Mr. Lube Steady earnings Diversified Royalty Corp. Announces Mr. Lube Trademark Acquisition and Royalty, $110 Million Bought Deal Financing, 11.25% Dividend Increase and Q2 Highlights
15:27 EDT Thursday, July 23, 2015
VANCOUVER, BRITISH COLUMBIA--(Marketwired - July 23, 2015) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Diversified Royalty Corp. (TSX:DIV) (the "Corporation" or "DIV") is pleased to announce its third trademark and royalty acquisition. DIV has entered into an agreement with Mr. Lube Canada Limited Partnership ("Mr Lube") to acquire the trademarks and certain other intellectual property rights utilized by Mr Lube in its business (the "Mr Lube Marks") for $138.8 million (the "Acquisition"). Immediately following the closing of the Acquisition, DIV will license the Mr Lube Marks back to Mr Lube for 99 years, in exchange for an initial royalty payment of $12.4 million per annum (the "Royalty" and together with the Acquisition, the "Transaction"). The Transaction is subject to Toronto Stock Exchange ("TSX") approval and customary closing conditions for transactions of this kind and is expected to close before the end of August 2015 and in any event within 60 days after closing of the Offering (as defined below).
In connection with the Acquisition, DIV has also entered into an agreement with a syndicate of investment dealers led by Cormark Securities Inc. (the "Underwriters") pursuant to which the Underwriters have agreed to purchase for resale to the public on a bought deal basis 40,741,000 subscription receipts of the Corporation (the "Subscription Receipts"), at a price of $2.70 per Subscription Receipt for gross proceeds of $110,000,700 (the "Offering").
In addition, the Corporation has granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 6,111,150 Subscription Receipts (or, in certain circumstances, Common Shares (as defined below)) at the Offering price exercisable in whole or in part at any time until the earlier of (i) 30 days following Closing (as defined below), and (ii) the occurrence of a Termination Event (as defined below), for market stabilization purposes and to cover over-allotments, if any.