Canadian alternative equity firm Alaris Royalty Corp has earned about $23.5 million with the previously announced sale of the U.S. assets of portfolio company Agility Health Inc (TSX-V: AHI), a Grand Rapids, Michigan-based rehabilitation solutions provider. Alaris said it realized an internal rate of return of about 25 percent as a result. Agility’s U.S. assets were sold to Alliance Physical Therapy Partners LLC, a portfolio company of GPB Capital Holdings, for US$45 million. In a separate release, Agility said its Canadian affiliate, Medic Holdings Corp, an operator of foot care clinics and maker of orthotics, will be its primary post-sale asset.
Alaris Royalty Corp. Announces Closing of the Agility Redemption
CALGARY, Alberta, Feb. 28, 2018 (GLOBE NEWSWIRE) — Alaris Royalty Corp. (“Alaris” or the “Corporation”) (TSX:AD) is pleased to announce that the previously disclosed pending transaction with Agility Health Holdings, Inc. (“AHI”), the parent company of Agility Health LLC (“Agility LLC) has closed on February 28, 2018. The result of this transaction is Agility LLC redeeming all of Alaris’ units in Agility LLC (the “Agility LLC Units”) for gross proceeds of US$26.67 million (CAD$34.14 million) (the “Gross Proceeds”). Alaris’ investment in Agility LLC resulted in a total return to Alaris of approximately US$17.45 million (CAD$23.53 million), or 87% (116% in CAD) as well as an internal rate of return (“IRR”) of approximately 18% (25% CAD). These returns were realized on Alaris’ 5 year investment in Agility LLC by successfully collecting all of the US$15.3 million of distributions owed by Agility LLC over the life of the investment as well as a 10% premium above Alaris’ cost its Agility LLC Units.
The Gross Proceeds to Alaris from the Agility Sale consist of: (i) US$22.23 million for the Agility Units (the “Repurchase Price”) Alaris holds in Agility LLC, which includes a premium of US$2.13 million over Alaris’ original cost of US$20.10 million (currently held at a fair value of $20.00 million); (ii) US$2.86 million for all unpaid distributions up to February 28, 2018; and (iii) US$1.58 million for a loan outstanding, including all principal and interest accrued on such loan. US$1.50 million of the Gross Proceeds paid to Alaris have been placed in escrow for 18 months (the “Escrow Period”) to satisfy indemnification obligations under the Purchase Agreement. Following the Escrow Period any remaining escrowed funds will be paid to Alaris. Gross Proceeds to Alaris from this transaction will go towards debt reduction.
“The Agility Sale brings to a close a challenging situation for Alaris that we have persistently worked on for nearly two years. Alaris was able to use the rights and remedies that we have through our preferred shares and achieved an excellent outcome for our shareholders. Receiving the full return that we expected when we entered the partnership with Agility is gratifying and I would like to thank the staff at Alaris who worked extremely hard to achieve this end result. The cash proceeds we received from this transaction strengthen our balance sheet and provide valuable capital to deploy in new partnerships,” said Steve King, President and Chief Executive Officer, Alaris
The IRR calculation used above assumes the US$1.5 million being held for the Escrow Period will be fully released to Alaris at the end of the Escrow Period.
ABOUT THE CORPORATION:
Alaris provides alternative financing to the Partners in exchange for distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. 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.
For further information please contact:
Vice President, Investments and Investor Relations
Alaris Royalty Corp.
P: (403) 221-7305
Photo courtesy of Agility Health Inc