Alaris Adds A New Partner, Increases Its Dividend by 5% and Announces A Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - June 6, 2012) -


Alaris Royalty Corp. (TSX:AD) ("Alaris" or the "Corporation") is pleased to announce that it has entered into a new partnership agreement (the "Partnership Agreement") with Labstat International ULC to form Labstat International LP ("Labstat" or the "Partnership"). Alaris has contributed $41,200,000 (the "Labstat Contribution") to the Partnership in return for an initial $6,180,000 annual preferred distribution (the "Distribution"). The Labstat Contribution was funded with the Corporation's senior revolving debt facility (the "Facility"), which was recently increased to $50,100,000. As a result of the new Partnership, and continued positive performance of Alaris' other sources of revenue, the board of directors (the "Board of Directors") has determined to increase Alaris' monthly dividend by $0.005 to $0.10 per share from $0.095. In addition, the Corporation has entered into an agreement for a $44,070,000 bought deal equity financing with a syndicate of underwriters (the "Underwriters") led by Acumen Capital Finance Partners Limited ("Acumen").

Labstat Contribution

On June 6, 2012 Alaris entered into the Partnership Agreement, pursuant to which it contributed $41,200,000 to the Partnership in return for the Distribution. The Distribution represents an expected initial return of approximately 15% on the contributed funds and was funded entirely with funds drawn on the Facility.

The Distribution will be adjusted annually, based on the percentage (%) change in the Partnership's "gross revenues" year over year, subject to a maximum increase or decrease of six percent (6%). This collar provides added certainty to the revenue received from Labstat, while also allowing Labstat's ownership group to benefit from revenue growth in excess of 6% per year. Following the Labstat Contribution Alaris does not have a single revenue source that accounts for more than 20% of its total revenue. In addition, Alaris has over 80% of its revenue protected by either a fixed annual increase, or a collar, which helps reduce the downside risks on the distributions received from its Private Company Partners (as defined herein).

A Canadian company, Labstat was established in 1976 and has grown into a globally recognized analytical laboratory dedicated to the analysis of tobacco and tobacco products. According to Labstat management, Labstat is the largest independent third party tobacco testing company in the world, providing testing services to tobacco manufacturers, governments and other public and private entities in Canada, the United States, Europe, South America, Asia and New Zealand. The senior management team are comprised of industry recognized scientists and technical staff, who collectively have over 120 years of experience in the industry. Labstat employs between 130 and 160 staff during its peak business.

"Due to the continuing regulatory requirements being imposed on tobacco manufacturers, Labstat's business model is remarkably stable, while also having excellent growth prospects. Labstat is truly a world leader in its industry and we are very excited to partner with Labstat's management team." said Steve King, President and CEO, Alaris.

"Labstat is well positioned to meet the increased product testing needs of the tobacco industry as a result of the anticipated regulations in the United States. We are extremely pleased to be partnered with a company that shares our values and vision for the future." said Bill Rickert, CEO of Labstat.

Dividend Increase

After considering the positive impact the Labstat Contribution is expected to have on Alaris and the continued performance of Alaris' seven other Private Company Partners, the Board of Directors has approved an increase to the monthly dividend on Alaris' outstanding common shares ("Common Shares") of $0.005 per Common Share to $0.10 per share (or $1.20 per share on an annualized basis) from $0.095 per share (or $1.14 per share on an annualized basis), which represents a 5% increase from the prior dividend. This increase represents the Corporation's fourth dividend increase since April 2010. The Corporation anticipates a reduction of its current payout ratio after giving effect to the Labstat Contribution and the dividend increase.

The first dividend for which this increase will apply is the dividend expected to be paid on July 16, 2012 to shareholders of record at the close of business on June 29, 2012.

