Ethema Executes Two Real Estate Transactions and Major Debt Repayment

WEST PALM BEACH, FL, July 17, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire - Ethema Health Corporation (OTCPINK: GRST) (“Ethema”, “GRST” or the “Company”) is pleased to announce the results of the global restructuring efforts with its senior lender and the property purchase in West Palm Beach.   

First, the Company is pleased to announce that is has signed a binding purchase and sale agreement to sell and leaseback the property located at 950 Evernia Street, West Palm Beach for $8,500,000 contemporaneously with the purchase of the property for $5,500,000. The Company will simultaneously enter into a twenty-year lease on the Property. The agreement became legally binding on July 13, 2023, and it is expected to conclude on or before August 3, 2023. The three million dollar spread is profit to the Company before expenses.   Second, as a result of the sale leaseback transaction, the Company will have the resources to pay off all of the outstanding senior lender debt at the closing of the transaction.   The senior lender had previously extended the forbearance agreement to allow for the Company to complete this process.  Third, the Company has agreed to sell the subsidiary that owns the Canadian property to its senior lender in exchange for all of the senior lender’s preferred shares, accrued and unpaid dividends, and the assumption of the property mortgage. The Company will emerge from this transaction with a greatly streamlined cap table, an improved balance sheet, and a new focus on an “asset light” business model.

Overall, the impact of this transaction will equate to a net reduction in debt of approximately $6.7 million and shareholder equity is expected to improve by $2 million for an overall positive improvement on the balance sheet of $8.7 million.

The Company also renegotiated the maturities of all of its remaining debt that had either expired or had no fixed terms of repayment. This puts the Company in a position to manage the repayment of those debts over time or convert them to equity.  In addition, the senior lender has agreed to exchange its warrant issued on June 12, 2020 for a new warrant with improved terms for the Company including a limit on the right to purchase up to 20% of the Company’s shares, and limits on antidilution rights. With these changes in hand, the Company is poised to raise new equity through its Reg A+ offering and to continue on with expansion and growth.  There are no plans to consolidate the stock and there will be no remaining outstanding debt that contains any variable rate conversion feature.