Alaris Equity Partners Income Trust (
"Alaris" or
the
"Trust") (TSX: AD.UN) is pleased to announce
the deployment of US$55 million into existing Partners including
transactions with Fleet Advantage LLC (
“Fleet”),
GWM Holdings Inc. and its affiliates (collectively
“GWM”) and Body Contour Centers LLC
(
“BCC”) doing business as Sono Bello. These
transactions all closed prior to December 31, 2021. With the
transactions announced today, Alaris deployed CDN$359 million in
2021.
Unless otherwise stated, all numbers in
this press release are presented in US dollars.
Fleet
The Trust is pleased to announce that it has
invested an additional $25.0 million (the “Fleet
Follow-On”) in Fleet. The Fleet Follow-On consists of a
new $17.0 million preferred equity contribution (the “Fleet
Contribution”) as well as an investment of $8.0 million in
exchange for a minority ownership of the common equity in Fleet
(the “Fleet Common Equity”). This transaction also
included an exchange (the “Unit Exchange”) of
Alaris’ existing preferred equity valued at $10.0 million. The
result of the Fleet Follow-On and Unit Exchange (collectively the
“Fleet Investment”) results in a total investment
of $35.0 million in Fleet.
“We are extremely excited to continue our
partnership with Alaris. This additional investment will allow us
to accelerate our robust growth trajectory and strengthen our
offering of innovative and award-winning fleet financing solutions
to help our clients achieve optimum vehicle productivity, maximum
safety, the lowest cost of operation, and meet their Environmental,
Social, and Governance (ESG) goals,” said Brian Holland, President,
Fleet Advantage.
Pursuant to the agreements among Alaris and
Fleet, Alaris made the Fleet Contribution and the Unit Exchange for
new preferred units (the “New Fleet Units”) in
Fleet totalling $27.0 million. The New Fleet Units will result in
an annualized distribution to Alaris of $3.78 million (the
“Fleet Distribution”), a pre-tax yield of 14.0%.
Commencing on January 1, 2023, the Fleet Distribution will be
adjusted based on net revenues. The proceeds from the Fleet
Investment were used for liquidity purposes to existing Fleet
equity holders. The Fleet Distribution has a payment in kind
(“PIK”) feature whereby Fleet can elect to PIK up
to 2.0% of Alaris’ aggregate preferred equity contribution. The PIK
is intended to give Fleet flexibility in capital allocation
decisions. The Fleet Common Equity will be entitled to common
equity dividends if and when Fleet declares such dividends.
GWM
The Trust is pleased to announce a set of
transactions with GWM whereby Alaris received $25.8 million (the
“Partial GWM Redemption”) for a partial redemption
of preferred units and partial repayment of outstanding
subordinated indebtedness in GWM as well as a subsequent $30.0
million investment (the “GWM Common Equity”) by
Alaris in exchange for minority ownership of the common equity in
GWM. The $25.8 million of proceeds received from the Partial GWM
Redemption had an associated cost basis of $25.0 million. The
result of the Partial GWM Redemption and GWM Common Equity
investment (collectively the “GWM Transactions”)
is a total investment of $106.0 million in GWM.
Following the closing of the GWM Transactions,
Alaris has a total of $76.0 million of preferred equity and
subordinated indebtedness (the “GWM Yield
Instruments”) invested in GWM with $9.1 million of
annualized distributions and interest (the “GWM
Payments”) on the GWM Yield Instruments. Alaris is also
entitled to receive dividends on the GWM Common Equity when and if
GWM declares such dividends. Although GWM has frequently paid
dividends in the past, no such dividend policy is in place and is
subject to GWM board approval.
“The programmatic media industry is expected to
grow at an impressive rate over the next 5 years and GWM has
positioned itself to capture that growth. The common equity
investment in GWM puts Alaris in a position to participate in this
growth and also better aligns us with GWM management and
shareholders,” said Steve King, President & CEO, Alaris.
Body Contour Centers
The Trust is pleased to announce that it has
invested an additional $25.0 million (“BCC Tranche
3”) into BCC. The BCC Tranche 3 was part of the original
investment commitment in September 2018, whereby BCC would receive
2 additional tranches of capital after achieving certain earnings
targets. The $20.0 million tranche 2 financing closed in December
2020 while BCC easily hit the BCC Tranche 3 hurdle in 2021 and as
such, the BCC Tranche 3 financing closed. Following the BCC Tranche
3 financing, Alaris’ total investment in BCC is $91.0 million.
