Alaris Royalty Corp ALARF

About the SM Group, it states:

[jjeerryy]

S.M. Group International LP (“Group SM”) During the three months ended September 30, 2017, Group SM received the final judgment related to an international arbitration process and the amount awarded was substantially less than anticipated. Therefore Group SM will not be in a position to repay the $9.8 million in unpaid distributions which were included in trade and other receivables at June 30, 2017. The Corporation recorded a $9.8 million bad debt expense for the accrued distributions and there remains $2.3 million of accrued interest on promissory notes which is expected to be received within the next twelve months. Subsequent to September 30, 2017, the Corporation received $1.5 million of accrued interest. The fair value of the preferred units were reduced in the period as in the absence of regular monthly distributions, the methodology for measuring the fair value changes from a discounted cash flow model to a liquidation model. Based on the conclusions of the liquidation value calculation, the preferred units were reduced to nil in the period as they are subordinate to the secured and unsecured debt on Group SM’s balance sheet. The permanent impairment of $41.0 million of the Group SM units was recorded through the statement of profit or loss. As of September 30, 2017 the Corporation has $27 million of promissory notes ($10 million first priority secured and $17 million of unsecured) recorded on its balance sheet. The smaller judgment also means that the majority of the short-term unsecured notes of $17 million are not expected to be collected in the next twelve months and have been moved from current assets to non-current assets. Group SM is currently undergoing a full restructuring process, subsequent to the restructuring the Corporation believes there will be sufficient enterprise value to repay in full the $27 million of secured and unsecured promissory notes. Should there be adverse developments in the restructuring process, collection of a portion up to the entire $17 million of unsecured notes could be impacted.