Alaris Royalty Corp. Announces the Repurchase of Its Financial Interests in End of the Roll
GlobeNewswire - Tue Jul 3, 7:30AM CDT
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Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX:AD.TO) 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.