CloudMD announces go-private transaction with CPS Capital

CloudMD Software & Services and CPS Capital are pleased to announce that they have entered into an arrangement agreement pursuant to which CPS Capital has agreed to acquire all of the outstanding common shares of CloudMD for cash consideration of C$0.04 per Share. The Transaction is the culmination of a strategic and liquidity review that the Special Committee has been engaged in since July 2023, with the assistance of INFOR Financial Inc. Such review was necessary to address the Company’s liquidity issues, which were largely the result of the number of acquisitions that the Company completed over the last four years. Although management of the Company was able to deliver on organic growth targets and strengthen the balance sheet while creating an ecosystem of care, the Company’s forecasted liquidity issues impacted the Company’s ability to remain a going concern. This is the result of the Company being unable to generate positive cashflow to support the business while making scheduled debt repayments, along with limited refinancing opportunities on commercially reasonable terms without onerous covenants, restricted business operations and forecasted growth initiatives. The Transaction provides the capital to support the Company’s business with specific consideration to all of the Company’s stakeholders and was the best alternative available to ensure the ongoing viability of the Company. If the Transaction is not completed, the Company does not expect that there will be an alternative that would provide any value to the holders of CloudMD’s equity securities. The Transaction will be completed pursuant to a court-approved plan of arrangement under the Business Corporations Act. The Transaction will be subject to the approval of at least: 66 2/3% of the votes cast by shareholders; 66 2/3% of the votes cast by shareholders and optionholders voting as a single class; and 50% of the votes cast by disinterested shareholders at a special meeting of CloudMD securityholders expected to be held before the end of June 2024. In addition to securityholder approval, the Transaction is also subject to the receipt of certain regulatory, court and stock exchange approvals and other closing conditions customary in transactions of this nature. The Arrangement Agreement includes, among other things, non-solicitation covenants on the part of the Company and a right for the Purchaser to match any competing offer that constitutes a superior proposal. Under certain circumstances, the Purchaser is entitled to a $3 million termination fee or an expense reimbursement to a maximum of $1.5 million, and CloudMD is entitled to a $1.75 million reverse termination fee. The directors and executive officers of CloudMD, who collectively hold approximately 0.16% of the outstanding Shares and approximately 0.60% of the outstanding Shares and stock options collectively, entered into voting support agreements with the Purchaser to support the Transaction. Following completion of the Transaction, the Shares will be delisted from the TSX Venture Exchange, and the Company will apply to cease to be a reporting issuer in applicable provinces in Canada.