Following the announcements today, the run rate
payout ratio remains in the range of 65% to 70%. The Trust has
approximately CDN$333.5 million drawn on its senior credit facility
(the “Facility”) and CDN$66.5 million available
for investment purposes, while the total senior debt to EBITDA on a
proforma basis is approximately 2.46x. Alaris continues to expect a
redemption from Kimco Holdings LLC, which will provide the Trust
with proceeds of approximately $60 to $70 million.
ABOUT ALARIS:
Alaris, through its subsidiaries, provides
alternative financing to private companies
("Partners") in exchange for distributions,
dividends and interest (“Distributions”) with the
principal objective of generating stable and predictable cash flows
for dividend payments to its unitholders. 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-IFRS MEASURES:
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.
The terms Run Rate Payout Ratio and EBITDA (the
"Non-IFRS Measure") are not standard measures
under IFRS. Alaris' calculation of the Non-IFRS Measure may differ
from those of other issuers and, therefore, should only be used in
conjunction with the Trust’s annual audited financial statements,
which are available under the Trust's profile on SEDAR at
www.sedar.com.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking
statements, including forward-looking statements within the meaning
of "safe harbor" provisions under applicable securities laws
(“forward-looking statements”). Statements other than statements of
historical fact contained in this news release may be
forward-looking statements, including, without limitation,
management's expectations, intentions and beliefs concerning: the
financial impact of the Fleet Contribution, the GWM Transactions
and the BCC Tranche 3, including the impact on Run Rate Payout
Ratio; the amounts of the Fleet, GWM and BCC Distributions and
adjustments thereto; expectations regarding common equity
Distributions on the new GWM and Fleet common equity; and the
outstanding indebtedness under the Facility and uses of proceeds
thereunder. 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. Any forward-looking statements herein which
constitute a financial outlook or future-oriented financial
information (including the impact on Run Rate Payout Ratio) were
approved by management as of the date hereof and have been included
to provide an understanding of 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 (including,
without limitation, the ongoing impact of COVID-19) 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 continue to
stabilize from the economic downturn created by COVID-19 and will
not be detrimentally impacted over the next 12 months; interest
rates will not rise in a material way over the next 12 months; that
those Alaris Partners previously affected by COVID-19 will not see
a detrimental impact from COVID-19 over the next 12 months;
following a recovery from the COVID-19 impact, the businesses of
the majority of our Partners will continue to grow; the businesses
of new Partners and those of existing partners will perform in line
with Alaris’ expectations and diligence; more private companies
will require access to alternative sources of capital 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 the Canadian and U.S. dollar trading pair will remain
in a range of approximately plus or minus 15% of the current rate
over the next 6 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 as well as prevailing economic conditions at the
time of such determinations.
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
Trust 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
ongoing impact of COVID-19 on the Trust and its Partners (including
which, if any, Partners may experience a slowdown or closure of its
business); the ability of our Partners and, correspondingly, Alaris
to meet performance expectations for 2022 and beyond as a result of
COVID-19 or otherwise; any change in the senior lenders under the
Facility’s outlook for Alaris’ business; management's ability to
assess and mitigate the ongoing impacts of COVID-19; the dependence
of Alaris on the Partners; reliance on key personnel; general
economic conditions, including the ongoing impact of COVID-19 on
the Canadian, U.S. and global economies; failure to complete or
realize the anticipated benefit of Alaris’ financing arrangements
with the Partners; a failure of the Trust 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’
Distributions; a change in the unaudited information provided to
the Trust; a failure of a Partner (or Partners) to realize on their
anticipated growth strategies; a failure to achieve resolutions for
outstanding issues, including payment of any deferred
Distributions, 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
Trust’s Management Discussion and Analysis and Annual Information
Form for the year ended December 31, 2020, which are filed under
the Trust’s profile at www.sedar.com and on its website at
www.alarisequitypartners.com.
This news release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about increases to the Trust's net operating
cash per flow per unit and liquidity, each of which are subject to
the same assumptions, risk factors, limitations, and qualifications
as set forth above. Readers are cautioned that the assumptions used
in the preparation of such information, although considered
reasonable at the time of preparation, may prove to be imprecise
and, as such, undue reliance should not be placed on FOFI and
forward-looking statements. Alaris' actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and FOFI, or if any of
them do so, what benefits the Trust will derive therefrom. The
Trust has included the forward-looking statements and FOFI in order
to provide readers with a more complete perspective on Alaris’
future operations and such information may not be appropriate for
other purposes. Alaris disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
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:
ir@alarisequity.comP: (403) 260-1457Alaris
Equity Partners Income TrustSuite 250, 333 24th Avenue S.W.Calgary,
Alberta T2S 3E6www.alarisequitypartners.com
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