Alaris Royalty to exit Sequel with 29% IRR

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By CPE News

pcJ News Briefs – Alaris Royalty Corp. (TSX: AD) announced that Sequel Youth and Family Services, LLC willl redeem all of Alaris’ units in Sequel for a price of approximately US $96 million or CDN $121 million.

The redemption is part of Sequel Youth and Family Services’ previously announced going public transaction through a merger with Global Partner Acquisition Corp. (NADASQ: GPAC; GPACW; GPACU), a special purpose acquisition company.

For its US $73.5 million investments in Sequel, Alaris will receive US $144.7 million in total returns, representing an IRR of 23% or 29% in Canadian dollars.

photo credit: Sequel

News Release


Calgary, Alberta – August 1, 2017 – Alaris Royalty Corp. (“Alaris” or the “Corporation”) (TSX: AD) is announcing today that Sequel Youth and Family Services, LLC (“Sequel”) has entered into a merger agreement (the “Merger Agreement”) with a third party, pursuant to which Sequel will redeem all of Alaris’ units (the “Alaris Units”) in Sequel for a price of approximately US$96 million (approximately CAD$121 million based on the current exchange rate) (the “Sequel Redemption”). The Sequel Redemption is expected to close by the end of September 2017, but is subject to certain customary conditions, including, without limitation receipt of regulatory approval and all applicable permits and licenses. The completion of the Sequel Redemption would result in a total return of approximately US$71 million (CAD$103 million), or 97% (133% in CAD) and an internal rate of return (“IRR”) of approximately 23% (29% CAD). The Sequel Redemption would reduce Alaris’ outstanding debt to nil and provides approximately CAD$10.0 million of excess cash. Until the Sequel Redemption closes, Alaris will continue to collect its monthly distribution of US$1.06 million.

“Sequel has been a fantastic partner for Alaris over the past several years. Alaris has created another incredible outcome for the entrepreneur by buying out the original private equity sponsor, financing accretive acquisitions as well as buying out minority shareholders during our partnership. By limiting our annual growth and also our exit participation, we have allowed the entrepreneur to enjoy an unprecedented financial result. At the same time, Alaris shareholders got exactly what we targeted, a very steady revenue stream and market leading returns. Our internal rate of return on Sequel will come in at 23% per annum, not including foreign exchange gains. Including foreign exchange, our IRR on this partnership increases to 29%. These results are at the very high end of private equity return expectations, particularly in the currently overheated competitive environment and are consistent with our 13 year track record of returns on partnership exits. While losing a large revenue stream is not our goal, the premium we receive allows us to redeploy the capital very profitably and without requiring equity or debt financing for our next transactions. We are pleased to say that we expect the Sequel revenue to be replaced accretively with new partnerships that are currently in process and exclusive to Alaris. We do not expect any reduction in our revenue expectations for the year but will have a stronger balance sheet with the excess cash that will remain from the Sequel proceeds.” said Steve King, President and Chief Executive Officer, Alaris.

About the Corporation:

Alaris provides alternative financing to private company partners (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.

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:
Curtis Krawetz Vice President, Investments and Investor Relations Alaris Royalty Corp. P: (403) 221-7305 Suite 250, 333 24th Avenue S.W. Calgary, Alberta T2S 3E6