Quantum International Income Corp.
TSX VENTURE : QIC

Quantum International Income Corp.

June 17, 2015 08:07 ET

Quantum International Income Corp. Announces $20 Million Bought Deal Offering

TORONTO, ONTARIO--(Marketwired - June 17, 2015) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Quantum International Income Corp. ("Quantum International" or the "Company") (TSX VENTURE:QIC) today announced that they have entered into an agreement with Mackie Research Capital Corporation, as lead underwriter and sole bookrunner on behalf of a syndicate(the "Underwriters"), for the sale on a "bought deal" basis of 47,620,000 subscription receipts of the Company (the "Subscription Receipts") at a price of $0.42 per Subscription Receipt (the "Offering Price") for gross proceeds of $20,000,400 (the "Offering").

Following the satisfaction or waiver of the Release Conditions (as defined below), each Subscription Receipt shall automatically, on a pro-rata basis based on the Release Schedule (defined below), and for no further consideration, convert into one (1) common share (a "Common Share") and one-half (1/2) of one common share purchase warrant (each whole common share purchase warrant a "Warrant") of Quantum International. Each Warrant entitles the holder thereof to acquire one common share (a "Warrant Share") for an exercise price of $0.65 per Warrant Share for a period of 24 months following the Closing (defined below). The expiry date of the Warrants may be accelerated by the Company at any time following the date on which all Release Conditions have been satisfied or waived (the "Release Date"), and prior to the expiry date of the Warrants if the volume-weighted average trading price of the Company's common shares is greater than $0.80 for any 20 consecutive trading days following the Release Date, at which time the Company may accelerate the expiry date by issuing a press release announcing the reduced warrant term whereupon the Warrants will expire thereafter on the 20th calendar day after the date of such press release.

The Company has also granted the Underwriters an over-allotment option (the "Over-Allotment Option"), exercisable at any time up to 30 days following closing, in whole or in part, to purchase up to an additional 15% of the Subscription Receipts sold pursuant to the Offering, to cover over-allotments and for market stabilization purposes.

The Subscription Receipts will be offered by way of a short-form prospectus to be filed in such provinces of Canada as the Underwriters may designate, pursuant to National Instrument 44-101 - Short Form Prospectus Distributions ("NI 44-101") and may be offered in the United States on a private placement basis pursuant to an appropriate exemption from the registration requirements of the United States Securities Act of 1933, as amended.

Upon closing of the Offering, the gross proceeds from the sale of the Subscription Receipts, less half the Underwriters' Commission and any Offering expenses (the "Escrowed Proceeds"), will be deposited into escrow ("Escrow") with an escrow agent (the "Subscription Receipt Agent") appointed in respect of the Subscription Receipts under an agreement between the Company, the Underwriters and the Subscription Receipt Agent.

The Escrowed Proceeds will be released from Escrow upon satisfaction of the Release Conditions according to the escrow release schedule set out below (the "Release Schedule"). No interest earned on the Escrowed Proceeds will be payable to the holders of the Subscription Receipts. Upon the satisfaction of the Release Conditions, the Subscription Receipt Agent will deliver an amount representing the balance of the Escrowed Proceeds to the Company. The "Release Conditions" are as follows: (i) The Company has secured the necessary additional debt financing required to fund the acquisition of Columbus Hospital LTACH, LLC ("LTACH"), under terms that are to the satisfaction of the Underwriter, acting reasonably; (ii) All conditions precedent to the closing of the acquisition of LTACH have been satisfied or waived; (iii) The Company has made the following amendments to the management agreement dated August 28, 2014 between Quantum International Income Corp. and Quantum International Asset Management Corp. (the "Management Agreement"), with such amendments being satisfactory to the Underwriter, acting reasonably: (a) the base annual management fee shall convert to a fixed amount (that will be capped), similar to a salary, paid by Quantum International, in exchange for common shares of the Company to be agreed upon between the Company and the Board of Directors, and (b) the M&A advisory fee shall be paid in common shares of Quantum International at a price equal to the Offering Price; and (iv) Receipt by the Company of all applicable regulatory approvals.

The Escrowed Proceeds will be released from Escrow in such proportions according to the following Release Schedule:

  1. $4,000,080 immediately upon closing of the Offering;

  2. $4,000,080 upon satisfaction of Release Condition (i);

  3. and the balance upon satisfaction of all remaining Release Conditions.

