TORONTO, March 4, 2024 /CNW/ - LifeSpeak Inc. (TSX: LSPK) ("LifeSpeak" or the "Company"), a leading provider of mental, physical, and family wellbeing solutions for employers, health plans, and other organizations, announced today that, in order de-lever and repay certain outstanding indebtedness under its senior credit agreement, the Company has entered into definitive subscription agreements ("Subscription Agreements") for a non-brokered private placement (the "Private Placement").

The Private Placement will consist of 8,224,896 common shares ("Common Shares") at a price of $0.60791 per Common Share (the "Subscription Price"), for aggregate gross proceeds of $5.0 million; $3.475 million of the Private Placement was subscribed for by Beedie Investments Ltd., Michael Held, Nolan Bederman, Jason Campana, Chad Deshler, Mario Di Pietro, Adam Goldberg, Anna Mittag, Sanjiv Samant, David Sciacca and Rajesh Uttamchandani, each of whom, for the purposes of Toronto Stock Exchange ("TSX") rules, is an "insider" of the Company (the "Insider Subscribers").

The Subscription Price is the "market price" of the Common Shares, calculated by reference to the five-day volume weighted average trading price ended on the date prior to the date hereof, per the rules of the TSX.

The Private Placement process follows a review of various financing alternatives explored by the Company, with the assistance and advice of various external advisors, to reduce the Company's debt. As of February 29, 2024, the Company has outstanding senior indebtedness from commercial lenders in the principal amount of $71,412,500.

The de-levering is required to assist the Company in complying with its financial covenants under its senior credit agreement. The subscribers to the Private Placement (the "Subscribers") (all of whom are current investors in the Company) were willing to subscribe for Common Shares at the market price.

The Insider Subscribers' participation in the Private Placement will cause the Company to surpass the TSX's insider participation limits. Therefore, the Company would normally be required by the TSX to seek shareholder approval of the Private Placement.

The Company has applied to the TSX to obtain an exemption from the shareholder approval requirements on the basis that the Company is in serious financial difficulty (the "Exemption"), the details of which are provided below under the heading "TSX Exemption from Shareholder Approval Requirement". Given the Company's need to address its obligations through the Private Placement, the Company does not have sufficient time to hold a special meeting of disinterested shareholders. Since insiders are participating in the Private Placement, the Private Placement was approved unanimously by all members of the board of directors of the Company (the "Board") that do not have an interest in any Subscriber under the Private Placement (collectively, the "Independent Board Members").

In the view of the Independent Board Members and the Board, the Private Placement will reduce the risk to the Company and improve its overall financial position. Notwithstanding that the proceeds of the Private Placement will be applied towards reducing the Company's overall indebtedness, there can be no assurance that the senior lender will not require further reductions of indebtedness in the future. The Company provides no assurances that it will be able to raise additional financing or, if it is able to do so, it will be on terms favourable to the Company.

The Private Placement is expected to close on or about March 8, 2024, subject to receipt of the necessary approvals of the TSX (including the granting of the Exemption as described herein) and the satisfaction or waiver of other customary closing conditions.

Pursuant to applicable Canadian securities laws, the Common Shares will be subject to a hold period of four months and one day following the closing date.

Absent the Exemption, the Private Placement would require the approval from the holders of a majority of the currently issued and outstanding Common Shares, excluding the votes attached to the Common Shares held by the Subscribers, under Section 607(g)(ii) of the TSX Company Manual, as the Private Placement is expected to result in an issuance of Common Shares in excess of 10% of the issued and outstanding Common Shares to "insiders".

In addition, the TSX has informed the Corporation that, as the Private Placement constitutes the first treasury offering since Michael Held became a "control person" of the Corporation (as such term is defined under applicable securities laws), Mr. Held's participation also requires disinterested shareholder approval, for the same reason that disinterested shareholder approval would be required under Section 607(a)(i) of the TSX Company Manual for a transaction that may "materially affect control" of the Corporation. Mr. Held became a control person on December 5, 2023, through open-market purchases of Common Shares and currently holds 20.16% of the Common Shares on a non-diluted basis.

Pursuant to Section 604(e) of the TSX Company Manual and upon the recommendation of the Independent Board Members, the Company has applied for the Exemption from the shareholder approval requirements of the TSX described above on the basis that the Company would experience financial difficulty if it were to be offside its loan covenants. As a result of various factors and as discussed in the Company's most recent management discussion and analysis, the growth in revenues was lower than expected in 2023.

Consequently, the Company is unlikely to be able to comply with its financial covenants in its senior credit agreement based on measuring its leverage against earnings without the completion of the Private Placement. In light of the foregoing, the Subscribers were willing to proceed with the Private Placement on the terms described herein.

After considering and reviewing all of the circumstances currently facing the Company and the Private Placement, including (i) the Company's current financial situation and requirements to meet its covenants to the senior lenders, (ii) the determination that the Private Placement is the most viable financing option available to the Company at the present time given current market conditions, (iii) the fact that the Private Placement is not subject to any unusual closing conditions for a transaction in the nature of the Private Placement, (iv) the fact that the Subscription Agreements provide for the issuance of Common Shares at a market price, rather than a discount to market price, and that the Subscription Agreements were ultimately approved by the Independent Board Members, (v) the expectation that the Private Placement, which will provide some de-levering, will allow the Company's lenders to continue to support its business, and (vi) other relevant factors, the Independent Board Members determined that the Private Placement is designed to improve the financial condition of the Company. The Independent Board Members also determined that the terms of the Private Placement are reasonable given the circumstances of the Company.

