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Wednesday, February 14th, 2024 9:26 pm EDT
Key Points
- Agreement with Underwriters: DIV has entered into an agreement with a syndicate of investment dealers led by CIBC Capital Markets to purchase 15,100,000 Common Shares at $2.66 per share, with an option for additional shares.
- Use of Proceeds: The proceeds from the offering will be used to partially repay outstanding amounts under DIV’s acquisition facility following its acquisition of trademarks and intellectual property from BarBurrito Restaurants Inc.
- Dividend Policy Increase: DIV’s board of directors has approved an increase in the annual dividend policy from 24.5 cents per share to 25.0 cents per share, effective March 1, 2024, marking a 2.0% increase.
Diversified Royalty Corp. (TSX: DIV and DIV.DB.A) (the “Corporation” or “DIV”) is pleased to announce that it has entered into an agreement with a syndicate of investment dealers led by CIBC Capital Markets (collectively, the “Underwriters”) pursuant to which the Underwriters have agreed to purchase 15,100,000 Common Shares (the “Common Shares”) from the treasury of the Corporation, at a price of $2.66 per Common Share (the “Offering Price”) for total gross proceeds of approximately $40 million (the “Offering”).
In addition, the Corporation has granted the Underwriters an option (the “Over-Allotment Option”) to purchase up to an additional 2,265,000 Common Shares from the treasury of the Corporation at the Offering Price for additional gross proceeds of up to approximately $6 million for market stabilization purposes and to cover over-allotments, if any. The Over-Allotment Option is exercisable, in whole or in part, by the Underwriters at any time up to 30 days following the closing of the Offering.
The net proceeds of the Offering will be used to partially repay outstanding amounts under DIV’s acquisition facility following DIV’s acquisition, on October 4, 2023, of trademarks and certain other intellectual property used by BarBurrito Restaurants Inc. in Canada in its business of franchising, licensing and operating quick service Mexican restaurants.
The Offering will be made by way of a prospectus supplement (the “Prospectus Supplement”) to the Corporation’s existing short form base shelf prospectus (the “Base Shelf Prospectus”) dated June 19, 2023. The Prospectus Supplement (together with the Base Shelf Prospectus, being the “Offering Documents”) will be filed with the securities commissions in all of the provinces and territories of Canada, except Quebec. The Offering Documents will contain important detailed information about the securities being offered. Copies of the underwriting agreement and the Offering Documents will be available by visiting the Corporation’s profile on the SEDAR+ website maintained by the Canadian Securities Administrators at www.sedarplus.ca.
Closing of the Offering is expected to occur on or about February 23, 2024 and is subject to regulatory approval including that of the TSX.
Dividend Policy Increase
DIV’s board of directors has approved an increase in DIV’s annual dividend policy from 24.5 cents per share to 25.0 cents per share effective March 1, 2024, an increase of 2.0%.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or compliance with an applicable exemption from such U.S. registration requirements.
About Diversified Royalty Corp.
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors.
DIV currently owns the Mr. Lube, AIR MILES®, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions and BarBurrito trademarks. Mr. Lube is the leading quick lube service business in Canada, with locations across Canada. AIR MILES® is Canada’s largest coalition loyalty program. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada. Mr. Mikes operates casual steakhouse restaurants primarily in western Canadian communities. Nurse Next Door is one of North America’s fastest growing home care providers with locations across Canada and the United States as well as in Australia. Oxford Learning Centres is one of Canada’s leading franchised supplemental education services. Stratus Building Solutions is a leading commercial cleaning service franchise company providing comprehensive environmentally friendly janitorial, building cleaning, and office cleaning services primarily in the United States. BarBurrito is Canada’s largest quick service Mexican restaurant chain.
DIV’s objective is to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. DIV intends to continue to pay a predictable and stable monthly dividend to shareholders and increase the dividend over time, in each case as cash flow per share allows.