In the event that the Release Conditions have not been satisfied or waived prior to 5:00 p.m. (Toronto time) on the date which is 90 days after the closing of the Offering, the Escrowed Proceeds shall be returned to the holders of the Subscription Receipts on a pro-rata basis, without any interest earned thereon and excluding such proportions that have been released according to the Release Schedule set out above, and such Subscription Receipts shall be automatically cancelled and be of no further force and effect. To the extent that the Escrowed Proceeds (plus accrued interest) are not sufficient to refund the original purchase price of the Subscription Receipts which remain outstanding, the Company shall contribute such amounts as are necessary to satisfy any shortfall. For greater clarity, the Company shall not have any obligation to return to the former holder of any Subscription Receipt, an amount on account of any proceeds released from Escrow in accordance with the Release Schedule in connection with the conversion of such Subscription Receipt for one (1) Common Share and one-half (1/2) of one common share purchase warrant of Quantum International.

The net proceeds to be received by the Company will be used to fund the acquisition of Columbus Hospital LTACH, LLC and for general corporate purposes.

Closing of the Offering is expected to occur on or about July 21, 2015 and is subject to certain conditions and approvals including, but not limited to, the receipt of approval by the TSX Venture Exchange.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About Quantum International Income Corp.

Quantum International Income Corp. ("QIIC") is a Healthcare company focused on delivering national integrated health solutions in the United States. The Company seeks to back management teams with strong operational track records and deep healthcare experience. Acquired businesses fit synergistically within a strategic framework, have a proven operating history, opportunities for standalone growth and in some cases national expansion. QIIC currently indirectly holds a 50% interest in Centers for Special Surgery LLC., a corporate surgeon joint venture with U.S. ambulatory surgery center operations. Potential acquisition targets will be in various related areas of the US Healthcare industry in different geographic regions to allow for diversification. Overall QIIC seeks to integrate and grow business in order to generate capital appreciation and stable distributions to its shareholders.

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this press release constitute forward-looking statements and forward-looking information (collectively, "Forward-Looking Statements") and QIIC cautions investors about important factors that could cause QIIC's actual results to differ materially from those expressed, implied or projected in any Forward-Looking Statements included in this press release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "expects", "will continue", "is anticipated", "anticipates", "may", "could", "believes", "estimates", "intends", "plans", "forecast", "projection" and "outlook") are not historical facts and may be Forward-Looking Statements that involve projections, estimates, assumptions, known and unknown risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such Forward-Looking Statements or otherwise materially inaccurate. No assurance can be given that these expectations or assumptions will prove to be correct and such Forward-Looking Statements included in this press release should not be unduly relied upon. These Forward-Looking Statements speak only as of management's beliefs and expectations as of the date of this press release. In addition, this press release may contain Forward-Looking Statements drawn from or attributed to third party sources. Accordingly, any such statements are qualified in their entirety by reference to the information discussed throughout this press release.

In particular, this press release contains Forward-Looking Statements regarding anticipated future financial, structural, growth and operating performance of QIIC, including as it pertains to the operations detailed in this press release and the deployment of capital into new acquisitions.

Actual results may differ materially due to a number of risks and uncertainties faced by QIIC, including, but not limited to: general economic and business conditions; global financial conditions; the failure of QIIC to identify future acquisition targets; third parties honouring their contractual obligations with QIIC and its subsidiaries; relationships with operating and/or joint venture partners; inaccuracy, incompleteness or omissions in any of the financial and other information upon which management bases its analysis of potential acquisitions; the failure to realize the anticipated benefits of QIIC's current and future acquisitions; factors relating to the healthcare industry, including reliance on third-party payors for revenue; licensing, certification and accreditation risk; healthcare regulatory requirements; dependence on physician relationships; litigation, professional liability claims; insurance coverage limitations and uninsured risks; dependence on key personnel at the QIIC and operations level; competition from other healthcare providers; factors relating to the media content generation and distribution industry, including ability to deliver services in a timely manner; changes in technology, consumer markets or demand for media services; changes in federal, provincial and foreign content laws and regulations; dependence on third party content producers; competition for, among other things, capital, equipment and skilled personnel; the inability to generate sufficient cash flow from operations to meet future obligations; the inability to obtain required debt and/or equity financing for future acquisitions on suitable terms; competition for acquisition targets; seasonality and fluctuations in results; and limited diversification of QIIC's business industries, structures and operations.

QIIC cautions that the list and description of Forward-Looking Statements, risks, assumptions and uncertainties set out above is not exhaustive. QIIC will update the Forward-Looking Statements as required by securities law. All Forward-Looking Statements contained in this press release are qualified by these cautionary statements.

Unless otherwise specified in this press release, information contained in this press release is current as of the date of this press release. Unless otherwise specified, all dollar amounts herein refer to Canadian dollars. Additional information on these and other factors that could affect the operations or financial results of QIIC and its subsidiaries are included in disclosure documents filed by QIIC with the securities regulatory authorities, available under QIIC's profile on SEDAR at www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Grant White
    Chief Executive Officer
    416.477.3410

    Manu K. Sekhri
    President
    416.477.3424