TIDMDUKE
RNS Number : 6117G
Duke Royalty Limited
05 March 2018
5 March 2018
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
New Royalty Agreement with Birmingham-based Specialist Coatings
Manufacturer
Duke Royalty Limited (AIM: DUKE), a provider of alternative
capital solutions to a diversified range of profitable and
long-established businesses in Europe and abroad, is pleased to
announce that it has entered into a GBP9 million royalty financing
agreement (the "Financing") with Trimite Global Coatings Limited
("Trimite"), a Birmingham-based specialist coatings manufacturer
established in the 1940s.
In addition, the Company is pleased to announce that it has
entered into non-binding terms with a fourth Royalty Partner and is
also pleased to publish an updated unaudited balance sheet to
better reflect its current financial position following its GBP20
million equity financing completed in December 2017.
Highlights
-- Duke has committed GBP9.0 million to Trimite, its third
royalty financing agreement in Europe, providing it with the
necessary funds to buy-out a minority shareholder, to fund a small
bolt-on acquisition and to provide the additional working capital
required to fund its anticipated future organic sales growth
-- Initial cash-on-cash yield of over 13 per cent. via monthly payments
-- 30 year secured financing - distributions to be adjusted
annually to reflect Trimite revenue growth
-- 2.5 per cent. equity interest in Trimite granted at no additional consideration
-- Trimite is a profitable supplier of industrial coatings to global brands and organisations
-- 120 employees across four UK plants and a highly experienced management team
-- The Financing meets Duke's strategy to replicate the proven
North American royalty model to create long term value for
shareholders in the form of predictable, robust dividend
streams
-- Non-binding terms signed with a fourth Royalty Partner, a
long established and profitable UK-based glass processing
business
Neil Johnson, CEO of Duke Royalty, said:
"We have been working closely with Trimite for some time to
execute this Financing. With a solid sales pipeline and a
high-quality management team who are also investing their capital
in the business, we feel that Trimite represents a textbook deal
for Duke.
"In addition, we are pleased with the progress we are
experiencing in terms of our future pipeline of deal opportunities
and are confident that royalty financing will become increasingly
understood as a highly competitive form of growth capital across
our preferred sectors."
David Roberts, Chairman and majority shareholder of Trimite,
said:
"Trimite investigated a number of different financing
alternatives and decided upon the Duke proposal as a result of the
long term, participating nature of the investment, which removes
any short term refinancing risk. Trimite looks forward to a long
and positive partnership with Duke as we grow our business."
New Royalty Partner - Trimite Global Coatings Limited
www.trimite.com
As detailed on 4 December 2017 at the time of its GBP20 million
equity fundraising, Duke has been working on an investment
opportunity to provide royalty financing to a speciality coating
manufacturer. This investment, which has been entered into with
Trimite, has now completed, utilising the proceeds of the Company's
equity financing in December.
Trimite is a 70-year-old UK private company that formulates and
manufactures high performance and technologically superior coatings
and paints for speciality industrial markets. It has more than 120
employees in four UK plants based in Birmingham, the Midlands and
West London.
Trimite is a key supplier of industrial coatings to several
global brands and organisations in sectors including defence and
aerospace, agricultural and construction equipment, and automotive.
Trimite has a history of profitable operations in highly technical
applications, has low debt and enjoys robust gross margins relative
to the overall paint industry.
Trimite is majority-owned by Chairman David Roberts and led by a
highly experienced team of executives who have spent their careers
in the UK manufacturing sector and in senior management positions
in global coatings suppliers like Akzo Nobel. With this in mind,
Trimite is well-positioned to expand its market presence and take
advantage of its strong and growing sales pipeline.
About the Financing
Duke has committed GBP9.0 million, providing it with the
necessary funds to buy-out a minority shareholder, to fund a small
bolt-on acquisition and to provide the additional working capital
required to fund its anticipated future organic sales growth.
The terms of the Financing are in line with Duke's typical
investment criteria. The Financing is provided through a secured
loan and preference shares and Duke will be entitled to monthly
distributions (the "Distribution") beginning in March 2018. On an
annual basis, the initial Distribution is expected to total
approximately GBP1.2 million, equating to a cash-on-cash yield of
over 13 per cent.
The Distribution will be adjusted annually with the first
adjustment occurring in April 2019 based on the percentage change
in Trimite's gross revenues for the year to 31 March 2019 compared
to the prior financial year. The annual adjustment in the
Distribution will be subject to a collar. The Financing is for a
period of 30 years, with the Distribution payable to Duke
throughout the duration of this term, unless Trimite utilises an
early buyback option.
