Alaris Royalty Corp. Announces Closing of the Agility Redemption
NOT FOR DISTRIBUTION IN THE UNITED STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.
CALGARY, Alberta, Feb. 28, 2018 (GLOBE NEWSWIRE) — Alaris Royalty Corp. (“Alaris” or the “Corporation”) (TSX:AD) is pleased to announce that the previously disclosed pending transaction with Agility Health Holdings, Inc. (“AHI”), the parent company of Agility Health LLC (“Agility LLC) has closed on February 28, 2018. The result of this transaction is Agility LLC redeeming all of Alaris’ units in Agility LLC (the “Agility LLC Units”) for gross proceeds of US$26.67 million (CAD$34.14 million) (the “Gross Proceeds”). Alaris’ investment in Agility LLC resulted in a total return to Alaris of approximately US$17.45 million (CAD$23.53 million), or 87% (116% in CAD) as well as an internal rate of return (“IRR”) of approximately 18% (25% CAD). These returns were realized on Alaris’ 5 year investment in Agility LLC by successfully collecting all of the US$15.3 million of distributions owed by Agility LLC over the life of the investment as well as a 10% premium above Alaris’ cost its Agility LLC Units.
The Gross Proceeds to Alaris from the Agility Sale consist of: (i) US$22.23 million for the Agility Units (the “Repurchase Price”) Alaris holds in Agility LLC, which includes a premium of US$2.13 million over Alaris’ original cost of US$20.10 million (currently held at a fair value of $20.00 million); (ii) US$2.86 million for all unpaid distributions up to February 28, 2018; and (iii) US$1.58 million for a loan outstanding, including all principal and interest accrued on such loan. US$1.50 million of the Gross Proceeds paid to Alaris have been placed in escrow for 18 months (the “Escrow Period”) to satisfy indemnification obligations under the Purchase Agreement. Following the Escrow Period any remaining escrowed funds will be paid to Alaris. Gross Proceeds to Alaris from this transaction will go towards debt reduction.
“The Agility Sale brings to a close a challenging situation for Alaris that we have persistently worked on for nearly two years. Alaris was able to use the rights and remedies that we have through our preferred shares and achieved an excellent outcome for our shareholders. Receiving the full return that we expected when we entered the partnership with Agility is gratifying and I would like to thank the staff at Alaris who worked extremely hard to achieve this end result. The cash proceeds we received from this transaction strengthen our balance sheet and provide valuable capital to deploy in new partnerships,” said Steve King, President and Chief Executive Officer, Alaris
The IRR calculation used above assumes the US$1.5 million being held for the Escrow Period will be fully released to Alaris at the end of the Escrow Period.
ABOUT THE CORPORATION:
Alaris provides alternative financing to the Partners in exchange for distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Distributions from the Partners are adjusted each year based on the percentage change of a “top line” financial performance measure such as gross margin and same-store sales and rank in priority to the owners’ common equity position.
The term IRR, as defined below, is a financial measure used in this press release, which is not a standard measure under IFRS. The Corporation’s method of calculating IRR may differ from the methods used by other issuers. Therefore, the Corporation’s Non-IFRS measures may not be comparable to similar measures presented by other issuers.
IRR refers to the annualized effective compounded rate of return on an investment. Alaris calculates IRR by using all cash outlays (contributions) and inflows (monthly distributions and gross proceeds from redemptions) over the specific time period in which Alaris was invested in a company, on a pre-tax basis.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements as defined under applicable securities laws. Statements other than statements of historical fact contained in this news release may be forward-looking statements under applicable securities legislation, including, without limitation, management’s expectations, intentions and beliefs concerning: the belief that it will eventually collect all escrowed dollars following the 18 month Escrow Period. Many of these statements can be identified by words such as “believe”, “expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar words or the negative thereof. To the extent any forward-looking statements herein constitute a financial outlook, including, without limitation, estimates regarding the Heritage earnings coverage ratio were approved by management as of the date hereof and have been included to provide an understanding with respect to Alaris’ financial performance and are subject to the same risks and assumptions disclosed herein. There can be no assurance that the plans, intentions or expectations upon which these forward looking statements are based will occur.
By their nature, forward-looking statements require Alaris to make assumptions and are subject to inherent risks and uncertainties. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will affect Alaris’ business and that of its Partners are material factors considered by Alaris management when setting the outlook for Alaris. Key assumptions include, but are not limited to, assumptions that the Canadian and U.S. economies will grow moderately over the next 12 months, that interest rates will not rise in a material way over the next 12 to 24 months, that Alaris will be able to achieve resolutions with respect to issues with Kimco and SCR on terms materially in line with management’s expectations, that Alaris will achieve the benefits of any concessions or relief measures provided to any Partners, that the Partners will continue to make distributions to Alaris as and when required and in line with management’s expectations, that the businesses of the Partners will continue to grow, what the Corporation expects to experience regarding resets to its annual royalties and distributions from its Partners upon the reset dates for each Partner and that Alaris will have the ability to raise required equity and/or debt financing on acceptable terms. Management of Alaris has also assumed that capital markets will remain stable and that the Canadian dollar will remain in a range of approximately plus or minus 10% relative to the U.S. dollar over the next six months. In determining expectations for economic growth, management of Alaris primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
There can be no assurance that the assumptions, plans, intentions or expectations upon which these forward looking statements are based will occur. Forward looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. The actual results of the Corporation and the Partners could materially differ from those anticipated in the forward looking statements contained herein as a result of certain risk factors, including, but not limited to, the following: the dependence of Alaris on the Partners; reliance on key personnel; general economic conditions; failure to complete or realize the anticipated benefit of Alaris’ financing arrangements with the Partners; a failure of the Corporation or any Partners to obtain required regulatory approvals on a timely basis or at all; changes in legislation and regulations and the interpretations thereof; risks relating to the Partners and their businesses, including, without limitation, a material change in the operations of a Partner or the industries they operate in; inability to close additional Partner contributions in a timely fashion, or at all; a change in the ability of the Partners to continue to pay Alaris’ preferred distributions; a change in the unaudited information provided to the Corporation; a failure to achieve resolutions for outstanding issues with Partners on terms materially in line with management’s expectations; and a failure to realize the benefits of any concessions or relief measures provided by Alaris to any Partner or to successfully execute an exit strategy for a Partner where desired. Additional risks that may cause actual results to vary from those indicated are discussed under the heading “Risk Factors” and “Forward Looking Statements” in the Corporation’s Management Discussion and Analysis for the year ended December 31, 2016, which is filed under the Corporation’s profile at www.sedar.com and on its website at www.alarisroyalty.com.
Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in this news release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. Statements containing forward-looking information reflect management’s current beliefs and assumptions based on information in its possession on the date of this news release. Although management believes that the assumptions reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations will prove to be correct.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release and Alaris does not undertake or assume any obligation to update or revise such statements to reflect new events or circumstances except as expressly required by applicable securities legislation.
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:
Vice President, Investments and Investor Relations
Alaris Royalty Corp.
P: (403) 221-7305