Grenville Strategic Royalty Corp has agreed to advance up to $1.25 million in financing to BG Furniture Ltd, a Walkerton, Ontario-based builder of home and office furniture products. In exchange, Grenville will receive a royalty based on the company’s gross revenue within Grenville’s average royalty rate of between 1 percent and 4 percent. BG Furniture said the deal will help accelerate its growth strategy, expand its customer base and continue its product innovation. Since its inception in July 2013, Grenville has completed around $20.9 million in royalty financings in North America.
Grenville Completes Investment in BG Furniture Ltd.
TORONTO, ONTARIO–(Marketwired – Oct. 20, 2014) – Grenville Strategic Royalty Corp. (TSX VENTURE:GRC) (“Grenville”) is pleased to announce that it has contracted for a gross sales royalty from BG Furniture Ltd. (“BG Furniture”) in exchange for an advance of $750,000, with an option, if agreed upon by both companies, to advance an additional $500,000. In exchange for this advance, Grenville will receive a royalty based on BG Furniture’s gross revenue within Grenville’s average royalty rate of between 1% and 4%.
BG Furniture, formerly Bogden and Gross, is an 87 year old furniture design and manufacturing business located in Walkerton Ontario. BG Furniture makes a large variety of home and office furniture products combining best-in-class style and quality and a high degree of customization for the consumer enabled by innovative parametric manufacturing processes.
“Grenville has allowed us to accelerate our growth strategy and advance the company’s services for our expanding customer base, as well as continue to innovate and bring new Canadian made, solid wood furniture to market,” stated Adam Hofmann, President, BG Furniture. “Over the next 5 years, we plan to invest over $5 million in new product development, technological advancement in manufacturing, new products, creating good paying jobs in the process,” said Dirk Nielsen, VP Manufacturing, BG Furniture.
“BG Furniture is a great example of the reinvention of Canadian manufacturing – an 87 year old company making a high quality product using advanced manufacturing strategies and impeccable design. We are delighted to invest in the community of Walkerton, Ontario with this expert management team and skilled workforce,” noted William (Bill) R. Tharp, President and Chief Executive Officer of Grenville.
BG Furniture represents Grenville’s 20th investment since its inception in July, 2013. To date, Grenville has completed approximately $20.86 million in royalty financings across Canada and the US.
About BG Furniture
BG Furniture has been handcrafting solid wood furniture for 85 years. All BG Furniture is built in the company’s plant in Walkerton, in the rural municipality of Brockton Ontario. Today, BG Furniture continues to take pride in handcrafting heirloom quality solid hardwood furniture, just as they did 85 years ago. Now, under the leadership of owner Adam Hofmann and Dirk Nielsen, the company upholds its commitment to maintain environmentally sustainable practices and to ensure the sole use of 100% North American hardwoods. Past and present, BG Furniture is a name synonymous with character, distinction, and Canadian heritage.
Grenville is a Toronto-based company that was formed to provide royalty-based finance solutions by acquiring revenue streams generated by growing industrial and technology businesses. Grenville has identified a large and underserviced finance market for companies generating up to $50 million in revenue, many of which are well managed and generating improving cash flow, but face difficult financing hurdles from traditional debt and equity markets. The non-dilutive royalty financing structure offered by Grenville can bridge the financing needs of these companies until traditional debt or equity is available to them on more attractive commercial terms. The application of Grenville’s royalty financing structure into sectors not traditionally serviced by royalty companies represents a new and innovative financing model – Capital Simplified – that has already attracted a considerable number of opportunities with attractive potential returns.
Forward-Looking Information and Statements
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and statements are not representative of historical facts or information or current condition, but instead represent only Grenville’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Grenville’s control. Generally, such forward-looking information or statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, information with respect to: prospective financial performance; expenses and operations; anticipated cash needs and need for additional financing; anticipated funding sources; future growth plans; royalty acquisition targets and proposed or completed royalty transactions; estimated operating costs; estimated market drivers and demand; business prospects and strategy; anticipated trends and challenges in Grenville’s business and the markets in which it operates; and financial position.
By identifying such information and statements in this manner, Grenville is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Grenville to be materially different from those expressed or implied by such information and statements. An investment in securities of Grenville is speculative and subject to a number of risks including, without limitation, risks relating to: the need for additional financing; the relative speculative and illiquid nature of an investment in Grenville; Grenville’s lack of operating history; Grenville’s ability to generate sufficient revenues; Grenville’s ability to manage future growth; the limited diversification in Grenville’s existing investments; dependence on the operations, assets and financial health of investee companies; limited ability to exercise control or direction over investee companies; potential defaults by investee companies and the unsecured nature of Grenville’s investments; Grenville’s ability to enforce on any default by an investee company; competition with other investment entities; tax matters; Grenville’s ability to pay dividends in the future and the timing and amount of those dividends; reliance on key personnel, particularly Grenville’s founders; dilution of shareholders’ interest through future financings; and general economic and political conditions. Although Grenville has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and statements, there may be other factors that cause results not to be as anticipated, estimated or intended.
In connection with the forward-looking information and forward-looking statements contained in this document, Grenville has made certain assumptions. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will affect Grenville’s business and its ability to identify and close new opportunities with new investees are material factors that Grenville considered when setting its strategic priorities and objectives, and its outlook for its business. Key assumptions include, but are not limited to: assumptions that the Canadian and U.S. economies will continue to grow moderately over the next 12 to 24 months; that interest rates will not increase dramatically over the next 12 to 24 months; that Grenville’s existing investees will continue to make royalty payments to Grenville as and when required; that the businesses of Grenville’s investees will not experience material negative results; that Grenville will continue to grow its portfolio in a manner similar to what has already been established; that tax rates and tax laws will not change significantly in Canada and the U.S.; that more small to medium private and public companies will continue to require access to alternative sources of capital; and that Grenville will have the ability to raise required equity and/or debt financing on acceptable terms. Grenville has also assumed that access to the capital markets will remain relatively stable, that the capital markets will perform with normal levels of volatility and that the Canadian dollar will not have a high amount of volatility relative to the U.S. dollar. In determining expectations for economic growth, Grenville primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
Although Grenville believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements.
For additional information with respect to these risks, uncertainties and assumptions, please refer to the “Risk Factors” section of Grenville’s annual information form dated April 21, 2014 and the other public filings of Grenville available on SEDAR at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof, and Grenville does not undertake to update any forward-looking information that is contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward looking information and statements attributable to Grenville or persons acting on its behalf is expressly qualified in its entirety by this notice.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Grenville Strategic Royalty Corp.
William (Bill) R. Tharp
President and Chief Executive Officer
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