Diversified Royalty Corp. (TSX: DIV and DIV.DB) (the
“
Corporation” or “
DIV”) is
pleased to announce that it has entered into an agreement with a
syndicate of underwriters led by CIBC Capital Markets, National
Bank Financial Inc. and Scotiabank (the
“
Underwriters”) pursuant to which the Underwriters
have agreed to purchase $52,500,000 aggregate principal amount of
6.00% convertible unsecured subordinated debentures (the
“
Debentures”) at a price of $1,000 per Debenture
(the “
Offering”).
In addition, the Corporation has granted the
Underwriters an option (“Over-Allotment Option”)
to purchase up to an additional $7,875,000 aggregate principal
amount of Debentures at the offering price exercisable at any time
up to 30 days following closing.
The Debentures will mature June 30, 2027 and
will bear interest at an annual rate of 6.00% payable semi-annually
in arrears on the last day of June and December in each year,
commencing June 30, 2022. At the holder’s option, the Debentures
may be converted into common shares of the Corporation
(“Common Shares”) at any time prior to the close
of business on the earlier of the last business day immediately
preceding June 30, 2027 and the date fixed for redemption. The
conversion price will be $4.05 per Common Share (the
“Conversion Price”), subject to adjustment in
certain circumstances.
The Debentures will not be redeemable on or
before June 30, 2025. After June 30, 2025 and prior to June 30,
2026, the Debentures may be redeemed in whole or in part from time
to time at DIV’s option, provided that the volume weighted average
trading price of the Common Shares on the Toronto Stock Exchange
(the “TSX”) during the 20 consecutive trading days
ending on the fifth trading day preceding the date on which the
notice of the redemption is given is not less than 125% of the
Conversion Price. On or after June 30, 2026 and prior to the
maturity date, DIV may, at its option, redeem the Debentures, in
whole or in part, from time to time at par plus accrued and unpaid
interest.
DIV intends to redeem (the
“Redemption”) all of its outstanding convertible
unsecured subordinated debentures due December 31, 2022 (the
“2022 Debentures”) prior to December 31, 2022. The
net proceeds of the Offering, together with other funds, are
expected to be used towards the Redemption of the 2022
Debentures.
Closing of the Offering is expected to occur on
or about March 30, 2022 and is subject to regulatory approval
including that of the TSX.
The Debentures to be issued under the Offering
will be offered by way of a prospectus supplement to the
Corporation’s short form base shelf prospectus dated May 11, 2021
in each of the provinces of Canada, except Québec, and may be
offered in the United States on a private placement basis pursuant
to an exemption from the registration requirements of the United
States Securities Act of 1933, as amended (the “U.S.
Securities Act”), and certain other jurisdictions.
This news release does not constitute an offer
of securities for sale in the United States. The securities being
offered have not been, nor will they be, registered under the U.S.
Securities Act, and such securities may not be offered or sold
within the United States absent U.S. registration or an applicable
exemption from U.S. registration requirements.
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 Mr. Lube, AIR MILES®, Sutton, Mr. Mikes, Nurse
Next Door and Oxford Learning Centres trademarks. Mr. Lube is the
leading quick lube service business in Canada, with locations
across Canada. AIR MILES® is Canada’s largest coalition loyalty
program with approximately two-thirds of Canadian households
actively participating in the AIR MILES® Program. Sutton is among
the leading residential real estate brokerage franchisor businesses
in Canada. Mr. Mikes currently operates casual steakhouse
restaurants primarily in western Canadian communities. Nurse Next
Door is one of North America’s fastest growing home care providers
with locations across Canada and the United States as well as in
Australia. Oxford Learning Centres is one of Canada’s leading
franchised supplemental education services in Canada and the United
States. DIV intends 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 information, although not all
forward-looking information contains these identifying words.
Specifically, forward-looking information in this news release
includes, but is not limited to, statements made in relation to:
the intended use of proceeds from the Offering; the ability of the
Corporation to source the funds needed to fully redeem the 2022
Debentures; the closing of the Offering or the Over-Allotment
Option, including the expected closing date for the Offering; the
approval of the TSX; the expected terms of the Debentures; the
intended redemption of DIV’s outstanding convertible unsecured
subordinated debentures and the timing thereof; DIV’s ability to
pay a predictable and stable dividend to shareholders; and DIV’s
corporate objectives. 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 by such
forward-looking information, including, without limitation, the
ongoing conflict between Russia and Ukraine and any actions taken
by other countries in response thereto, such as sanctions or export
controls. DIV believes that the expectations reflected in the
forward-looking information included in this news release are
reasonable but no assurance can be given that these expectations
will prove to be correct. In particular there can be no assurance
that: the Offering will close in accordance with the expected
timing, or at all; the actual use of proceeds will be consistent
with current expectations; the Corporation will be able to source
the funds needed to fully redeem the 2022 Debentures; the TSX will
approve the Offering; DIV will be able to make monthly dividend
payments to the holders of its common shares; or DIV will achieve
any of its corporate objectives. 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 10, 2022 and in its most recent Management’s Discussion and
Analysis, copies of each of which are available under DIV’s profile
on SEDAR at www.sedar.com. In formulating the forward-looking
information contained herein, management has assumed that all
necessary approvals for the Offering will be obtained and that the
Offering will be completed successfully, DIV will generate
sufficient cash flows from its royalties to service its debt and
pay dividends to shareholders; DIV will be able to source the funds
needed to fully redeem the 2022 Debentures using cash on hand or,
if necessary, obtaining additional funds through new credit
facilities or by amending its existing credit facilities; the
impacts of COVID-19 on DIV and its royalty partners will be
consistent with DIV’s expectations and the expectations of
management of each of its Royalty Partners, both in extent and
duration; DIV and its royalty partners will be able to reasonably
manage the impacts of the COVID-19 outbreak on their respective
businesses and 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 statements made in
this news release are 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 will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, DIV. The
forward-looking information included in this news release is
presented 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
OfficerDiversified Royalty Corp.(236) 521-8470
Greg Gutmanis, Chief Financial Officer and VP
AcquisitionsDiversified Royalty Corp.(236) 521-8471
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