NBLY Neighbourly Pharmacy Inc

- Committed Debt Financing Secured; Exclusivity Extended to January 15, 2024 -

TORONTO, Nov. 13, 2023 /CNW/ - Neighbourly Pharmacy Inc. ("Neighbourly" or the "Company") (TSX: NBLY), Canada's largest and fastest growing network of independent pharmacies, provides an update regarding the previously announced letter of intent entered into with an affiliate of Persistence Capital Partners (collectively, and together with their affiliated funds, "PCP"), in respect of a transaction (the "Proposed Transaction") whereby a newly-formed entity controlled by PCP would acquire all of the common shares (the "Common Shares") in the capital of the Company, other than those Common Shares already owned by PCP or its affiliates, at a purchase price of $20.50 per Share, payable in cash.

As previously announced, the Proposed Transaction would be financed via equity and debt financing. PCP has now received commitments for a fully underwritten credit facility in an amount of $650 million co-led by The Bank of Nova Scotia and RBC Capital Markets. PCP expects to use approximately $450 million of such amount to finance the Proposed Transaction. Since the execution of the letter of intent on October 2, 2023, PCP has continued to advance with its sources of equity financing and expects to conclude those arrangements over the near term.

The Company has agreed to extend the previously announced exclusivity period granted to PCP to January 15, 2024 to complete negotiation of a definitive agreement for the Proposed Transaction and to allow PCP to finalize its equity financing arrangements for the Proposed Transaction.

The entering into of a definitive agreement concerning the Proposed Transaction remains subject to, among other things, as at the time the definitive agreement is entered into, (i) PCP having secured fully committed equity financing; (ii) the negotiation and execution of a definitive agreement for the Proposed Transaction on terms satisfactory to PCP and Neighbourly; (iii) receipt from TD Securities Inc. ("TD"), financial advisor and independent valuator to the committee of independent directors (the "Transaction Committee") formed by the Board of Directors of the Company (the "Board"), of an updated formal valuation of the Common Shares initially orally delivered by TD to the Transaction Committee on October 2, 2023 (the "Formal Valuation"); and (iv) receipt from TD of an updated fairness opinion initially orally delivered by TD to the Transaction Committee on October 2, 2023 (the "Fairness Opinion"), containing a fairness conclusion consistent with the Fairness Opinion. The consummation of the Proposed Transaction will be subject to various conditions customary for transactions of this nature, including, among others, (i) receipt by the Company and PCP of any required regulatory, court and/or stock exchange approvals; and (ii) the approval of the Proposed Transaction at a special meeting of shareholders of the Company (the "Special Meeting") entitled to vote on the Proposed Transaction (including a "majority of the minority" vote of the shareholders excluding for this purpose the votes of Shares held or controlled by PCP and any other persons described in items (a) through (d) of Section 8.1(2) of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions).

The Proposed Transaction is expected to close in the first calendar quarter of 2024, subject to the above listed conditions and other customary closing conditions. The terms and conditions of the Proposed Transaction will be disclosed in greater detail in a management information circular for the Special Meeting that is expected to be mailed to the Company's shareholders following the execution of the definitive agreement for the Proposed Transaction. Copies of the definitive agreements and of the management information circular for the Special Meeting will be filed with Canadian securities regulators and will be available on the SEDAR+ profile of Neighbourly at www.sedarplus.com. Neighbourly's shareholders are urged to read those and other relevant materials when they become available.

While the Board, after having received the unanimous recommendation of the Transaction Committee, has agreed (with Stuart M. Elman, Chair of the Board and Managing Partner of PCP, recusing himself from the meeting) to extend the exclusivity period and to continue pursuing the Proposed Transaction, neither the Transaction Committee nor the Board has approved the Proposed Transaction. There can be no assurance that Neighbourly and PCP will enter into a definitive agreement for the Proposed Transaction or that the Proposed Transaction will occur as proposed or at all. Neither the Company nor the Transaction Committee expect to make further public comment regarding the matters contemplated herein until a definitive agreement for the Proposed Transaction is reached or the Proposed Transaction is abandoned.

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to management's beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "estimates", "outlook", "forecasts", "projection", "prospects", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". 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 but instead represent management's expectations, estimates and projections regarding future events or circumstances. Forward-looking information in this news release, which includes, among other things, statements relating to the Proposed Transaction and timing thereof, is necessarily based on a number of opinions, estimates and assumptions that the Company considered appropriate and reasonable as of the date such statements are made in light of its experience, current conditions and expected future developments.

Risks and uncertainties related to the Proposed Transaction include, but are not limited to: failure of Neighbourly and PCP to enter into a definitive agreement for the Proposed Transaction on terms satisfactory to Neighbourly, or at all; failure of PCP to secure equity financing on acceptable terms, or at all; failure to keep the debt financing committed; failure to complete satisfactory due diligence; failure of Neighbourly and PCP to obtain the required shareholders and regulatory approvals for, or satisfy other conditions to effect, the Proposed Transaction; failure by TD to deliver an updated Formal Valuation at the time the definitive agreement is entered into; failure by TD to deliver an updated Fairness Opinion at the time the definitive agreement is entered into; the risk that the Proposed Transaction may involve unexpected costs, liabilities or delays; the risk that, prior to or as a result of the completion of the Proposed Transaction, the business of Neighbourly may experience significant disruptions, including loss of clients or employees due to transaction related uncertainty, industry conditions or other factors; risks relating to employee retention; the risk of regulatory changes that may materially impact the business or the operations of Neighbourly; the risk that legal proceedings may be instituted against Neighbourly; and risks related to the diversion of management's attention from Neighbourly's ongoing business operations.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents the Company's expectations as of the date of this news release (or as the date they are otherwise stated to be made) and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Neighbourly is Canada's largest and fastest growing network of community pharmacies. United by their patient first focus and their role as essential and trusted healthcare hubs within their communities, Neighbourly's pharmacies strive to provide accessible healthcare with a personal touch. Since 2015, Neighbourly has expanded its diversified national footprint to include 292 locations, reinforcing the Company's reputation as the industry's acquirer of choice.

TD Securities is acting as financial advisor and independent valuator to the Transaction Committee, and McCarthy Tétrault LLP is acting as independent legal advisor to the Transaction Committee.  

Scotiabank and RBC Capital Markets are acting as financial advisors to PCP, and Stikeman Elliott LLP is acting as legal advisor to PCP on the Proposed Transaction.  Devon Park Advisors is providing strategic advisory and capital raising services to PCP.

SOURCE Neighbourly Pharmacy Inc.