Greenbrook TMS Inc. has entered into definitive agreements for new senior secured term loans totaling approximately $4.3 million, according to a recent 8-K filing with the U.S. Securities and Exchange Commission. The company, which specializes in miscellaneous health and allied services, secured the loans through amendments to its existing credit agreement.
The first amendment, dated Monday, June 25, 2024, provided Greenbrook with a $2.5 million loan. The second, on Wednesday, June 27, 2024, added a further $1.8 million. The proceeds from these loans are intended for general corporate and working capital purposes. Additionally, the amendments include an extension of a reduced minimum liquidity covenant and the payment-in-kind of a $3.3 million interest payment due today, which will be added to the principal balance.
Following these amendments, the outstanding principal under the credit agreement stands at approximately $109 million, with the total amount including accrued interest, interest paid in kind, and amendment fees reaching around $122 million. The loans carry an interest rate of 9.0% plus the 3-month term Secured Overnight Financing Rate, with a 1.5% floor, and a 0.10% increment. The maturity is set for 63 months, featuring four years of interest-only payments, followed by quarterly installments commencing September 30, 2026.
Greenbrook has pledged all of its assets as security for the loan obligations. The company's relationship with Madryn Fund Administration, LLC, the administrative agent for the lenders, is notable as affiliates of Madryn are also the largest shareholders of Greenbrook. They currently hold a beneficial ownership of 64.2% of the company's common shares, fully converted from the convertible instruments under the credit agreement and a note purchase agreement dated August 15, 2023.
The company's financial position has been under scrutiny, facing challenges such as recurring losses and the need to raise capital to support operations. The recent credit amendments reflect ongoing efforts to manage liquidity and financial obligations. The details of these financial arrangements were disclosed in Greenbrook's annual and quarterly reports filed earlier this year.
InvestingPro Insights
Greenbrook TMS Inc.'s recent financial maneuvers, as detailed in their 8-K filing, underscore the importance of understanding the company's current market position and performance metrics. According to real-time data from InvestingPro, Greenbrook TMS Inc. has a market capitalization of just $3.56M, reflecting the market's valuation of the company. The company's revenue for the last twelve months as of Q1 2024 stands at $72.49M, yet it is important to note a slight decline in revenue growth during the same period by -0.78%. With a gross profit margin of only 0.51%, Greenbrook's financial health appears strained.
InvestingPro Tips for Greenbrook TMS Inc. highlight several areas of concern for investors. The company operates with a significant debt burden and is quickly burning through cash, which aligns with the recent need to secure additional loans. Moreover, the stock has experienced high price volatility, and with short-term obligations exceeding liquid assets, the financial stability of Greenbrook remains precarious. Analysts do not anticipate the company will be profitable this year, and the stock price has taken a substantial hit over the last six months, plummeting by -65.6%. It's also worth mentioning that Greenbrook does not pay a dividend, which may be a consideration for income-focused investors.
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