DRI Healthcare Trust Announces US$95 million Private Placement of Preferred Securities and Increased Deployment Target

DRI Healthcare Trust Logo (CNW Group/DRI Healthcare Trust)

– Provides additional capital to fund biopharmaceutical research, driving value for DRI’s unitholders and partners – 

TORONTO, Feb. 8, 2023 /CNW/ – DRI Healthcare Trust (TSX: DHT.UN) (TSX: DHT.U) (“DRI” or “the Trust”) announced today that it has completed a private placement of US$95 million of preferred securities (the “Private Placement”) to an investor group that includes funds managed by EdgePoint Wealth Management Inc. (“EdgePoint”), Alberta Investment Management Corporation and FAX Capital Corp.

“We have an exciting opportunity to execute royalty transactions on high quality therapeutics. This is driven by the dislocation in biotech capital markets and the capital needed to fund ground-breaking research in the life sciences,” said Behzad Khosrowshahi, Chief Executive Officer of DRI. “This financing will give us the ability to execute on a larger portion of our pipeline and to drive value for our partners and our unitholders.”

DRI also announced that the Trust has increased its deployment target for the five years ending 2025 to between US$850 million and US$900 million, up from US$650 million to US$750 million, for the five years ending 2025. Since its initial public offering, the Trust has deployed US$381.5 million with potential future performance-based milestones and options to deploy up to US$76.0 million, for total potential deployment in our transactions of up to US$457.5 million.

“Given our strong pace of deployment to date, and the quality of our near-term pipeline, we are pleased to make this revision to our five-year deployment target,” continued Mr. Khosrowshahi.

“We are very excited to have this opportunity to partner with DRI to help capitalize on the generational opportunity to invest in high quality pharmaceutical royalty streams,” said Frank Mullen, Partner at EdgePoint. “We look forward to working with the team at DRI as they continue to execute on their growth plans.”

Private Placement Summary

The Private Placement provides gross proceeds to DRI of US$95 million through the sale of US$95 million principal amount of Series A Preferred Securities and US$19.76 million principal amount of Series B Preferred Securities (the “Preferred Securities”), which are unsecured, subordinated debt securities of the Trust. The Preferred Securities will initially pay cash interest at a rate of 7.04% per annum on the principal amount of the Preferred Securities, payable semi-annually on June 30 and December 31 of each year.

The Series A Preferred Securities will mature on February 8, 2073, and the Series B Preferred Securities will mature on December 27, 2027. The Series A Preferred Securities can be redeemed at par, at the option of DRI, at any time from and after December 27, 2027. The Preferred Securities will not be redeemable by the Trust prior to December 27, 2027, except in the event of a change of control of the Trust, in which case the Preferred Securities will be subject to a mandatory redemption.

The interest rate on the Series A Preferred Securities will increase to 10% per annum if any of the Series A Preferred Securities are outstanding on January 1, 2028, and will be subject to an annual increase of 1.5% per annum if any of the Preferred Securities remain outstanding on each one year anniversary of such date, up to a specified cap.

In connection with the Private Placement, DRI also issued 6,369,180 warrants (the “Warrants”) to the Private Placement investors.  Each Warrant entitles the holder thereof to acquire one unit of the Trust for an exercise price of US$11.62 at any time until the expiry of the Warrant on February 8, 2028. The warrant exercise price represents a 106% premium to the volume-weighted average price of the Trust’s units for the 20 trading days ending February 7, 2023.

Additional information regarding the Private Placement and the terms of the Preferred Securities and the Warrants will be included in a material change report to be filed by the Trust on www.sedar.com. Copies of the indentures for the Preferred Securities and the Warrants will be filed on www.sedar.com. This press release is only a summary of certain principal terms of the Private Placement, and the summary is qualified in its entirety by reference to the more detailed information contained in indentures.

Scotia Capital Inc. acted as exclusive financial advisor and private placement agent, and Osler, Hoskin & Harcourt LLP acted as legal advisor to DRI.

About DRI Healthcare Trust

DRI Healthcare Trust is managed by DRI Capital Inc. (“DRI Capital”), a pioneer in global pharmaceutical royalty monetization with a more than 30-year history of accelerating innovation by providing capital to inventors, academic institutions and biopharma companies.­­ Since its founding in 1989, DRI Capital has deployed more than US$2.5 billion, acquiring more than 60 royalties on 40-plus drugs, including Eylea, Spinraza, Zytiga, Remicade, Keytruda and Stelara. DRI Healthcare Trust’s units are listed and trade on the Toronto Stock Exchange in Canadian dollars under the symbol “DHT.UN” and in U.S. dollars under the symbol “DHT.U”. To learn more, visit drihealthcare.com or follow us on LinkedIn.

Forward Looking Information

This news release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking information generally can be identified by the use of forward-looking words such as “expect”, “continue”, “anticipate”, “intend”, “aim”, “plan”, “believe”, “budget”, “deploy”, “estimate”, “forecast”, “foresee”, “close to”, “target” or negative versions thereof and similar expressions. Some of the specific forward-looking information in this news release may include, among other things, statements regarding the Trust’s deployment target. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Trust’s control that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These assumptions include: our assumptions regarding demand and growth in opportunities for royalty investing; our ability to obtain financing and maintain our existing financing on acceptable terms; our ability to maintain business relationships with potential royalty counterparties and other industry partners; and the absence of material adverse changes in our industry or the global economy. These risks and uncertainties include, but are not limited to, those that are disclosed in the Trust’s most recent annual information form and in the Trust’s management’s discussion and analysis. All forward-looking information in this news release speaks as of the date of this news release. The Trust does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise except as required by law. Additional information about these assumptions and risks and uncertainties is contained in the Trust’s filings with securities regulators, including its latest annual information form and Management’s Discussion and Analysis. These filings are also available at the Trust’s website at drihealthcare.com.

SOURCE DRI Healthcare Trust


Recent Posts

Presentation at 2024 RBC Capital Markets Global Healthcare Conference

2024 Annual Meeting of Unitholders

DRI Healthcare Trust Announces Voting Results of AGM