/NOT FOR DISTRIBUTION IN THE UNITED
STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY
CONSTITUTE A VIOLATION OF UNITED
STATES SECURITIES LAW./
CALGARY, AB, Oct. 8, 2020 /CNW/ - Alaris Equity Partners
Income Trust ("Alaris" or the "Trust") (TSX: AD.UN)
is pleased to announce that it has made a follow-on investment of
US$55.0 million (the "GWM
Contribution") in to GWM Holdings, Inc. ("GWM") and a
subsidiary thereof. The GWM Contribution results in an
expected annual increase of approximately CDN$0.25 (a 9% increase) and CDN$0.13 (an 8% increase) of revenue and net cash
from operations per unit respectively. It is estimated that
the GWM Contribution and associated cash flows from it will
decrease Alaris' Run Rate Payout Ratio by over 5% to below
75%.
Pursuant to the agreements (the "GWM Agreements") among
Alaris, Alaris USA and GWM, Alaris
and Alaris USA collectively made
the GWM Contribution in exchange for an aggregate annualized
distribution of US$6.6 million (the
"GWM Distribution"). Due to the structure used for the
GWM Contribution, the after-tax yield on the GWM Distribution is
expected to be equivalent to that of a deal done at a first-year
pre-tax yield of approximately 13%. Commencing on
January 1, 2022, the GWM Distribution
will be adjusted annually based on the percentage change in gross
revenue over the most recently completed 12-month period versus the
prior 12-month period, subject to a collar of 8%. A small
portion of the GWM Distribution can be paid in kind ("PIK").
GWM used the proceeds from the GWM Contribution for liquidity. The
original contribution to GWM was in November
2018 for a total of US$46.0
million. After today's announcement Alaris has
US$101.0 million invested in GWM.
"We couldn't be happier to support GWM as they continue to grow
their business. Partnering with such a strong business and
with such a trusted management team makes a follow-on investment
very good business for Alaris. We look forward to many more
years of partnership with this wonderful company," said
Steve King, President and Chief
Executive Officer, Alaris.
GWM has increased earnings by over 100% since Alaris' first
investment in November 2018 and has
successfully weathered the headwinds created by the COVID-19
pandemic ("COVID"). Based on Alaris' review of GWM's
internal pro forma results for the most recent trailing
twelve-month period in 2020, management of Alaris believes that GWM
would have an Earnings Coverage Ratio of approximately 1.5x after
giving effect to the GWM Contribution, other changes to GWM's
capital structure and the GWM Distribution payable to
Alaris.
ABOUT GWM:
GWM provides data-driven digital marketing
solutions for advertisers globally. The company manages
performance and branding campaigns for advertisers across all forms
of digital media including display, video, connected TV, social,
and email on devices including computers, mobile, tablets, and
Connected TV. With a global presence, GWM has offices in
North America and Europe.
ABOUT ALARIS:
Alaris, through its subsidiaries,
provides alternative financing to private companies
("Partners") in exchange for distributions with the
principal objective of generating stable and predictable cash flows
for dividend payments to its unitholders. Distributions from
the Partners are adjusted each year based on the percentage change
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:
Run Rate Payout Ratio refers
to Alaris' total distribution per unit expected to be paid over the
next twelve months divided by the estimated net cash from operating
activities per unit Alaris expects to generate over the same
twelve-month period (after giving effect to the impact of all
information disclosed as of the date of this report).
Earnings Coverage Ratio refers to the Normalized EBITDA
of a Partner divided by such Partner's sum of debt servicing
(interest and principal), unfunded capital expenditures and
distributions to Alaris. Management believes the earnings coverage
ratio is a useful metric in assessing our partners continued
ability to make their contracted distributions.
The terms Run Rate Payout Ratio and Earnings Coverage Ratio (the
"Non-IFRS Measure") are not standard measures under IFRS.
