Epsilon Healthcare Replaces $2 Million Promissory Note with New $1.72 Million Debt Facility from CEO-Controlled Lekarna

Ending the $2 Million Promissory Note with Lekarna Pty Ltd

Epsilon Healthcare has restructured its short-term financing by mutually terminating the existing $2 million promissory note with Lekarna Pty Ltd, controlled by CEO Peter Giannopoulos, effective 30 June 2026. This note had been previously disclosed in company communications.

At termination, Lekarna had advanced $280,000 under the note. This principal plus $13,939.73 accrued interest to 30 June 2026 was converted into a separate unsecured loan deed dated 30 June 2026, established on arm’s length terms between Epsilon Healthcare and Lekarna.

Details of the New $1.72 Million Debt Facility Agreement

Simultaneously, Epsilon Healthcare and Lekarna entered a new unsecured debt facility agreement dated 30 June 2026 with a limit of $1,720,000. The company states the facility is conventional and designed to support working capital, going concern requirements, and general corporate purposes, indicating its role in managing near-term liquidity.

The facility accrues interest at 15% per annum on drawn amounts only, with a default interest rate of 2% above the base rate for overdue payments. Interest is payable quarterly in arrears. The full principal, interest, and other sums are due by 31 December 2027. Prepayments are allowed with 30 days’ written notice, a minimum of $50,000, and no prepayment penalties disclosed.

Non-Convertible Facility Protects Existing Shareholders

The new facility is explicitly non-convertible, meaning no shares, options, or equity-linked rights will be issued to Lekarna or CEO Peter Giannopoulos as a result of this debt. This structure avoids dilution risks for current shareholders, distinguishing it from convertible note arrangements.

The company did not specify expected drawdown amounts or timing under the new facility in this update.

Governance and Conflict of Interest Management

Given Lekarna is controlled by CEO Peter Giannopoulos, this related-party transaction required governance safeguards. Mr Giannopoulos did not participate in board discussions or decisions regarding the termination of the promissory note, the unsecured loan deed, or the new facility agreement.

The board, excluding Mr Giannopoulos, authorised the announcement, ensuring compliance with the Corporations Act 2001 (Cth) and ASX Listing Rules governing related-party transactions. The company emphasized that all arrangements were conducted on arm’s length terms, with independent directors overseeing approvals.

Implications of Going Concern Support in Facility Purpose

The inclusion of "going concern support" among the facility’s purposes signals potential liquidity challenges. This language suggests the facility aims to address or mitigate going concern considerations, a common disclosure for smaller listed companies facing tight liquidity.

Details on the company’s going concern assessment, cash position, or how the facility fits within financial reporting were not provided. The immediate market reaction was unclear at the time of this report.

Conversion of Existing $280,000 Drawdown into Unsecured Loan

Instead of repaying the $280,000 advanced under the terminated promissory note, Epsilon Healthcare formalised this amount plus $13,939.73 accrued interest into an unsecured loan deed dated 30 June 2026. This conversion provides cash flow relief by deferring repayment obligations without immediate funding from operations.

The company did not disclose the loan deed’s repayment schedule or interest rate beyond confirming it is unsecured and on arm’s length terms.

Company Overview and Importance of Liquidity Facilities

Epsilon Healthcare is an Australian-based, globally active healthcare firm with a diversified portfolio spanning healthcare and clinic operations, pharmaceutical contract development and manufacturing, pharmacy services, and biotechnology therapeutics. This diversity entails ongoing capital needs across various business lines with variable cash flows.

Flexible working capital facilities are critical for managing supplier payments, supporting operations, and covering overhead during periods of uneven revenue. The new $1.72 million facility, while modest, offers a financial buffer aligned with the company’s stated going concern support.

Facility Security, Prepayment, and Structural Features

The facility is unsecured, meaning Lekarna holds no security interest over Epsilon Healthcare’s assets. In insolvency scenarios, Lekarna would rank behind secured creditors. Prepayment is permitted with 30 days’ notice and a minimum $50,000 amount, without penalty.

Standard representations, undertakings, and default provisions apply, consistent with typical commercial debt agreements.

Strategic Implications of the Restructured Financing

By replacing the promissory note with a defined facility limit, fixed interest rate, repayment date, and governance structure, Epsilon Healthcare aims for greater clarity and predictability in its balance sheet commitments through the end of 2027.

Investors will look to upcoming financial reports to see how these changes are reflected and monitor any drawdowns or further financing developments impacting liquidity ahead of the December 2027 repayment deadline. The company has not provided earnings guidance or forecasts in this update.

Board Approval and Compliance with ASX Listing Rules

The announcement was authorised by the board excluding Mr Giannopoulos, with Chairman Alan Beasley signing off. This confirms independent board oversight in line with ASX Listing Rule 10.1 and Corporations Act provisions on related-party financial benefits.

Epsilon Healthcare has maintained transparency by previously disclosing the promissory note and now detailing the new arrangements, demonstrating a considered approach to managing conflicts of interest involving its CEO and related entities.