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CALGARY, Alberta, April 17, 2019 (GLOBE NEWSWIRE) -- Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX: AD) is providing an update to shareholders regarding the trading activity of its common shares (“Shares”) on the Toronto Stock Exchange. Although we do not generally respond to market activity, we feel it is appropriate at this time to comment based on the level of trading activity in AD Shares today.
An analyst that covers Alaris distributed a research report this morning highlighting risks Alaris faces with regards to a current partner, Providence Industries (“Providence”). On April 2, 2019 Alaris filed its annual information form (“AIF”). In the AIF Alaris highlighted that its distribution from Providence (the “Providence Distribution”) had been blocked at the end of March 2019 but that it was too early in the discussions with Providence and Providence’s senior lenders (the “Lenders”) to determine the level of impact to our business. This is a non-material event to the Corporation with the Providence Distribution only accounting for approximately 5% of total revenue (CAD$5.9 million or $0.16 per share) that Alaris expects for the year ended December 31, 2019. The carrying value of Alaris’ investment in Providence also only accounted for approximately 5% of Alaris’ total investment book value (CAD$39 million or $1.07 per share) at year ended December 31, 2018. The Corporation expects no disruption to its dividend as a result of any outcome of the current issues with Providence. The Run Rate Payout Ratio at March 5, 2019 was estimated to be 90% and the impact on that ratio from any non-payment of the Providence Distribution would be approximately 5% in the event that Alaris receives no distributions from Providence for the remainder of the year. The numbers presented above represent the impact of the worst case scenario in regard to Providence, which is not what the Corporation expects at this time. The Corporation also wants to highlight that the remainder of its portfolio continues to perform in line with guidance provided on March 5, 2019 in the Q4, 2018 earnings release.
The Corporation, Providence and its Lenders are working collaboratively together and we expect to be able to provide a fulsome update on possible solutions with Providence and its Lenders on May 6, 2019 when we release our earnings for Q1, 2019. Alaris has received all payments from Providence through the end of March 2019.
Below is the excerpt from the AIF filed on April 2, 2019:
“In March 2019 Alaris received a notice from the senior lenders of Providence notifying Alaris that its distribution from Providence has been blocked for future payments due to Providence’s loss of a material customer. Alaris, Providence and the senior lender are working on viable solutions to minimize the disruption to distributions. Timing and amounts of distributions collected for the remainder of the year are unknown at this time but there should be a meaningful update available when Alaris releases Q1, 2019 results on May 6, 2019.”
ABOUT THE CORPORATION:
Alaris 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 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.
The term Run Rate Payout Ratio is a financial measure used in this news release that is not a standard measure under International Financial Reporting Standards (“IFRS”). The Corporation’s method of calculating Run Rate Payout Ratio may differ from the methods used by other issuers. Therefore, the Corporation’s Run Rate Payout Ratio may not be comparable to similar measures presented by other issuers.
Run Rate Payout Ratio refers to Alaris’ total dividend per share expected to be paid over the next twelve months divided by the estimated net cash from operating activities per share 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).
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements as defined under applicable securities laws. Statements other than statements of historical fact contained in this news release may be forward-looking statements under applicable securities legislation, including, without limitation, management's expectations, intentions and beliefs concerning: the impact of the blockage of the Providence Distribution (including the impact on revenues, run rate payout ratio and investment book value). 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. To the extent any forward-looking statements herein constitute a financial outlook (including the impact on revenues, run rate payout ratio and investment book value), they were approved by management as of the date hereof and have been included to provide an understanding with respect to 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 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 grow moderately over the next 12 months, that interest rates will not rise in a material way over the next 12 to 24 months, that Alaris will achieve the benefits of any concessions or relief measures provided to any Partners, that the Partners will continue to make distributions to Alaris as and when required and in line with management’s expectations, that the businesses of the Partners will continue to grow 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 capital markets will remain stable and that the Canadian and US dollars will trade in a range of approximately plus or minus 10% of the current value of the US Canadian dollar pairing over the next twelve 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.
There can be no assurance that the assumptions, plans, intentions or expectations upon which these forward looking statements are based will occur. 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 Corporation 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, the following: the dependence of Alaris on the Partners; reliance on key personnel; general economic conditions; failure to complete or realize the anticipated benefit of Alaris’ financing arrangements with the Partners; a failure of the Corporation or any Partners to obtain required regulatory approvals on a timely basis or at all; changes in legislation and regulations and the interpretations thereof; 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’ preferred distributions; a change in the unaudited information provided to the Corporation; 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 Corporation’s Management Discussion and Analysis for the year ended December 31, 2018, which is filed under the Corporation’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.
For further information please contact:
Vice President, Investments and Investor Relations
Alaris Royalty Corp.
P: (403) 221-7305