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Press release from Marketwire

Alaris Announces a New Partner, Contributes to an Existing Partnership and Enters into a Bought Deal Financing

Tuesday, December 18, 2012

Alaris Announces a New Partner, Contributes to an Existing Partnership and Enters into a Bought Deal Financing08:05 EST Tuesday, December 18, 2012CALGARY, ALBERTA--(Marketwire - Dec. 18, 2012) -NOT FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX:AD) is pleased to announce that it expects to enter into an operating agreement and subscription agreement (collectively, the "Agility Agreements") with Agility Health LLC ("Agility"), effective December 19, 2012. Pursuant to the Agility Agreements, Alaris will contribute USD $12,500,000 (the "Agility Contribution") to Agility in exchange for a pre-tax annual preferred distribution of USD $2,000,000 (the "Agility Distribution") for the first full year after the Agility Contribution, which represents an expected initial pre-tax return of 16%. Agility will be Alaris' ninth Private Company Partner (as defined below), and its second U.S. partnership. The Agility Distribution will be funded with funds drawn on the Company's senior credit facility (the "Facility") and is expected to close on December 19th, 2012."Alaris is looking forward to partnering with Agility as they continue their growth plans. With Agility's long track record and management expertise, combined with Alaris' experience through our successful build out of LifeMark Health in Canada, we feel that this new partnership will give us the opportunity to deploy a significant amount of capital into a stable industry," said Steve King, President and Chief Executive Officer, Alaris."Agility Health is pleased to partner with Alaris in the pursuit of our growth strategy," said Steven N. Davidson, Agility Health CEO. "Strong cultural fit and growth potential define the core philosophy for both our financial and clinical partnerships. We are confident that Alaris' support will provide the resources and flexibility that are essential to Agility Health's strategy as we build our leadership position in the physical rehabilitation industry."The Corporation also expects to enter into an agreement (the "KMH Agreement") to complete an additional contribution to KMH Limited Partnership ("KMH") in support of KMH's growth program, effective on or around December 21, 2012. Pursuant to the KMH Agreement, Alaris will contribute $6,200,000 (the "KMH Contribution") to KMH in exchange for an additional $918,518 annual preferred distribution (the "KMH Distribution") for the first full year after the contribution. Upon closing of the KMH Contribution, Alaris will have contributed an aggregate of $54,800,000 to KMH and, after giving effect to the KMH Contribution, the total aggregate distribution payable to Alaris from KMH will be $8,269,200, on an annualized basis. The KMH Contribution will be funded with funds drawn on the Corporation's Facility and is expected to close on or around December 21, 2012. Bought Deal FinancingThe Corporation is also pleased to announce that it has entered into an agreement with a syndicate of underwriters (the "Underwriters"), led by Acumen Capital Finance Partners Limited and including Cormark Securities Inc., Canaccord Genuity Corp., National Bank Financial Inc., and Clarus Securities Inc., pursuant to which the Corporation will sell, on a "bought-deal" basis, subject to regulatory approval, 2,140,000 common shares of the Corporation (the "Common Shares") at a price of $22.00 per Common Share for total gross proceeds of $47,080,000 (the " Offering"). The Corporation has also granted the Underwriters an over-allotment option (the "Over-Allotment Option") to purchase up to an additional 321,000 Common Shares at the same price and on the same terms as the Offering, exercisable in whole or in part, at any time, for a period of up to 30 days following closing of the Offering to cover over-allotments.The net proceeds of the Offering will be used to reduce the Corporation's indebtedness under the Facility and for general corporate purposes. After giving effect to the contributions to Agility and KMH, and the Facility repayment of $41,700,000, Alaris is expecting to carry an undrawn balance on its Facility following the closing of the Offering.The Common Shares will be offered in each of the provinces of Canada, other than the province of Québec, by way of a short form prospectus. The Offering is expected to close on or about January 11, 2013. Completion of the Offering is subject to certain conditions, including, without limitation, the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange.This press release does not constitute an offer of the Common Shares for sale in the United States or in any jurisdiction in which such offer or sale would be unlawful. The Common Shares have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent registration or an exemption from registration under that Act. About Agility HealthAgility Health (www.agilityhealth.com) is a leading healthcare provider devoted to the rehabilitation of patient physical injuries and