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Corporate Update: Smart Employee Benefits Inc. Announces Amendment to Credit Facility

Smart Employee Benefits Inc.
5 min read
Smart Employee Benefits Inc.
Smart Employee Benefits Inc.

MISSISSAUGA, Ontario, Oct. 03, 2022 (GLOBE NEWSWIRE) -- Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV: SEB) (OTCQB: SEBFF) a leader in benefits processing solutions and services today announced that it has entered into an amending agreement to its secured revolving credit facility agreement (the “Credit Agreement”) with its international asset-focused lender (the “Lender”) to, among other things, extend the period of increased availability from $10,000,000 to $15,000,000 under the existing Credit Agreement, until December 31, 2022.

Co-operators Financial Services Limited (“Co-operators”), a strategic investor in SEB, has previously provided an amended and restated limited guarantee dated June 24, 2022 (the “Limited Guarantee”) in favour of the Lender in the amount of $10,000,000, and, accordingly, SEB had issued a corresponding amended and restated promissory note in favour of Co-operators dated June 24, 2022 (the “Amended and Restated Promissory Note”).

In conjunction with this amending agreement to the Credit Agreement, Co-operators has agreed to extend the term of its Limited Guarantee until December 31, 2022 (the “First Amending Agreement to the Limited Guarantee”), and the recitals in the Amended and Restated Promissory Note were correspondingly amended to better reference the Limited Guarantee as amended by the First Amending Agreement to the Limited Guarantee.

It remains the case that should the Limited Guarantee be called upon by the Lender and converted to a loan from Co-operators the amount would be deemed to be a repayment under the Credit Agreement with the Lender and as a result such amount would also be deemed to be owing by SEB to Co-operators under the Amended and Restated Promissory Note. Although there is currently nothing owing to Co-operators under the Amended and Restated Promissory Note, the Amended and Restated Promissory Note contemplated that SEB would be entitled to repay the interest thereunder in shares provided that any such share issuance(s) would be subject to applicable regulatory and TSX Venture Exchange approval at the time of such share issuance. However, since regulatory approval and minority shareholder approval has not been obtained for any such share issuance, as contemplated by the terms of the Amended and Restated Promissory Note, it is expected that the interest payable will either be capitalized and added to the principal under the Amended and Restated Promissory Note or repaid in cash. As set out in the Company’s press release dated September 6, 2022, the Company has also provided its written undertaking to the Ontario Securities Commission confirming that it will not issue shares in payment of interest under the Amended and Restated Promissory Note without first obtaining minority shareholder approval in accordance with Multilateral Instrument 61-101 (“MI 61-101”).

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