 days, have reduced our leverage point with KeyBank to below
60%, providing additional flexibility for the Company as we
continue our path forward."
"The CSL portfolio has been an important part of Invesque's
story since it was acquired in August
2019 and the decision to sell this portfolio and our
ownership stake in the management company was not an easy one given
the alignment with our Company strategy to be seniors housing real
estate focused. We believe that the favorable impact to leverage
following the sale via the reduction of mortgage debt and release
of preferred equity, made for a compelling transaction that was
worth pursuing."
Mr. Chester continued, "assuming the closing of all disclosed
transactions, the Company will have reduced its leverage to below
50%, which will represent a reduction of over 30% compared to the
balance sheet as of June 30, 2024.
This substantial reduction is a result of the Company's stated
strategy to de-risk and streamline our balance sheet."
About Invesque
The Company is a North American health
care real estate company with an investment thesis focused on the
premise that an aging demographic in North America will continue to utilize health
care services in growing proportion to the overall economy. The
Company currently capitalizes on this opportunity by investing in a
portfolio of income-generating predominantly private pay seniors
housing communities. The Company's portfolio includes investments
primarily in independent living, assisted living, and memory care,
which are operated under long-term leases and joint venture
arrangements with industry-leading operating partners. The
Company's portfolio also includes investments in owner-occupied
seniors housing properties in which the Company owns the real
estate, the licensed operations, and provides management services
through Commonwealth Senior Living, LLC, a Delaware limited liability company. For more
information, please visit www.invesque.com.
Forward-Looking Information
This press release (this
"Press Release") contains certain forward-looking
information and/or statements ("forward-looking statements"),
that reflect and are provided for the purpose of presenting
information about management's current expectations and plans
relating to the future, including, without limitation, statements
regarding the Company's utilization of proceeds of dispositions,
statements regarding the closing of the sale of certain seniors
housing communities, and statements regarding the Debenture
Amendments, the Debenture Exchange and the Preferred Share
Exchange. Forward-looking statements is typically identified by
terms such as "anticipate," "believe," "continue," "expect,"
"expectations," "look," "may," "plan," "project," "should," "will,"
and other similar expressions that do not relate solely to
historical matters and suggest future outcomes or events. Readers
should not place undue reliance on forward-looking statements and
are cautioned that forward-looking statements may not be
appropriate for other purposes. Forward-looking statements in this
Press Release are based on current beliefs, expectations, and
certain assumptions of the Company's management, including
assumptions regarding the Company'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 Company's seniors housing operating partners
will continue. Forward-looking statements in this Press Release are
subject to significant known and unknown risks, uncertainties, and
other factors that are beyond the Company's ability to predict or
control, and 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 Toronto
Stock Exchange, 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 Company's
seniors housing operating partners will not continue. The
forward-looking statements in this press release are also subject
to the risks described in the Company'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 Company'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 Company as of the date of this Press Release
and speak only as of the date of this Press Release. The Company
does not undertake any obligation to publicly update or revise any
forward-looking statements except as may be required by applicable
law.
There can be no assurance that forward-looking statements will
prove to be accurate as actual outcomes and results may differ
materially from those expressed in these forward-looking
statements. Readers are cautioned not to place undue reliance on
any such forward-looking statements, which are given as of the date
hereof, and not to use such forward-looking statements for anything
other than the intended purpose. Further, except as expressly
required by applicable law, the Company assumes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events, or otherwise.
Forward-looking statements contained in this Press Release are
expressly qualified by this cautionary statement.
SOURCE Invesque Inc.