Pay attention to the fact that Leonite, the only senior lende, is divesting itself of this company. Leonite's debt was almost all secured in some way because they had the leverage. All others were not secured with the exceptions for the options against the treatment center of which Leonite also owned most of. So Leonite had these guys is an financial head lock but it is worthless if the business model is this so weak that it is unable to support the stock for any meaningful debt conversions. That is the current state of the business.
How very fortunate for Leonite to receive cash straight up. This also speaks to their leverage and ability to influence affairs here. So now they give it up and appear to be moving on and the reason is clear. We will see how transparent Shawn Leon is going to be with the 8K. I for one see a SEC compliant in the future if he tries to hide the terms like he did with the "pledge and security agreement" that was supposed to be attached to the 2022 Leonite June 8K.
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.
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.
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