Diversified Royalty completes $57.5M bought deal

News Release

Diversified Royalty Corp. Announces Closing of $57.5 Million Bought Deal Offering Of 5.25% Convertible Unsecured Subordinated Debentures


Vancouver, B.C., November 7, 2017, For Immediate Release – Diversified Royalty Corp. (TSX: DIV) (the “Corporation” or “DIV”) is pleased to announce that it has closed its previously announced bought deal public offering of $57,500,000 aggregate principal amount of 5.25% convertible unsecured subordinated debentures (the “Debentures”) at a price of $1,000 per Debenture, including $7,500,000 aggregate principal amount of Debentures issued pursuant to the full exercise of the over-allotment option (the “Offering”). The Offering is fully described in DIV’s short form prospectus dated October 30, 2017 (the “Prospectus”), which is available on SEDAR at www.sedar.com.

The Offering was conducted by a syndicate of underwriters led by CIBC Capital Markets that included BMO Nesbitt Burns Inc., National Bank Financial Inc., Cormark Securities Inc., GMP Securities L.P. PI Financial Corp., Canaccord Genuity Corp., Haywood Securities Inc., Industrial Alliance Securities Inc., Beacon Securities Limited and Paradigm Capital Inc.

As described in the Prospectus, DIV intends to use the net proceeds of the Offering to fund potential future acquisitions of additional top-line royalties from other well-managed, multi-location businesses and franchisors in furtherance of DIV’s stated business strategy, and may be used for, among other things, funding of general administration expenses and salaries, lease payments, payment of deposits for potential acquisitions and to fund working capital.

The Debentures mature on December 31, 2022 and bear interest at an annual rate of 5.25% payable semi-annually in arrears on the last day of December and June in each year, commencing June 30, 2018. At the holder’s option, the Debentures may be converted into common shares of the Corporation (“Common Shares”) at any time prior to the close of business on the earlier of the last business day immediately preceding December 31, 2022 and the date fixed for redemption. The conversion price is $4.55 per Common Share (the “Conversion Price”), subject to adjustment in certain circumstances in accordance with the terms of the trust indenture governing the Debentures dated November 7, 2017 (the “Indenture”), a copy of which will be filed on SEDAR at www.sedar.com.

The Debentures are not redeemable prior to January 1, 2021, except upon the satisfaction of certain conditions after a Change of Control (as defined in the Indenture) has occurred. On and after January 1, 2021 and prior to December 31, 2021, the Debentures may be redeemed in whole or in part from time to time at DIV’s option, provided that the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”) during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is not less than 125% of the Conversion Price. On or after December 31, 2021 and prior to the maturity date, DIV may, at its option, redeem the Debentures, in whole or in part, from time to time at par plus accrued and unpaid interest.

The Debentures sold pursuant to the Offering have been listed on the Toronto Stock Exchange under the trading symbol “DIV.DB”.

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 U.S. Securities Act, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from 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 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 Sutton, Mr. Lube and AIR MILES® trademarks in Canada. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada with approximately 8,000 agents and over 200 offices across Canada. Mr. Lube is the leading quick lube service business in Canada with 170 locations across Canada and over $200 million of annual system sales. AIR MILES® is Canada’s largest coalition loyalty program with over 200 leading brand-name sponsors; approximately two-thirds of Canadian households actively participate in the AIR MILES® Program.

DIV expects to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. DIV expects to pay a predictable and stable dividend to shareholders and increase the dividend as cash flow per share increases allow.