Bought Deal Financing

Following the completion of the Labstat Contribution, Alaris entered into an agreement with the Underwriters, led by Acumen and including Cormark Securities Inc., Canaccord Genuity Corp. and National Bank Financial Inc., pursuant to which the Corporation will sell, on a "bought-deal" basis, subject to regulatory approval, 2,260,000 shares of the Corporation (the "Common Shares") at a price of $19.50 per Common Share for total gross proceeds of $44,070,000 (the " Offering"). The Corporation has also granted the Underwriters an over-allotment option (the "Over-Allotment Option") to purchase up to an additional 255,000 Common Shares from treasury at the same price and on the same terms as the Offering, exercisable in whole or in part, at any time, for a period of up to 30 days following closing of the Offering to cover over-allotments.

The net proceeds of the Offering will be used to reduce the Corporation's indebtedness under the Facility. With the net proceeds from the Offering, Alaris is expecting to carry a balance of approximately $5,950,000 on the Facility or $1,450,000, should the Over-Allotment Option be exercised in full.

"Maintaining a strong balance sheet allows us to enter the competitive bidding process with private companies which are only entertaining offers from parties with the cash available to close the financing. Having balance sheet flexibility was a key factor for Alaris winning the Labstat bidding process", said Steve King, President and CEO, Alaris.

The Common Shares will be offered in each of the provinces of Canada, other than the province of Québec, by way of a short form prospectus. The Offering is expected to close on or about June 27, 2012. Completion of the Offering is subject to certain conditions, including, without limitation, the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange.

The securities offered have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States. This release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the offered securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About the Corporation:

Alaris provides alternative financing to the private companies (the "Private Company Partners") in exchange for royalties or distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions from the private company partners are structured as a percentage 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

The terms "payout ratio" and "distributable cash per share" are financial measures that are not standard measures under International Financial Reporting Standards ("IFRS"). The Corporation's method of calculating payout ratio and distributable cash per share may differ from the methods used by other issuers. Therefore, the Corporation's payout ratio and distributable cash per share may not be comparable to similar measures presented by other issuers. Payout ratio means Alaris' annualized dividend per share divided by its distributable cash per share, as defined above. Distributable cash per share means Alaris' net income prepared in accordance with IFRS excluding certain non-cash items that included stock-based compensation expense, future income taxes, depreciation and amortization. The terms payout ratio and distributable cash per share should only be used in conjunction with the Corporation's annual audited and quarterly reviewed financial statements, which are available on SEDAR at

Forward-Looking Statements

This news release contains forward-looking statements. Statements other than statements of historical fact contained in this news release may be forward-looking statements. 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. In particular, without limitation, this news release contains forward looking statements regarding: the Distributions to be received by Alaris from Labstat; the impact of the Labstat Contribution on Alaris future performance and growth prospects of Labstat; anticipated regulations in the United States; the use of proceeds of the Offering; receipt of regulatory approvals; the reduction in payout ratio; the timing of the dividend increase; the jurisdictions in which the Offering will be sold; the method of the Offering; the closing of the Offering; and the indebtedness under the Facility after giving effect to the Labstat Contribution and the Offering (including the Over-Allotment Option).

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 may require capital from Alaris in the future; the Canadian and U.S. economies will grow moderately over the balance of 2012; that the Private Company Partners will continue to make distributions to Alaris as and when required; the FDA's implementation of its tobacco testing guidelines and requirements; the business of the Private Company Partners will continue to grow; the Corporation will experience positive resets to its annual royalties and distributions from its Private Company Partners in 2012; and the Corporation will obtain any required regulatory approvals for the Offering on a timely basis. 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 Labstat and its business; a change in the ability of Labstat and the other Private Company Partners to continue to pay Alaris' preferred distributions; the dependence of Alaris on the Private Company Partners; changes in legislation or government regulations and the interpretations thereof; and a failure to realize the benefits of the Labstat Contribution and its financing agreements. In addition, the information set forth under the heading "Risk Factors" in the Corporation's Annual Information Form dated March 14, 2012 (a complete copy of which can be found on SEDAR at identifies additional factors that could affect the operating results and performance of the Company and may cause the actual results of the Corporation 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.

Contact Information:

Alaris Royalty Corp.
Curtis Krawetz
Manager of Investor Relations and Business Analyst

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