Alaris' calculation of the Non-IFRS Measure may differ from those
of other issuers and, therefore, should only be used in conjunction
with the Trust's annual audited financial statements, which are
available under the Trust's profile on SEDAR at www.sedar.com.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements,
including forward-looking statements within the meaning of "safe
harbor" provisions under applicable securities laws
("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
financial impact of the GWM Contribution, including the GWM
Distribution and adjustments thereto and the impact on Alaris'
revenue and net cash from operating activities; GWM's Earnings
Coverage Ratio; Alaris' Run Rate Payout Ratio and the impact of the
GWM Contribution thereon. Many of these statements can be
identified by words such as "believe", "expects", "will",
"intends", "projects", "anticipates", "estimates", "continues" or
similar words or the negative thereof. Any forward-looking
statements herein which constitute a financial outlook or
future-oriented financial information (including the impact on
revenues, net cash from operating activities and Run Rate Payout
Ratio) were approved by management as of the date hereof and have
been included to provide an understanding of Alaris' financial
performance and are subject to the same risks and assumptions
disclosed herein. There can be no assurance that the plans,
intentions or expectations upon which these forward-looking
statements are based will occur.
By their nature, forward-looking statements require Alaris to
make assumptions and are subject to inherent risks and
uncertainties. Assumptions about the performance of the Canadian
and U.S. economies over the next 24 months and how that will affect
Alaris' business and that of its Partners (including, without
limitation, the ongoing impact of the COVID) are material factors
considered by Alaris management when setting the outlook for
Alaris. Key assumptions include, but are not limited to,
assumptions that: the Canadian and U.S. economies will begin to
recover from the ongoing economic downturn created by the response
to COVID within the next twelve months; interest rates will not
rise in a material way over the next 12 to 24 months, that those
Alaris Partners detrimentally affected by COVID will recover from
the pandemic's impact and return to their current operating
environments; following a recovery from the COVID impact, the
businesses of the majority of our Partners will continue to grow;
more private companies will require access to alternative sources
of capital; and that Alaris will have the ability to raise required
equity and/or debt financing on acceptable terms. Management
of Alaris has also assumed that that the Canadian and U.S. dollar
trading pair will remain in a range of approximately plus or minus
15% of the current rate over the next 6 months. In determining
expectations for economic growth, management of Alaris primarily
considers historical economic data provided by the Canadian and
U.S. governments and their agencies as well as prevailing economic
conditions at the time of such determinations.
Forward-looking statements are subject to risks,
uncertainties and assumptions and should not be read as guarantees
or assurances of future performance. The actual results of the
Trust and the Partners could materially differ from those
anticipated in the forward-looking statements contained herein as a
result of certain risk factors, including, but not limited to: how
many Partners will continue to be impacted by the ongoing COVID and
the extent of such impact; the ability of our Partners and,
correspondingly, Alaris to meet performance expectations for 2020
and beyond as a result of COVID or otherwise; any change in Alaris'
senior lenders outlook for the Trust; a failure to complete the
extension of the Facility in line with expected terms or at all;
management's ability to assess and mitigate the impacts of COVID;
the dependence of Alaris on the Partners; reliance on key
personnel; general economic conditions, including the ongoing
impact of the COVID on the Canadian, U.S. and global economies;
failure to complete or realize the anticipated benefit of Alaris'
financing arrangements with the Partners; a failure of the Trust or
any Partners to obtain required regulatory approvals on a timely
basis or at all; changes in legislation and regulations and the
interpretations thereof; a failure to achieve expected benefits of
the trust conversion; risks relating to the Partners and their
businesses, including, without limitation, a material change in the
operations of a Partner or the industries they operate in;
inability to close additional Partner contributions in a timely
fashion, or at all; a change in the ability of the Partners to
continue to pay Alaris' distributions; a change in the unaudited
information provided to the Trust; a failure of a Partner (or
Partners) to realize on their anticipated growth strategies;
a failure to achieve resolutions for outstanding issues with
Partners on terms materially in line with management's expectations
or at all; and a failure to realize the benefits of any concessions
or relief measures provided by Alaris to any Partner or to
successfully execute an exit strategy for a Partner where desired.
Additional risks that may cause actual results to vary from those
indicated are discussed under the heading "Risk Factors" and
"Forward Looking Statements" in the Trust's Management Discussion
and Analysis for the year ended December 31,
2019, which is filed under the Trust's profile at
www.sedar.com and on its website at www.alarisroyalty.com.
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 assumptions
reflected in the forward-looking statements contained herein 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.
Neither the TSX nor its Regulation Services Provider (as
that term is defined in the policies of the TSX) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE Alaris Equity Partners Income Trust