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LAW.
CALGARY, Alberta, Sept. 17, 2018 (GLOBE NEWSWIRE) -- Alaris Royalty Corp. ("Alaris" or the
"Corporation") (TSX: AD) is pleased to announce that it has contributed US$46,000,000 (the “BCC
Contribution”) to a new partner, Body Contour Centers, LLC (“BCC”), and has committed to contributing an
additional US$45,000,000 (the “Additional BCC Contributions”) to BCC in two future tranches dependent on BCC
achieving certain financial targets. The Corporation is also pleased to announce a follow-on contribution of US$7,000,000
(the “Accscient Contribution”) into Accscient LLC (“Accscient”). The US$53,000,000 of
contributions announced today add approximately $0.27 cents and $0.13 cents per share of revenue and net cash from operations
respectively. Alaris has approximately $155,000,000 of undrawn capacity on its credit facility (the
“Facility”) following today’s announcement and estimates its run-rate payout ratio to be 92%.
New Partner – Body Contour Centers, LLC
Alaris entered into subscription and operating agreements with BCC on September 14, 2018, pursuant to which Alaris made the BCC
Contribution in exchange for preferred units in BCC (the “BCC Units”), which entitle Alaris to a US$6,440,000
distribution (the “BCC Distribution”) for the first full year following the transaction, representing an initial
yield of 14%. BCC has the option to pay a portion of the BCC Distribution, subject to a maximum of 2% of the aggregate contributed
capital to BCC in any given year as payment in kind (“PIK”) provided that any amounts subject to the PIK must be
paid every three years. If utilized, any amounts PIK’d will compound monthly. The BCC Distribution will be adjusted
annually (commencing January 1, 2020) based on the change in same clinic sales, subject to a 6% collar and will represent
approximately 8.5% of Alaris’ revenue. The BCC Contribution was used to fund growth and provide partial liquidity to existing
equity holders.
Alaris has also committed as part of the operating and subscription agreements with BCC to the Additional BCC
Contributions consisting of US$20,000,000 (“Tranche 2”) and US$25,000,000 (“Tranche 3”).
The Tranche 2 and Tranche 3 contributions will be funded upon BCC satisfying certain financial targets. If the Additional BCC
Contributions are funded, Alaris will have contributed a total of US$91,000,000 to BCC. The Additional BCC Contributions will
carry the same terms as the original BCC Contribution. Up to 25% of the BCC Units are redeemable at par at any time following
the earlier of the second tranche closing and three years from the original closing date, prior to such time these units are
non-redeemable.
“Alaris is thrilled to be adding what could eventually become one of our largest partners. Body Contour
Centers is the unquestioned market leader in a field that continues to grow at a high rate in the US. Adding yet another
partner with a great balance sheet and in a very desirable industry is another example of our ability to deploy capital in
competitive situations. We look forward to supporting BCC’s world class management team for years to come,” said Steve King,
President and Chief Executive Officer, Alaris.
Body Contour Centers, is the largest private plastic surgery practice in the United States with over 50
locations across the country. Operating in nearly 30 states and over 50 cities, it combines a consistent patient experience
with the art of treating each patient as an individual with unique plastic surgery needs. Procedures are conducted by over 100
board-certified plastic surgeons and every surgical center is certified by AAAHC, the highest-level certification for plastic
surgery. BCC is growing rapidly, doubling its location count over the last two years. The company celebrated its tenth
year of delivering great patient outcomes in July 2018 and lives by a mission that everyone deserves to have their best body today
and pursue their best life now.
“We are excited to embark on the next phase of growth via this partnership with Alaris. Their flexible
capital solution will allow our management team to pursue our vision for growth while recapitalizing our balance sheet in a prudent
way. We look forward to a long and successful relationship with Alaris,” Chris M. Par, Chief Executive Officer, Body Contour
Centers, LLC.
Based on Alaris' review of BCC’s internal pro forma results for the most recent trailing twelve month period in
2018, management of Alaris believes that BCC would have an earnings coverage ratio in a range of 1.2x to 1.5x, after giving effect
to the BCC Contribution, other changes to BCC’s capital structure and the BCC Distribution payable to Alaris.
Accscient Follow-On
In exchange for the Accscient Contribution announced today, Alaris is entitled to an additional US$1,001,000 of distributions from
Accscient. Alaris now has US$30,000,000 invested in Accscient and is collecting run rate distributions of US$4,430,000.
Accscient’s cumulative distribution accounts for approximately 6% of Alaris’ total revenue. Proceeds of the Accscient Contribution
were used by Accscient to acquire a business complimentary to their current operations.
ABOUT THE CORPORATION:
Alaris provides alternative financing to the Partners in exchange for distributions with the principal objective
of generating stable and predictable cash flows for dividend payments to its shareholders. Distributions from the Partners
are adjusted each year based on the percentage change of a "top line" financial performance measure such as gross margin and
same-store sales and rank in priority to the owners' common equity position.