The Company expects that as a consequence of its application and intention to rely on the Exemption, the TSX will place LifeSpeak's listing of its Common Shares under remedial delisting review, which is customary practice when a listed issuer seeks to rely on the Exemption. No assurance can be provided as to the outcome of such review and therefore continued qualification for listing of the Common Shares on the TSX.

The following table sets out the names of persons who will beneficially own, or exercise control or direction over, directly or indirectly, more than 10% of the Common Shares immediately after the closing of the Private Placement, and the Common Shares held by such persons, in each case on a non-diluted basis:

The following table sets out certain information about the Insider Subscribers:

As the Private Placement constitutes a transaction between the Company and certain persons that are "related parties" of the Company in which securities of the Company will be issued to such related parties, the Private Placement constitutes a "related party transaction" pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101").

The Company is relying on the exemption from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in Section 5.5(a) and Section 5.7(a) on the basis that the fair market value of the transaction, as it involves interested parties, does not exceed 25% of the Company's market capitalization. All of the Independent Board Members determined that the terms of the Private Placement and the consummation of the financing are reasonable given the circumstances of the Company. The Company will not file a material change report related to the Private Placement more than 21 days before the expected closing of the Private Placement as the completion of the Private Placement is expected to occur sooner than 21 days from the execution of the Subscription Agreements, due to the immediacy of the Company's need to address its obligations under its senior credit agreement. The Subscription Agreements were negotiated by representatives of the Company and the Subscribers on an arm's length basis and contain customary terms and conditions for a transaction of this nature.

The following is a description of the interest in the Private Placement of each "interested party" and of the "related parties" and "associated entities" of such interested parties (as such terms are defined in MI 61-101) as well as the anticipated effect of the Private Placement on the percentage of securities of the Company beneficially owned or controlled by such persons, in each case on a non-diluted basis and partially diluted basis. The reference in the table to "Other" refers to six other officers, directors and employees of the Company who have participated in the Private Placement on a de minimus basis.

To the knowledge of the Company and its directors and senior officers, after reasonable inquiry, there is no prior valuation as to the subject matter of, or is otherwise relevant to, the Private Placement that has been made in the 24 months prior to the date hereof.

The Company and the Independent Board Members were advised by Fasken Martineau DuMoulin LLP and certain Subscribers were advised by Meretsky Law Firm.

At LifeSpeak, we believe that wellbeing can't wait. LifeSpeak is the leading provider of mental, physical, and family wellbeing solutions for employers, health plans, and other organizations. With a suite of digital solutions, LifeSpeak enables organizations to deliver best-in-class content and human expertise at scale, catering to employees throughout their wellbeing journeys. The LifeSpeak portfolio of solutions spans every pillar of wellbeing, including LifeSpeak Mental Health & Resilience, Wellbeats Wellness, Torchlight Parenting & Caregiving, ALAViDA Substance Use, and LIFT session Fitness. Collectively, LifeSpeak has more than 30 years of experience working with Fortune 500 companies, government agencies, insurance providers, unions, and other organizations across the globe. Insights from LifeSpeak's digital and data-driven solutions empower organizations and individuals to take impactful action to address gaps in wellbeing, ultimately enhancing workplace performance outcomes. To learn more, follow LifeSpeak on LinkedIn (http://www.linkedin.com/company/lifespeak-inc), or visit www.LifeSpeak.com.

At LifeSpeak, we believe that wellbeing can't wait. LifeSpeak is the leading provider of mental, physical, and family wellbeing solutions for employers, health plans, and other organizations. With a suite of digital solutions, LifeSpeak enables organizations to deliver best-in-class content and human expertise at scale, catering to employees throughout their wellbeing journeys. The LifeSpeak portfolio of solutions spans every pillar of wellbeing, including LifeSpeak Mental Health & Resilience, Wellbeats Wellness, Torchlight Parenting & Caregiving, ALAViDA Substance Use, and LIFT session Fitness. Collectively, LifeSpeak has more than 30 years of experience working with Fortune 500 companies, government agencies, insurance providers, unions, and other organizations across the globe. Insights from LifeSpeak's digital and data-driven solutions empower organizations and individuals to take impactful action to address gaps in wellbeing, ultimately enhancing workplace performance outcomes. To learn more, follow LifeSpeak on LinkedIn (http://www.linkedin.com/company/lifespeak-inc), or visit www.LifeSpeak.com.

This press release may include "forward-looking information" within the meaning of applicable securities laws. Such forward-looking information may include, but is not limited to, information with respect to the expected closing of the Private Placement, the expected effect on the financial condition of the Company based on the Private Placement, the Company's ability to meet its covenants under the credit agreement, any future financing, additional reductions in indebtedness, expectations regarding continued support from the Company's lenders and the TSX's remedial delisting review of the Common Shares. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology and phrases such as "forecast", "target", "goal", "may", "might", "will", "could", "expect", "anticipate", "estimate", "intend", "plan", "indicate", "seek", "believe", "predict", or "likely", or the negative of these terms, or other similar expressions intended to identify forward-looking information, including references to assumptions. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding possible future events, circumstances or performance.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that, while considered reasonable by LifeSpeak as of the date of this release, is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information.

Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking information include, but are not limited to, general market conditions, the Company's ability to secure financing in the future, decisions made by the Company's lenders and the TSX, third party reaction to the Private Placement, as well as the risk factors identified under "Risk Factors" in LifeSpeak's annual information form for fiscal year ended December 31, 2022 dated March 31, 2023, and in other periodic filings that LifeSpeak has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under LifeSpeak's SEDAR+ profile at www.sedarplus.com. These factors are not intended to represent a complete list of the factors that could affect LifeSpeak. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking information, which speak only as of the date of this release. LifeSpeak undertakes no obligation to publicly update any forward-looking information, except as required by applicable securities laws.