Alaris Royalty Corp. Announces the Repurchase of Its Financial Interests in End of the Roll
NOT FOR DISTRIBUTION IN THE UNITED STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.
CALGARY, Alberta, July 03, 2018 (GLOBE NEWSWIRE) — Alaris Royalty Corp. (“Alaris” or the “Corporation”) (TSX:AD) is announcing today that End of the Roll Carpet & Vinyl (“EOR”) has repurchased Alaris’ financial interests in EOR for $12.60 million (the “EOR Repurchase”). Alaris’ original investment into EOR was in May 2005 for $7.20 million and over the last 13 years Alaris has collected approximately $16.83 million of royalties from EOR (the “EOR Royalties”). Together with the proceeds from the EOR Repurchase and EOR Royalties previously collected, Alaris has generated total returns of $22.23 million (309%) as well as an IRR of approximately 22%. The EOR Repurchase was completed at $6.50 million above the book value Alaris recorded for EOR at March 31, 2018, a 75% premium to Alaris’ initial investment and at a 9.88x multiple of the current annualized royalty to Alaris, which was $1.27 million.
“End of the Roll has been our longest serving partner, spanning 13 years. We have been very lucky to have been involved in such a fine company and with such fine people for that length of time. Alaris was able to help in a generational transfer liquidity event for End of the Roll 13 years ago and the results could not have worked out better for both sides. The second generation management was able to retain full control and independence and grew the company at their own pace and keep a legacy asset for as long as they want. We are pleased to be one of the only capital providers that could have constructed this outcome. While End of the Roll has never been a material percentage of our revenue, the partnership has provided another great example of the advantages of our unique structure as well as the returns that we provide to our shareholders,” said Steve King, President and CEO, Alaris.
The proceeds from the EOR Repurchase will be used to reduce Alaris’ debt outstanding leaving the Corporation with approximately $70 million drawn at July 3, 2018 and approximately $230 million available to use for investment purposes. The after tax impact of the EOR Repurchase on Alaris’ net cash from operations is a net reduction of approximately $0.01 per share after accounting for the decrease in royalties from EOR as well as the interest savings through debt reduction. Future reinvestment of the proceeds from the EOR Repurchase at 15% should result in incremental revenue of over $600,000 per year.
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.
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 use of the proceeds of the EOR Repurchase; the balance on the Corporation’s senior debt facility and the use thereof; the impact of the repayment of indebtedness; the reinvestment of the EOR Repurchase proceeds and the impact thereof. 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, they 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 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 twelve 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, 2017, 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