NON-GAAP MEASURES:
Earnings Coverage Ratio refers to the Normalized EBITDA of a Partner divided by such Partner’s
sum of debt servicing (interest and principal), unfunded maintenance capital expenditures and distributions to Alaris.
Run Rate Payout Ratio refers to Alaris’ total dividend per share expected to be paid over the
next twelve months divided by the estimated net cash from operating activities per share Alaris expects to generate over the same
twelve-month period (after giving effect to the impact of all information disclosed as of the date of this report).
EBITDA refers to net earnings (loss) of a Partner determined in accordance with IFRS, before
depreciation and amortization, net of gain or loss on disposal of capital assets, interest expense and income tax expense.
Normalized EBITDA refers to the EBITDA of a Partner excluding items that are non-recurring in
nature and is calculated by adjusting for nonrecurring expenses and gains to EBITDA. Management deems non-recurring items to be
unusual and/or infrequent items that its Partner incurs outside of its common day-to-day operations.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements as defined under applicable securities laws. Statements
other than statements of historical fact contained in this news release may be forward-looking statements under applicable
securities legislation, including, without limitation, management's expectations, intentions and beliefs concerning: the impact of
the BCC and Accscient contributions (including the impact on revenues, distributions, run rate payout ratio and net cash from
operating activities), and the BCC Distributions and the additional Accscient distributions. Many of these statements can be
identified by words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar
words or the negative thereof. To the extent any forward-looking statements herein constitute a financial outlook (including
the impact on revenues, distributions, run rate payout ratio and net cash from operating activities), they were approved by
management as of the date hereof and have been included to provide an understanding with respect to Alaris' financial performance
and are subject to the same risks and assumptions disclosed herein. There can be no assurance that the plans, intentions or
expectations upon which these forward looking statements are based will occur.
By their nature, forward-looking statements require Alaris to make assumptions and are subject to inherent risks
and uncertainties. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will
affect Alaris’ business and that of its Partners are material factors considered by Alaris management when setting the outlook for
Alaris. Key assumptions include, but are not limited to, assumptions that the Canadian and U.S. economies will grow moderately over
the next 12 months, that interest rates will not rise in a material way over the next 12 to 24 months, that Alaris will achieve the
benefits of any concessions or relief measures provided to any Partners, that the Partners will continue to make distributions to
Alaris as and when required and in line with management’s expectations, that the businesses of the Partners will continue to grow
and that Alaris will have the ability to raise required equity and/or debt financing on acceptable terms. Management of
Alaris has also assumed that capital markets will remain stable and that the Canadian dollar will remain in a range of
approximately plus or minus 10% relative to the U.S. dollar over the next twelve months. In determining expectations for economic
growth, management of Alaris primarily considers historical economic data provided by the Canadian and U.S. governments and their
agencies.
There can be no assurance that the assumptions, plans, intentions or expectations upon which these forward
looking statements are based will occur. Forward looking statements are subject to risks, uncertainties and assumptions and should
not be read as guarantees or assurances of future performance. The actual results of the Corporation and the Partners could
materially differ from those anticipated in the forward looking statements contained herein as a result of certain risk factors,
including, but not limited to, the following: the dependence of Alaris on the Partners; reliance on key personnel; general economic
conditions; failure to complete or realize the anticipated benefit of Alaris’ financing arrangements with the Partners; a failure
of the Corporation or any Partners to obtain required regulatory approvals on a timely basis or at all; changes in legislation and
regulations and the interpretations thereof; risks relating to the Partners and their businesses, including, without limitation, a
material change in the operations of a Partner or the industries they operate in; inability to close additional Partner
contributions in a timely fashion, or at all; a change in the ability of the Partners to continue to pay Alaris’ preferred
distributions; a change in the unaudited information provided to the Corporation; a failure to achieve resolutions for outstanding
issues with Partners on terms materially in line with management’s expectations or at all; and a failure to realize the benefits of
any concessions or relief measures provided by Alaris to any Partner or to successfully execute an exit strategy for a Partner
where desired. Additional risks that may cause actual results to vary from those indicated are discussed under the heading “Risk
Factors” and “Forward Looking Statements” in the Corporation’s Management Discussion and Analysis for the year ended December 31,
2017, which is filed under the Corporation’s profile at www.sedar.com and on its website at www.alarisroyalty.com.
Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in
this news release as a number of factors could cause actual future results, conditions, actions or events to differ materially from
the targets, expectations, estimates or intentions expressed in the forward-looking statements. Statements containing
forward-looking information reflect management’s current beliefs and assumptions based on information in its possession on the date
of this news release. Although management believes that the assumptions reflected in the forward-looking statements contained
herein are reasonable, there can be no assurance that such expectations will prove to be correct.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary
statement. The forward-looking statements included in this news release are made as of the date of this news release and Alaris
does not undertake or assume any obligation to update or revise such statements to reflect new events or circumstances except as
expressly required by applicable securities legislation.
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the
TSX) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:
Curtis Krawetz
Vice President, Investments and Investor Relations
Alaris Royalty Corp.
P: (403) 221-7305
www.alarisroyalty.com
