CALGARY, ALBERTA--(Marketwire - July 6, 2011) -
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Alaris Royalty Corp. ("Alaris" or the "Company") (TSX:AD) is pleased to announce that it has entered into a new partnership agreement (the "Agreement") which will see the Company contribute CAD$27,250,000 in return for a first year distribution of CAD$4,300,000 (the "Transaction"). This new partnership will be funded by the re-deployment of a significant portion of the proceeds (the "LifeMark Proceeds") from the recently closed transaction involving LifeMark Health Limited Partnership (the "LifeMark Transaction"). Following the Transaction, and the recent repayment of $26,200,000 on the Company's revolving credit facility, Alaris will have approximately $11,000,000 remaining of the $65,000,000 LifeMark Proceeds.
The Agreement is with Killick General Partners L.P. ("Killick GP") and Killick Aerospace Limited Partnership Fund II ("Killick Aerospace"), resulting in the formation of Killick Limited Partnership (the "Partnership"). The Transaction delivers an accretive re-deployment of the Proceeds received from the LifeMark Transaction while further diversifying Alaris' revenue stream both geographically, and in a new industry to Alaris. The Transaction is expected to add approximately $0.25 of distributable cash per share to Alaris on a pro forma basis.
Killick Aerospace is a world class leader in the global aircraft maintenance, repair and overhaul ("MRO") industry. Through its three wholly owned subsidiaries, (Prime Turbines; www.primeturbines.com, CT Aerospace; www.ctaerospace.com, and Kansas Aviation; www.kansasaviation.com) Killick Aerospace offers MRO services to owners of small aircraft operating turboprop engines, as well as inventory management services to MRO shops which service commercial aircraft jet engines. Based in Carrollton, Texas, USA, Killick Aerospace has operations in Hyannis, MS; Pittsburgh, PA; Independence, Kansas; Europe; and Singapore. Killick Aerospace and Killick GP are owned and controlled by the Dobbin family of Newfoundland, who were previously behind the success of CHC Canadian Helicopters. The Partnership is a Canadian partnership with all amounts for the contribution and preferred distribution denominated in Canadian dollars.
"Killick Aerospace has systematically built a platform with the right products and people to efficiently serve our global customer base. We are very pleased to have such a strong partner with us as we take our company to the next level", said Russell Starr, CEO of Killick Aerospace.
Similar to its transactions with Alaris' other partners, Alaris acquired preferred units in the Partnership which entitle Alaris to receive an initial annual preferred distribution of $4,300,000, payable monthly and in priority to holders of other units in the Partnership. For the first twelve months following the closing of the Killick Transaction, Alaris' distribution will represent an expected 15.8% return on contributed cash. The preferred distribution will be adjusted annually based on the Partnership's change in gross revenues, subject to a maximum annual increase or decrease of 4%.
"This new partnership not only replaces the majority of revenue sold in the LifeMark Transaction, it also diversifies our revenue base in a stable, regulated industry and on a global platform", said Steve King, President and Chief Executive Officer, Alaris Royalty Corp. "We are very excited at the prospect of partnering with an impressive management team and for the opportunity to fund a world class company. Killick offers all of the criteria that we look for in a new partner: steady historic earnings from a required service; low levels of term debt and capital expenditures; a large buffer of free cash flow; and opportunities for future growth."
Mark Dobbin, of Killick GP added, "We are looking forward to a long-term productive relationship with Alaris. Alaris' unique business model and insightful people makes it the ideal partner for Killick Aerospace as we continue to profitably grow our business. The Alaris team took the time to understand our business and recognized the opportunities we have to grow together."
The Company invests in a diversified group of private businesses ("Private Company Partners") in exchange for royalties or distributions from the Private Company Partners, with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions to Alaris from the Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin, same clinic sales, gross revenues and same-store sales and rank in priority to the owners' common equity position.
The term "distributable cash per share" (the "Non-IFRS Measure") is a financial measure used in this news release that is not a standard measure under International Financial Reporting Standards ("IFRS"). The Company's method of calculating the Non-IFRS Measure may differ from the methods used by other issuers. Therefore, the Company's Non-IFRS Measure may not be comparable to similar measures presented by other issuers.
Distributable cash per share means Alaris' net income prepared in accordance with IFRS excluding non-cash items that include stock-based compensation expense, future income taxes, and depreciation and amortization divided by the weighted average number of common shares issued and outstanding in the share capital of the Company over such period.
This news release contains 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 transaction described herein including: the expected preferred distribution to the Company, and the expected adjustments thereto, the expected return on contributed cash to the Company, opportunities for future growth with the Partnership, and the expected effect on the Company's distributable cash per share. Many of these statements can be identified by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which these forward looking statements are based will occur.
Statements containing forward-looking information by their nature involve numerous assumptions and significant known and unknown facts and uncertainties of both a general and a specific nature. Key assumptions include, but are not limited to assumptions that: the Partnership will grow and continue to require capital from Alaris in the future; the Canadian and U.S. economies will continue to grow moderately in 2011; interest rates will remain low; more private companies will require access to alternative sources of capital; capital markets will continue to improve; and the Canadian dollar will remain strong relative to the U.S. dollar. In determining the Company's expectations for economic growth, management primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
The forward-looking statements contained herein are subject to numerous known and unknown risks that may cause actual results to vary from those set forth in the forward-looking statements, including, but not limited to risks associated with: general economic conditions and changes in the financial markets; risks associated with Killick Aerospace and its business; and a change in the ability of the Partnership to continue to pay Alaris' preferred distributions. In addition, the information set forth under the heading "Risk Factors" in the Company's Annual Information Form dated March 25, 2011 (a complete copy of which can be found on SEDAR at www.sedar.com) identifies additional factors that could affect the operating results and performance of the Company and may cause the actual results of the Company to differ materially from those anticipated in forward-looking statements.
As forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. 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 expectations represented in such forward-looking statements 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.
Manager Investor Relations and Investment Analyst