Ethema Restructures Debt and Raises New Financing to Acquire Interest in New Facility

WEST PALM BEACH, FL, June 12, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE – Ethema Health Corporation (OTCPINK: GRST) (“Ethema” “GRST” or the “Company”), a provider of healthcare services, previously announced that it was working to restructure its debt and to acquire the majority interest in a company that would give Ethema a new treatment center location in West Palm Beach. This press release will update the status of those negotiations as well as previous announcements regarding letters of intent for other acquisitions, and general corporate matters. This release will serve as a general update on these matters and more detailed information will follow in additional press releases and regulatory filings. 

New Financing and Acquisition 

The Company has secured term sheets from two of its existing lenders for new investments to finance the acquisition and operation of its new addiction treatment facility at 950 Evernia Street, West Palm Beach Florida. The New notes will be for a principal amount of $330,000.00 including an OID of $30,000.  The net proceeds to the Company after the OID discount and legal fees will be $293,000.00. Document drafts have been submitted and the Company hopes to close on this transaction in the next week. The acquisition announced in January 2020 is scheduled to close immediately after closing the new financing. The new facility will be licensed for all levels of care. There is capacity for 60 beds on the property. The Company expects to ramp up its virtual care that it developed in 2019 as this will become an important aspect of treatment going forward. The company expects strong demand for addiction treatment services for the foreseeable future. The location and building are ideal for the operation of an addiction treatment business. The Company expects to use the latest developments and methods to make the facility a COVID-19 free zone for its clients.   

Debt and Warrant Amendments

The following Lenders and Warrant holders have been renegotiating the terms of their debt and/or warrants. All of these agreements include lock-ups on the conversion to shares. Some of these agreements are finalized and some are pending completion of documentation. 

1. Power Up Lending Group Ltd. – Paid.
2. Firstfire Global Opportunities Fund LLC – Amendment signed with Lock-up pending two payments of $25,000.00 each at end of June and July 2020. 
3. Labrys Fund, LP – Amendment signed with Lock-up pending eight monthly payments of $25,000.00 each starting October 15, 2020.  
4. Auctus Fund, LLC (“Auctus”) – Amendment is pending.  The agreement is for a Lock-up with a payment plan of nine monthly payments of $25,000.00 each beginning October 1, 2020.  Auctus is participating in the new financing. 
5. Leonite Capital LLC (“Leonite”) – Term sheet signed and pending final documents. The term sheet includes the following changes:
   1. The principal outstanding would be reduced to $1,250,000.00 and all existing defaults would be waived.  
   2. A $700,000 portion of the note would be converted to 10% redeemable preferred shares in the Company’s Canadian real estate holding subsidiary Cranberry Cove Holdings Ltd.
   3. A $400,000 portion of the note would be converted into 6% callable Series A Preferred shares of the Company.
   4. A $150,000 portion of the note would remain outstanding with the following changes:
      1. All existing defaults would be waived
      2. No conversion between month 1 and 3 
      3. Minimal leak out conversion between month 4 and 6
      4. Six Equal Monthly payments of the balance starting in month 7

The documentation to effect the Leonite amendments are still in draft form and subject to legal review.