REG - Duke Royalty Limited - New Royalty Agreement

Duke CapitalAnnouncement

16/12/2021 07:00

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RNS Number : 8149V  Duke Royalty Limited  16 December 2021

16 December 2021

 

Duke Royalty Limited

 

("Duke Royalty" or "Duke")

 

New Royalty Agreement with Specialist Social Care Business

 

Duke Royalty, a provider of alternative capital solutions to a diversified
range of profitable and long-established businesses in Europe and North
America, is pleased to announce that it has entered into a new £10.5 million
royalty financing agreement (the "Financing") with Tristone Healthcare Limited
("Tristone"), further broadening its revenue base.

 

Tristone provides specialist residential and domiciliary care in two end
markets: i) high acuity adults with severe mental, physical or learning
disabilities; and ii) care leavers, aged 16-19, who are transitioning out of
social care and into independent living.

 

Highlights:

 

·     Initial cash yield of 13.5% per annum via monthly payments, which
commence immediately.

·   30-year secured financing, with distributions to be adjusted annually
to reflect Tristone's consolidated revenue growth, on typical Duke terms.

·    Tristone's subsidiaries have a combined 40 year operating history,
and offer a high degree of recurring revenue, with demonstrated organic
growth.

·   Formed in 2015, Tristone has acquired three specialist care businesses
to date, and Duke expects to provide further financing over the next 18 months
to fund Tristone's growing pipeline of bolt-on transactions.

·     Duke's initial investment will refinance Tristone's existing
capital structure.

 

Neil Johnson, CEO of Duke Royalty, said:

 

"Duke Royalty is excited to be entering the UK care space. There is a growing
need for high-quality operators in Tristone's end markets and the company has
a strong reputation for delivering outstanding support. Our long-term funding
helps Tristone grow capacity while removing refinancing risk, so the business
can focus on allocating capital towards what matters - best-in-class care for
vulnerable people.

 

"We are excited to back its CEO, Yannis, and the Tristone team as a royalty
partner because they have a long-term vision, they exemplify social
responsibility, and because partnering with Duke aligns with their goals."

 

Yannis Loucopoulos, CEO of Tristone, said:

 

"We were looking for a funding partner that shares our values and vision for
building a group of care businesses with a long term, care-centric focus which
prioritises delivering outstanding care and support.

 

"The long-term and non-controlling characteristics of this financing was
compelling as it enables us to focus on what we do best without any
refinancing risk and without having to compromise our values or approach. We
look forward to working with the team to deliver our shared ambitions."

 

About Tristone

 

Tristone is committed to the acquisition and growth of social care companies
which have proven business models. Tristone deeply understands the demands of
social care and support and has extensive experience of investing in and
building businesses of this nature, having supported a number of different
care businesses since formation in 2015.

 

Tristone's management philosophy is to operate a simple and care-centric
community of businesses that focus, first and foremost, on delivering
outstanding care and support. Tristone's operating subsidiaries retain their
identity and value base, and Tristone aims to help support existing management
and staff teams to unlock further growth and value and ultimately positively
impact more lives.

 

About the Financing

 

Duke has agreed to provide Tristone with a total investment line of up to £20
million. The remaining £9.5 million will primarily be drawn in the future for
the acquisition of additional care homes and for general working capital
purposes.

 

The terms of the Financing are broadly in line with Duke's typical investment
criteria. The Financing is provided through a secured loan and Duke will be
entitled to monthly distributions (the "Distribution") beginning in December
2021.

 

In line with Duke's other investments, and reflective of the participating
nature of Duke's business model, the Distribution will be adjusted annually
based on the percentage change in Tristone's total gross revenues for the 12
months to 31 March 2022, compared to the prior financial year. The first
adjustment will occur from 30 June 2022. The annual adjustment in the
Distribution will be subject to an agreed collar, in line with Duke's typical
terms.

 

The Financing is for a period of 30 years, with the Distribution payable to
Duke throughout the duration of this term, unless Tristone utilises an early
buyback option which will trigger an early redemption payment to Duke.

 

Duke will also receive a 17.5% equity stake in the business as part of the
transaction.

 

Duke Royalty Portfolio

 

A full list of Duke's current Royalty Partners are now included for reference
on the Partners page of the Company's website: www.dukeroyalty.com/partners
(http://www.dukeroyalty.com/partners)

 

This announcement contains inside information.

 

***ENDS***

 

 

For further information, please visit www.dukeroyalty.com
(http://www.dukeroyalty.com)  or contact:

 

 Duke Royalty Limited     Neil Johnson / Charlie Cannon Brookes / Hugo Evans               +44 (0) 1481 730 613

 Cenkos Securities plc    Stephen Keys / Callum Davidson / Julian Morse / Michael Johnson  +44 (0) 207 397 8900

 (Nominated Adviser

 and Joint Broker)

 Canaccord Genuity        Adam James / Georgina McCooke                                    +44 (0) 207 523 8000

 (Joint Broker)

 SEC Newgate (PR)         Elisabeth Cowell / Richard Bicknell / Megan Kovach               + +44 (0) 20 3757 6880 dukeroyalty@secnewgate.co.uk

 

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.

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