Concurrent to the Financing, Trimite has secured an investment
from its Chairman for GBP2 million at an indicative pre-money
valuation of GBP15 million and Trimite has agreed to issue Duke,
for no additional consideration, with an equity interest of 2.5 per
cent. of the ordinary shares of the enlarged group.
Update on identified near term investment opportunity
As detailed on 4 December 2017, Duke has been actively
progressing a potential fourth investment into a long established
and profitable UK glass processing business.
Duke is pleased to report that non-binding terms have now been
agreed and are in line with Duke's typical deal structure, which
includes senior security, an over 13 per cent. initial cash-on-cash
yield, an annual adjustment factor based on revenue performance,
and a 30-year term.
While the transaction is subject to due diligence and final
documentation, Duke is confident that it will be able to complete
the transaction by April 2018 as previously announced.
Duke Royalty portfolio
Further to the completion of the Trimite Financing the Company's
portfolio of royalty investments is as follows with over GBP23
million of capital deployed to date:
Royalty Partner Royalty investment Date of Royalty
amount Agreement
------------------ ------------------- ----------------
Temarca B.V Euro 8,000,000 April 2017
------------------ ------------------- ----------------
Lynx Equity (UK) GBP 7,000,000 October 2017
Limited
------------------ ------------------- ----------------
Trimite Global GBP 9,000,000 March 2018
Coatings Limited
------------------ ------------------- ----------------
Unaudited Company balance sheet as at 31 January 2018
To more accurately reflect the financial position of Duke
following the fundraising in December 2017, the Company reports its
latest unaudited balance sheet as at 31 January 2018.
CONSOLIDATED BALANCE
SHEET
AS AT 31 JANUARY
2018
GBP
ASSETS
Royalty debt instruments 14,556,739
Equity investments at fair
value through profit and loss -
-----------------------
Total non-current
assets 14,556,739
Trade and other
receivables 308,963
Cash and cash
equivalents 18,233,882
-----------------------
Total current
assets 18,542,845
33,099,584
=======================
EQUITY AND LIABILITIES
Equity
Shares issued 60,391,300
Shares to be issued -
Share option reserve 124,412
Retained losses (27,464,244)
-----------------------
Total equity 33,051,468
Current liabilities
Trade and other
payables 48,116
-----------------------
Total current
liabilities 48,116
Total equity and
liabilities 33,099,584
=======================
**S**
For further information, please contact www.dukeroyalty.com, or
contact:
Duke Royalty Neil Johnson / Charlie +44 (0) 1481
Limited Cannon-Brookes 741 240
------------------------ ------------------------ ----------------
Colin Aaronson /
Grant Thornton Samantha
UK LLP Harrison / Carolyn +44 (0) 20 7383
(Nominated Adviser) Sansom 5100
------------------------ ------------------------ ----------------
Cenkos Securities
plc Julian Morse / Michael +44 (0) 207
(Joint Broker) Johnson 397 8900
------------------------ ------------------------ ----------------
Mirabaud Securities
Limited Peter Krens / Edward +44 (0) 20 3167
(Joint Broker) Haig-Thomas 7222
------------------------ ------------------------ ----------------
Elisabeth Cowell/
Redleaf Communications Robin Tozer/ Ian +44 (0) 20 3757
(PR) Silvera 6880
------------------------ ------------------------ ----------------
About Duke Royalty
Duke Royalty Limited provides alternative capital solutions to a
diversified range of profitable and long-established businesses in
Europe and abroad. Duke Royalty's experienced team and exclusive
partnership provide financing solutions to private companies that
are in need of capital but whose owners wish to maintain equity
control of their business. Duke Royalty's royalty investments are
intended to provide robust, stable, long term returns to its
shareholders.
Duke Royalty is listed on the AIM market under the ticker DUKE
and is headquartered in Guernsey.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
This information is provided by RNS
The company news service from the London Stock Exchange
END
AGREAKDLEFAPEFF
(END) Dow Jones Newswires
March 05, 2018 02:00 ET (07:00 GMT)
Duke Capital (LSE:DUKE)
Historical Stock Chart
From Apr 2024 to May 2024
Duke Capital (LSE:DUKE)
Historical Stock Chart
From May 2023 to May 2024