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Bullboard - Stock Discussion Forum Alaris Equity Partners Income 5 50 convertible unsecured subordinated Debentures T.AD.DB

Alternate Symbol(s):  ADLRF | T.AD.DB.A | T.AD.UN

Alaris Equity Partners Income Trust (the Trust) is a Canada-based private equity company. The Trust, through its subsidiaries, provides alternative financing to private companies. The Trust’s operations consist primarily of investments in private operating entities. The principal objective of the Trust is to generate stable and predictable cash flows for payment of distributions to unitholders... see more

TSX:AD.DB - Post Discussion

Post by ace1mccoy on Feb 09, 2021 4:18pm

Alaris News

Alaris Equity Partners Income Trust (the "Trust" or "Alaris") (TSX: AD.UN) is pleased to announce that its wholly owned subsidiary, Alaris Equity Partners USA, Inc. (collectively with the Trust and its other subsidiaries, "Alaris") has made an investment of US$66.0 million (the "B&S Investment") into Brown & Settle Investments, LLC and a subsidiary thereof (collectively, "B&S" or "Brown & Settle").  Alaris is also pleased to announce that it has entered into an agreement with a syndicate of underwriters (the "Underwriters") to purchase, on a bought deal basis, 4,687,500 trust units (the "Trust Units") from Alaris at a price of $16.00 per Trust Unit for aggregate gross proceeds of $75.0 million (the "Offering"). Lastly, Alaris and its syndicate of senior lenders (the "Lending Syndicate") have agreed to an amendment (the "Amendment") to its credit facility (the "Facility") that will see the Facility permanently increased from $330.0 million to $373.0 million. Following the B&S Investment Alaris has deployed approximately $135 million in 2021. Alaris is also pleased to announce that it is estimating Q4, 2020 revenue to beat guidance by approximately $1.0 million increasing from $31.0 million to approximately $32.0 million primarily as a result of dividends declared on Alaris' common equity investments in Amur Financial Group Inc. ("Amur") and Carey Electric Contracting, LLC ("Carey").
 
B&S Investment
 
On February 9, 2021, Alaris made the B&S Investment of US$66.0 million into Brown & Settle, which consisted of: (i) an aggregate of US$53.7 million (the "B&S Preferred Contribution") of combined subordinated debt and preferred equity, entitling Alaris to an initial annualized distribution of US$7.5 million (the "B&S Distribution"); and (ii) US$12.3 million for a minority common equity ownership in B&S. The B&S Distribution is expected to be the equivalent to a pre-tax yield of approximately 14%.   
 
Commencing on January 1, 2022, the B&S Distribution will be adjusted annually based on the percentage change in gross revenue over the most recently completed 12-month period versus the prior 12-month period (January 1, 2022 adjustment will be based on fiscal 2021 vs fiscal 2020), subject to a collar of 6%. 
 
Based on Alaris' review of Brown & Settle's internal pro forma financial results for the most recent trailing twelve-month period in 2021 and giving effect to the B&S Investment, certain other changes to Brown & Settle's capital structure and the B&S Distribution payable to Alaris, management of Alaris believes that Brown & Settle would have an earnings coverage ratio between 1.5x and 2.0x.  Proceeds were used to provide a partial liquidity event to founders, management and investors.
 
Founded in 2003 and headquartered in Northern Virginia, the largest data center market in the world, Brown & Settle is a full-service large-parcel site development contractor.  B&S' comprehensive suite of services includes excavation, clearing, rock blasting, concrete, paving, and utility installation in Virginia, Maryland, West Virginia, and the Greater Washington D.C. area. Brown & Settle has established itself as one of the top providers of site development services for data centers, working on projects for blue chip end users. www.brown-settle.com  B&S Corporate Video
 