conditions. Established in 1968, Agility Health delivers personalized care through over one million therapy visits annually at more than 155 service sites in 14 states nationwide. The company is dedicated to providing exceptional value to the patients, clients and partners it serves through the provision of physical therapy, occupational therapy, speech pathology services and clinical management software. Agility Health's innovative clinical services, proven practice management systems and flexible partnership models help achieve optimal performance in a variety of settings, including outpatient clinics, hospitals, long-term care facilities and employer work sites.About KMH:KMH provides access to rapidly-evolving medical technology, state-of-the-art diagnostic equipment and highly qualified specialists in Canada and the United States. According to KMH management, KMH has grown from a single facility in 1988 to become the largest provider of Nuclear Cardiology services in North America.KMH services include Nuclear Medicine, Cardiology and Magnetic Resonance Imaging (MRI) diagnostic services. Physician practice management solutions by KMH further enhance patient care by providing access to specialist consultations and treatment. According to KMH management, more than 85,000 patients visit KMH annually after being referred by physicians, insurance companies, employers and other third party service providers. KMH has successfully administered more than 600,000 cardiology, nuclear cardiology and nuclear medicine diagnostic tests and more than 40,000 magnetic resonance imaging scans. KMH consistently provides a high level of service which has created a strong rapport within the healthcare community. KMH is well recognized by more than 10,000 physicians and has established a preferred provider relationship within the insurance and health services industry.About Alaris:The Corporation provides alternative financing to a diversified group of private businesses ("Private Company Partners") in exchange for royalties or distributions from the Private Company Partners, with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions to Alaris from the Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin, same clinic sales, gross revenues and same-store sales and rank in priority to the owners' common equity position.Forward-Looking StatementsThis 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 closing of the Agility and KMH Contributions; the amount of the Agility and KMH Distributions; the use of funds drawn on the Facility; the use of proceeds of the Offering and the closing thereof; the return to Alaris; indebtedness under the Facility and Alaris' cash position following the Offering; and the jurisdictions and method of Offering. Many of these statements can be identified by looking for 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, 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 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.Statements containing forward-looking information by their nature involve numerous assumptions and significant known and unknown facts and uncertainties of both a general and a specific nature. Key assumptions include, but are not limited to assumptions that: the Private Company Partners will continue to grow and may require additional capital from Alaris in the future; the Canadian and U.S. economies will grow moderately over the next 12 months; interest rates will not rise in a material nature over the next 12 months; more private companies will require access to alternative sources of capital; and the Corporation will obtain required regulatory approvals on a timely basis. In determining the Corporation's expectations for economic growth, management primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies. The forward-looking statements contained herein are subject to numerous known and unknown risks that may cause actual results to vary from those set forth in the forward-looking statements, including, but not limited to risks associated with: general economic conditions and changes in the financial markets; risks associated with the Private Company Partners and their respective businesses; a change in the ability of the Private Company Partners to continue to pay Alaris' preferred distributions; failure to obtain required regulatory approvals on a timely basis or at all; and changes in legislation on government regulations and the interpretations thereof. In addition, the information set forth under the heading "Risk Factors" in the Corporation's Annual Information Form dated March 14, 2012 (a complete copy of which can be found on SEDAR at www.sedar.com) identifies additional factors that could affect the operating results and performance of the Corporation and may cause the actual results of the Corporation to differ materially from those anticipated in forward-looking statements.As forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. 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.FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Alaris Royalty Corp.Curtis KrawetzManager of Investor Relations, Analyst403-221-7305