Duke Royalty Limited Modification of Partners' Agreements - Amendment (9960Y)
May 14 2019 - 7:00AM
UK Regulatory
TIDMDUKE
RNS Number : 9960Y
Duke Royalty Limited
14 May 2019
The following amendments have been made to RNS number 8869Y,
entitled 'Modification of Terms with Recently Acquired Royalty
Partners', which was released at 7.00 a.m. on 14 May 2019.
The date for the deferred consideration to be paid to Capital
Step, subject to the achievement of 'performance related
milestones', is 31 March 2020. All other details remain the same.
The full amended text is shown below.
14 May 2019
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Modification of Terms with Recently Acquired Royalty
Partners
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 modifications to the terms of the following agreements
which will increase near term revenues for the Company.
The Company has reached agreements with royalty partners Welltel
(Ireland) Limited ("Welltel"), a telecommunications services
company, media company Pearl & Dean Cinemas Limited ("the Pearl
& Dean Group"), and Xtremepush Limited ("Xtremepush"), a
technology solutions company, all of which were acquired via the
recent Capital Step acquisition, to modify the terms of existing
agreements. This is expected to increase gross revenues to Duke by
at least GBP3.7 million in aggregate over the next five years.
Capital Step was acquired by Duke Royalty in February 2019,
prior to which it offered a 'unitranche' solution, which is a
perpetual royalty paired with a senior secured loan, which
amortises over a three to five year term. Pursuant to the existing
arrangements with these three royalty partners, a total of GBP5.5
million of capital deployed amongst them was due to begin
repayments in various instalments starting from December 2018, with
the entire GBP5.5 million of capital expected to be repaid by 31
March 2022.
Modifications of terms have now been agreed; for Welltel and
Xtremepush, the maturity dates of the senior loan facilities have
been extended until 30 April 2024, when the full repayment of
principal will be due. For the Pearl and Dean Group, the original
agreement saw half of the royalty amortising over three years, and
the other half as a perpetual term. The parties have agreed to make
the entire amount a perpetual royalty, with the return calculated
as a fixed percentage of gross revenues, subject to a floor and a
cap. All other terms of the agreements remain the same.
As a result of removing the capital repayments, Duke has
increased the gross revenues that it expects to receive, assuming
the agreements are in place until 30 April 2024, by at least GBP3.7
million. By extending the royalty agreement in perpetuity, the
actual revenue could exceed this figure depending on future revenue
growth of the Pearl & Dean Group, as GBP3.7 million only
includes the minimum contractual royalties (ie. the 'floor') due in
the next five years.
These modifications represent an increase of more than 25% to
the Capital Step portfolio's expected revenues per year for the
next five years and need no additional overhead costs. Importantly,
these contract modifications are excluded from the 'performance
related milestones for the period ended 31 March 2020' which the
Capital Step portfolio needs to deliver in order to receive a
deferred payment from Duke Royalty, as announced by the Company on
4(th) February.
Neil Johnson, CEO of Duke Royalty, said:
"We are pleased to agree these modifications, which means that
our royalty partners can increase short term cash flow and Duke can
maximise near term revenues. We recognised the strength and credit
quality of the acquired royalty partners and the Board identified
this as a way of unlocking value of the Capital Step royalty
agreements for Duke Royalty shareholders. We are also looking at
the opportunity to deploy further capital at accretive returns via
follow-on investments into the acquired royalty partners and look
forward to updating the market in due course."
**ENDS**
For further information, please contact www.dukeroyalty.com, or
contact:
Neil Johnson / Charlie
Duke Royalty Limited Cannon-Brookes +44 (0) 1481 741 240
Cenkos Securities plc Julian Morse / Michael
(Nominated Adviser and Johnson / Stephen
Broker) Keys / Callum Davidson +44 (0) 207 397 8900
Newgate Communications Elisabeth Cowell +44 (0) 20 3757 6880
(PR) / Ian Silvera / Tom Dukeroyalty@newgatecomms.com
Carnegie
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 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.
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END
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