Bought Deal
 
The Underwriters have agreed to purchase, on a bought deal basis, 4,687,500 Trust Units from Alaris at a price of $16.00 per Trust Unit for aggregate gross proceeds of $75.0 million. The Trust has also granted the Underwriters an option, exercisable for up to 30 days from of the closing of the Offering, to purchase up to an additional 703,125 Trust Units upon the same price and terms as the Offering to cover over-allotments and for market stabilization purposes (the "Over-Allotment Option"). The Offering is expected to close on or about March 3, 2021. The Underwriters will sell the Trust Units in all provinces of Canada, except Quebec, in a public offering by way of short form prospectus. The aggregate gross proceeds of the Offering and Over-Allotment Option (if exercised in full) will be $86.3 million (net proceeds of $82.8 million).  The Offering is being co-led by Acumen Capital Finance Partners Limited, Cormark Securities Inc., CIBC Capital Markets, National Bank Financial Inc. and RBC Capital Markets.
 
The Trust will use net proceeds of the Offering (and Over-Allotment Option, if any) to reduce debt outstanding under the Facility. Upon closing of the Offering and including the B&S Investment, the Trust expects to have approximately $300.0 million drawn on the Facility ($289.2 million with the Over-Allotment Option exercised).
 
The Offering is subject to customary closing conditions, including receipt of applicable regulatory and Toronto Stock Exchange approvals.
 
Amendments to the Facility
 
The Facility was permanently increased from $330 million to $373 million. Additionally, an additional 0.5x EBITDA was added to the leverage covenant for the March 2021 and June 2021 measurement periods bringing the maximum leverage to 3.5x through those two periods. Covenants return to previous levels from September 30, 2021 forward. The Amendment also includes a temporary bridge facility (the "Bridge") of US$30 million to use for potential new investments prior to the closing of the Offering.  Funds from the proceeds of the Bridge may be used to fund a potential new investment being reviewed by Alaris in the ordinary course of its business, which may or may not come to fruition.
 
This press release is not an offer of Units for sale in the United States. The Units may not be offered or sold in the United States. Alaris has not registered and will not register the Units under the U.S. Securities Act of 1933, as amended. Alaris does not intend to engage in a public offering of Units in the United States. This press release shall not constitute an offer to sell, nor shall there be any sale of, the Units in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Comment by TimeBuilder on Feb 09, 2021 9:06pm
Thanks for posting  ace1mccoy - (2/9/2021 4:18:50 PM) Alaris News    Regards, TimeBuilder 
Comment by riverrrow on Feb 11, 2021 4:51am
Bought more today on the financing dip. GLTA.
Comment by TickerTwit on Feb 11, 2021 11:34am
"dip"? We just got diluted about 15%, so share price should have fallen below $15 ... but it didn't. Post-dilution, the share price has actually risen from where it was expected to be (no doubt on the news of the new investment). .
Comment by TickerTwit on Feb 11, 2021 11:37am
And it's worth noting that management got us a modest premium on the bought deal. .
Comment by Tommy123 on Feb 11, 2021 12:41pm
This post has been removed in accordance with Community Policy
Comment by TickerTwit on Feb 11, 2021 3:28pm
We now are the proud owners of less of the company than before the bought deal, so I would say that dilutions are not accretive. I am open to considering arguments in the other direction. .
Comment by mickeymouse on Feb 11, 2021 4:05pm
Yes there are now 13.6% more shares outstanding - but you must also take into consideration that with that higher share count comes more cash flow and lower debt - to really calculate whether the deal is accretive or dilutive you need to take many factors into account which the brokerage houses are very aware of when they price these offerings - and even though it is trading below the $16 of the ...more  
Comment by TickerTwit on Feb 11, 2021 7:21pm
It's messy to jointly analyze the dilution and the deployment as if they were part of the same event; they are distinct transactions. .
Comment by mickeymouse on Feb 11, 2021 10:32pm
The financing and "dilution" were done specifically to fund the capital deployments - in terms of the dilution I guess the next couple of quarter results will be the evidence one way or another - it really boils down to CFPS - if they have not increased their debt and the CFPS increases then this financing can only be viewed as accretive for shareholders - the dividend can then be ...more  
Comment by prophetoffacts on Feb 12, 2021 10:36pm
This post has been removed in accordance with Community Policy
Comment by Tommy123 on Feb 11, 2021 8:18pm
This post has been removed in accordance with Community Policy
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