Alaris Royalty Corp. Provides an Update on Trading Activity Alaris Royalty Corp. ("Alaris" or the "Corporation") (AD.TO) is providing an update to shareholders regarding the trading activity of its common shares (“Shares”) on the Toronto Stock Exchange. Although we do not generally respond to market activity, we feel it is appropriate at this time to comment based on the level of trading activity in AD Shares today.
An analyst that covers Alaris distributed a research report this morning highlighting risks Alaris faces with regards to a current partner, Providence Industries (“Providence”). On April 2, 2019 Alaris filed its annual information form (“AIF”). In the AIF Alaris highlighted that its distribution from Providence (the “Providence Distribution”) had been blocked at the end of March 2019 but that it was too early in the discussions with Providence and Providence’s senior lenders (the “Lenders”) to determine the level of impact to our business. This is a non-material event to the Corporation with the Providence Distribution only accounting for approximately 5% of total revenue (CAD$5.9 million or $0.16 per share) that Alaris expects for the year ended December 31, 2019. The carrying value of Alaris’ investment in Providence also only accounted for approximately 5% of Alaris’ total investment book value (CAD$39 million or $1.07 per share) at year ended December 31, 2018. The Corporation expects no disruption to its dividend as a result of any outcome of the current issues with Providence. The Run Rate Payout Ratio at March 5, 2019 was estimated to be 90% and the impact on that ratio from any non-payment of the Providence Distribution would be approximately 5% in the event that Alaris receives no distributions from Providence for the remainder of the year. The numbers presented above represent the impact of the worst case scenario in regard to Providence, which is not what the Corporation expects at this time. The Corporation also wants to highlight that the remainder of its portfolio continues to perform in line with guidance provided on March 5, 2019 in the Q4, 2018 earnings release.
The Corporation, Providence and its Lenders are working collaboratively together and we expect to be able to provide a fulsome update on possible solutions with Providence and its Lenders on May 6, 2019 when we release our earnings for Q1, 2019. Alaris has received all payments from Providence through the end of March 2019.
Below is the excerpt from the AIF filed on April 2, 2019:
“In March 2019 Alaris received a notice from the senior lenders of Providence notifying Alaris that its distribution from Providence has been blocked for future payments due to Providence’s loss of a material customer. Alaris, Providence and the senior lender are working on viable solutions to minimize the disruption to distributions. Timing and amounts of distributions collected for the remainder of the year are unknown at this time but there should be a meaningful update available when Alaris releases Q1, 2019 results on May 6, 2019.”