Diversified Royalty Corp. (TSX: DIV; DIV.DB) (the
“
Corporation” or “
DIV”) is
pleased to announce it has completed its previously announced
transaction with Nurse Next Door Professional Homecare Services
Inc. (“
Nurse Next Door”) to add a fifth royalty
stream to DIV's portfolio. DIV’s subsidiary, NND Royalties Limited
Partnership (“
NND LP”) acquired the trademarks and
certain other intellectual property rights utilized by Nurse Next
Door in its premium home care business (the “
NND
Rights”) for a purchase price (the “
Purchase
Price”) of $52.0 million (the
“
Acquisition”), excluding a retained interest
provided to Nurse Next Door through the issuance of limited
partnership units of NND LP (the “
Exchangeable
Units”).
The cash Purchase Price of $52.0 million was
funded with $44.5 million of DIV’s cash on hand and $7.5 million of
senior debt provided by a Canadian chartered bank under a new
credit facility having a maximum borrowing capacity of $14.5
million. In addition to the cash portion of the Purchase Price, NND
LP issued the Exchangeable Units to Nurse Next Door as a retained
interest having an agreed value of $23.0 million.
Immediately following the closing of the
Acquisition, DIV licensed the NND Rights back to Nurse Next Door
for 99 years, in exchange for an initial royalty payment of $4.8
million per annum (the “Royalty” and together with
the Acquisition, the “Transaction”). The Royalty
will grow contractually at a rate of 2% per annum during the term
of the license.
For further details with respect to the
Transaction, see DIV’s news release dated November 1, 2019, a copy
of which is available under DIV’s profile at www.sedar.com.
Dividend Increase
Given the successful completion of the
Transaction, DIV’s annual dividend will increase from 22.25 cents
per share to 23 cents per share as previously announced in DIV’s
news release dated November 1, 2019. The dividend increase will
take effect commencing with the December 2019 dividend.
About Diversified Royalty Corp.
DIV is a multi-royalty corporation, engaged in
the business of acquiring top-line royalties from well-managed
multi-location businesses and franchisors in North America. DIV’s
objective is to acquire predictable, growing royalty streams from a
diverse group of multi-location businesses and franchisors.
DIV currently owns the Sutton, Mr. Lube, AIR
MILES®, Mr. Mikes and Nurse Next Door trademarks. Sutton is among
the leading residential real estate brokerage franchisor businesses
in Canada with over 200 offices across Canada. Mr. Lube is the
leading quick lube service business in Canada with 182 locations
across Canada and over $235 million of annual system sales. AIR
MILES® is Canada’s largest coalition loyalty program with over 200
leading brand-name sponsors; approximately two-thirds of Canadian
households actively participate in the AIR MILES® Program. Mr.
Mikes operates 44 casual steakhouse restaurants primarily in
western Canadian communities with over $85 million of annual system
sales. Nurse Next Door is one of North America’s fastest growing
home care providers and operates 177 locations across Canada, the
United States and Australia with over $100 million of annual system
sales.
DIV expects to increase cash flow per share by
making accretive royalty purchases and through the growth of
purchased royalties. DIV expects to pay a predictable and stable
dividend to shareholders and increase the dividend as cash flow per
share increases allow.
Forward Looking Statements
Certain statements contained in this news
release may constitute “forward-looking information" within the
meaning of applicable securities laws that involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking information. The use
of any of the words “anticipate”, “continue”, “estimate”, “expect”,
“intend”, “may”, “will”, ”project”, “should”, “believe”,
“confident”, “plan” and “intends” and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words.
Specifically, forward-looking information in this news release
includes, but are not limited to, statements made in relation to:
the effective date of the increase to the annual dividend; DIV’s
corporate objectives; and DIV’s expectation that it will pay a
predictable and stable dividend to shareholders and increase the
dividend as cash flow per share increases allow. These statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events, performance, or
achievements of DIV to differ materially from those anticipated or
implied in such forward-looking statements. DIV believes that the
expectations reflected in these forward-looking statements are
reasonable but no assurance can be given that these expectations
will prove to be correct. In particular there can be no assurance
that: DIV will be able to achieve any of its corporate objectives
or make monthly dividend payments to the holders of its common
shares. Given these uncertainties, readers are cautioned that
forward-looking information included in this news release are not
guarantees of future performance, and such forward-looking
information should not be unduly relied upon. More information
about the risks and uncertainties affecting DIV’s business and the
businesses of its royalty partners can be found in the “Risk
Factors” section of its Annual Information Form dated March 11,
2019 and the “Risk Factors” section of its management’s discussion
and analysis for the three and nine months ended September 30, 2019
that are available under DIV’s profile on SEDAR at
www.sedar.com.
In formulating the forward-looking statements
contained herein, management has assumed that, among other things,
DIV will obtain the expected benefits of the Transaction, and the
business and economic conditions affecting DIV and its royalty
partners will continue substantially in the ordinary course,
including without limitation with respect to general industry
conditions, general levels of economic activity and regulations.
These assumptions, although considered reasonable by management at
the time of preparation, may prove to be incorrect.
All of the forward-looking information disclosed
in this news release is qualified by these cautionary statements
and other cautionary statements or factors contained herein, and
there can be no assurance that the actual results or developments
contemplated thereby will be realized or, even if substantially
realized, that they will have the expected consequences to, or
effects on, DIV contemplated by such forward-looking information
contained herein. The forward-looking information included in this
news release is made as of the date of this news release and DIV
assumes no obligation to publicly update or revise such information
to reflect new events or circumstances, except as may be required
by applicable law.
THE TORONTO STOCK EXCHANGE HAS NOT
REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE
ACCURACY OF THIS RELEASE.
Additional Information
Additional information relating to the
Corporation and other public filings, is available on SEDAR at
www.sedar.com.
Contact:Sean Morrison, President and Chief
Executive Officer Diversified Royalty Corp.(604) 235-3146
Greg Gutmanis, Chief Financial Officer and VP
AcquisitionsDiversified Royalty Corp.(604) 235-3146
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