Is (ASX:EPN) Strengthening Capital Structure Through Loan Notes On The ASX All Ordinaries And ASX 300?

Highlights:

• Epsilon Healthcare Limited issues loan notes under a funding agreement.

• The funds are designated for general working capital purposes.

• The notes are issued to a related entity as part of a structured financing move.

Epsilon Healthcare Limited (ASX:EPN) operates within the health sector and is engaged in the production and distribution of medicinal cannabis products and healthcare services. Listed on the Australian Securities Exchange, the company is included in the ASX All Ordinaries and ASX 300 indices. Epsilon Healthcare’s business model spans cultivation, pharmaceutical-grade manufacturing, and clinical services, positioning it in a regulated and technical segment of the healthcare industry.

Its operations are structured across multiple Australian facilities and involve compliance with strict quality control and regulatory standards. The company’s commercial activities also extend to product formulation and patient support, with a focus on therapeutic applications for prescribed cannabis treatments.

Issuance of Loan Notes for Working Capital

Epsilon Healthcare has announced the issuance of loan notes under a funding agreement designed to provide additional working capital. This financial arrangement was executed with a related party entity. According to the company, the funding will support general operations and liquidity needs across its business units.

The loan notes were issued as part of a structured agreement, including fixed terms and conditions regarding interest and maturity. Epsilon Healthcare confirmed the registration of a general security over company assets in relation to this funding. This security interest grants the lender enforceable rights should specified conditions be triggered during the term of the agreement.

The transaction falls within corporate financing norms for ASX-listed companies managing capital structure amid operational scaling or transitional phases. Epsilon Healthcare’s board of directors reviewed and approved the arrangement in line with governance policies regarding related party dealings.

Purpose and Use of Funds

The proceeds from the loan notes will be applied towards working capital, supporting ongoing activities such as procurement, manufacturing, and operational overheads. These funds may also be used for administrative or compliance-related requirements tied to the company’s healthcare service delivery and pharmaceutical production.

Operational continuity in regulated sectors like healthcare and medicinal cannabis often requires timely access to funding for inventory, staff, and compliance systems. The availability of this capital enables the business to maintain focus on delivering its services and fulfilling regulatory obligations.

The structure of the loan note issuance also provides flexibility in how funds are allocated across departments, particularly where operational demand may fluctuate. The arrangement helps to ensure that financial commitments can be met without disruption to patient services or product delivery.

Related Party Disclosure and Oversight

The loan notes were issued to a related party entity, triggering disclosure under ASX listing rules and corporate governance protocols. Epsilon Healthcare released a formal notification, outlining the nature of the relationship and the oversight process applied by the board.

A review process was undertaken to assess the transaction terms against market benchmarks, ensuring the funding conditions were appropriate and in line with industry standards. The company’s non-executive directors managed the review to maintain objectivity and compliance.

Such disclosures are standard practice for ASX-listed firms when transacting with related entities, ensuring that stakeholders are informed of any potential conflicts of interest and that transparency is upheld.

Security Interests and Asset Coverage

A general security agreement was registered as part of the funding transaction, covering the company’s assets. This agreement allows the lender specific rights over company assets in the event of non-performance or breach of loan terms. Security registration is a common practice in structured lending to protect the lender’s interests.

The security agreement is in place to define the scope of asset claims and to formalise the legal framework underpinning the loan. It outlines both the rights of the lender and the obligations of Epsilon Healthcare during the loan period. The company has confirmed compliance with all necessary regulatory steps regarding the registration of this security interest. This issuance represents a strategic move within a broader financial management framework, ensuring liquidity is available for continued operations under standard industry practices.