Canadian alternative equity firm Alaris Royalty Corp has invested US$15 million in Fleet Advantage LLC, a Fort Lauderdale, Florida-based provider of business analytics, equipment financing and asset lifecycle cost management services to transportation fleets. The deal will give Alaris an annualized distribution of US$2.1 million. It will support Fleet’s continued growth and provide partial liquidity to existing shareholders. Alaris also invested US$3 million more in Accscient LLC, an Atlanta, Georgia-based provider of information technology staffing, consulting and outsourcing services. Accscient raised an initial US$20 million last year.
PRESS RELEASE
Alaris Royalty Corp. Contributes US$15 Million to a New Partner and an Additional US$3 Million to Accscient
CALGARY, Alberta, June 18, 2018 (GLOBE NEWSWIRE) — Alaris Royalty Corp. (“Alaris” or the “Corporation”) (TSX:AD) is pleased to announce that it has contributed US$15.0 million (approximately CAD$19.5 million) (the “Fleet Contribution”) to Fleet Advantage, LLC (“Fleet”), which will entitle Alaris to an annual distribution of US$2.1 million (approximately CAD$2.7 million) (the “Fleet Distribution”). The Corporation is also pleased to announce it has contributed an additional US$3.0 million (CAD$3.9 million) to Accscient, LLC (the “Accscient Contribution”) in exchange for an additional US$0.4 million (CAD$0.6 million) of distributions from Accscient. The Fleet Distribution accounts for approximately 4% of Alaris’ annualized revenue and both deals above are accretive to cash flow adding over $0.04 cents per share to Alaris’ net cash from operations (after tax). Alaris has approximately $150.0 million of undrawn capacity on its credit facility following today’s announcement.
New Partner – Fleet Advantage, LLC
Alaris entered into subscription and operating agreements with Fleet, pursuant to which Alaris made the US$15.0 million Fleet Contribution in exchange for preferred units in Fleet (the “Fleet Units”), which entitle Alaris to the US$2.1 million Fleet Distribution for the first full year following the transaction. Fleet has the option to pay a portion of the Fleet Distribution, subject to a maximum of 2% (US$0.3 million in the first year) of the annualized yield in any given year as payment-in-kind (“PIK”) provided that any amounts subject to the PIK must be paid every three years. US$7.5 million of the Fleet Units are redeemable at par at any time. The Fleet Distribution will be adjusted annually (commencing January 1, 2020) based on the change in net revenues, subject to a 6% collar. The Fleet Contribution was used to fund continued growth and provide partial liquidity to existing shareholders.
“Alaris is excited to partner with a best in class business and best in class management team and we look forward to our partnership with Fleet over the coming years,” said Gregg Delcourt, Alaris Senior Vice President, Small Cap Investments.
Fleet serves America’s top truck fleets and guarantees the absolute lowest cost of operation by providing truck leasing and matching proprietary data driven IT processes with fleet analytics using the latest eco-efficient clean diesel technology to achieve optimum vehicle productivity, while reducing operating costs. Fleet Advantage is ranked as one of the fastest-growing privately held companies in the state of Florida and the fastest growing independent truck lessor in the U.S. In 2018, Fleet Advantage was ranked the 9th Top Private Independent from Monitor Daily; and in 2015 and 2013, the company was named to Inc. magazines’ 500|5000 list of fastest growing companies in the nation. In 2011, CEO John Flynn received the Ernst & Young Entrepreneur of the Year® 2011 Florida – Emerging Category award.
Based on Alaris’ review of Fleet’s internal pro forma results for the most recent trailing twelve month period in 2018, management of Alaris believes that Fleet would have an earnings coverage ratio of between 1.5x and 2.0x, after giving effect to the Fleet Contribution, other changes to Fleet’s capital structure and the Fleet Distribution payable to Alaris.
Accscient Follow-on
Following the additional US$3.0 million Accscient Contribution, Alaris has US$23.0 million invested in Accscient and is collecting approximately US$3.4 million in annualized distributions from the company. Proceeds from the Accscient Contribution were used by Accscient to acquire a business complimentary to their current operations.
Through its operating businesses (i) Norwin Technologies, (ii) Premier IT Solutions and (iii) Appridat Solutions, Accscient provides IT Staffing, Consulting, and Outsourcing services with a focus on Digital Infrastructure Management, Enterprise Resource Planning, Business Intelligence and Database Administration. Since partnering with Alaris, Accscient acquired Emergys, LLC in April 2018 to expand its offerings in Outsourcing, Digital Transformation and Robotics Automation. Accscient also acquired Applications2U, LLC in June 2018 to expand its offerings in Consulting, Digital Infrastructure Management and Systems Integration to the healthcare industry.
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:
Curtis Krawetz
Vice President, Investments and Investor Relations
Alaris Royalty Corp.
P: (403) 221-7305
www.alarisroyalty.com
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