Duke Royalty Limited Royalty finance agreement LOI and secured loan (3408R)
14 June 2018 - 4:01PM
UK Regulatory
TIDMDUKE
RNS Number : 3408R
Duke Royalty Limited
14 June 2018
14 June 2018
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
LOI signed for fifth Royalty Investment and GBP3.5m secured
loan
Duke Royalty Limited (AIM: DUKE), a provider of alternative
capital solutions to a diversified range of profitable and
long-established businesses in Europe and abroad, is pleased to
announce that it has signed an exclusive Letter of Intent ("LOI")
for a fifth royalty investment. The total planned consideration for
this near-term investment opportunity is US$3.5 million.
The target Royalty Partner ("PartnerCo") was founded in the
1950s and represents the largest US provider of legal information
that is solely focussed on serving the law enforcement market.
PartnerCo's publications include enforcement manuals, code books
and field guides that highlight legislative changes and
guidelines.
PartnerCo's mission is to help the law enforcement community be
more efficient by providing them easy access to the latest laws,
rules, and regulations and by equipping them with the tools to
educate and train officers, management, the courts and the
citizens.
The investment opportunity meets all of Duke's stated
criteria:
-- Long-standing, profitable operating history
-- Experienced senior management team with high equity ownership
-- Initial cash-on-cash yield of more than 13 per cent. per
annum via monthly payments immediately post investment
-- 40 year secured financing - distributions to be adjusted
annually to reflect PartnerCo's revenue growth
This investment opportunity is well advanced but still subject
to final due diligence and definitive documentation. It is expected
that this transaction will be completed in the coming weeks, with a
possible initial tranche of capital being provided during June
2018.
The LOI also includes the terms to scale up Duke's investment up
to U$7.0 million. PartnerCo has additional acquisition targets
which Duke has agreed to finance through subsequent tranches on the
same terms, subject to PartnerCo maintaining Duke's investment
criteria post-acquisition.
In order to position itself to finance the planned investment
into PartnerCo, Duke has secured a loan of GBP3.5m from a
non-related third party. The summary terms of this loan are:
-- GBP3.5m secured loan with expiry date of 30 June 2019
-- 9% per annum interest rate until 31 December 2018, rising to
12% per annum for the final six-month period ending June 30th
2019
-- 2% drawdown fee
-- Automatic repayment in the event of the closure of an equity
issue of more than GBP3.5m and/or in the event that the GBP3.5m
loan becomes greater than 20% of the NAV of Duke
Neil Johnson, CEO of Duke Royalty, said:
"Duke's near term goal is to diversify its portfolio through the
addition of new Royalty Partners and this accretive LOI has allowed
us to maintain momentum towards achieving this.
"Therefore, we are pleased to have gained exclusivity over our
fifth Royalty Partner, a unique business with compelling long term
prospects and an impressive management team, by securing a modest
amount of leverage to demonstrate that Duke has the capital on its
balance sheet.
"We are accumulating a royalty portfolio which provides robust,
predictable, long term returns to shareholders, targeting a high
single-digit yield in 2018. With this in mind, I am pleased to
report that Duke's royalty pipeline continues to grow and we look
forward to updating the market in due course."
***ENDS***
For further information, please contact www.dukeroyalty.com, or
contact:
+44 (0) 1481 741
Duke Royalty Limited Neil Johnson/ Charlie Cannon-Brookes 240
Grant Thornton UK
LLP Colin Aaronson/ Samantha +44 (0) 20 7383
(Nominated Adviser) Harrison 5100
Cenkos Securities
plc +44 (0) 207 397
(Joint Broker) Julian Morse/ Michael Johnson 8900
Mirabaud Securities
Limited +44 (0) 20 3167
(Joint Broker) Peter Krens/ Edward Haig-Thomas 7222
Redleaf Communications Elisabeth Cowell/ Robin +44 (0) 20 3757
(PR) Tozer/ Ian Silvera 6880
Dukeroyalty@redleafpr.com
About Duke Royalty
Duke Royalty Limited provides alternative capital solutions to a
diversified range of profitable and long-established businesses in
Europe and abroad. Duke Royalty's experienced team and exclusive
partnership provide financing solutions to private companies that
are in need of capital but whose owners wish to maintain equity
control of their business. Duke Royalty's royalty investments are
intended to provide robust, stable, long term returns to its
shareholders. Duke Royalty is listed on the AIM market under the
ticker DUKE and is headquartered in Guernsey.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
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END
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