/NOT FOR DISTRIBUTION TO THE
"
Transaction Highlights
The Transaction is aligned with Aegis' long-term business strategy to grow into the premier consolidator of Canadian food and beverage brands. The highlights of the Transaction include the following:
- St. Louis Represents a Strong, Established, and Stable Brand in the Canadian Casual Dining Space
- St. Louis brand was established in 1992 and strong brand recognition has been built over 30 years
- Compelling customer proposition: fun, energizing, casual atmosphere perfect for a night out with friends and sophisticated enough to host corporate events
- Diversified footprint, with 72 franchised locations operating across 4 provinces
St. Louis has demonstrated a strong degree of operational resilience; throughout the course of the pandemic, 4 net new stores were opened- Durable, Agile, and Forward-thinking Business
- Operations possess robust unit economics for franchisees, generating +21% cash-on-cash returns and ~20% 4-wall EBITDA margins (before royalty, management fees and advertising funds payments)
- Access to dedicated business intelligence team to analyze demographic segmentation, conduct market area analysis, and determine traffic / competition access
- Well-developed off-premises business, with proprietary
St. Louis mobile app in use across a wide user base - Robust Combined Financial Profile
- Run rate same-store-sales since pandemic restrictions lifted +1% to 2019 levels, and +38% over 2021
- Highly visible pipeline for expansion, with +50% new store growth projected over the next 3-years
- Strong profitability and cash flow profiles, touting ~48% corporate-level EBITDA margins (2023E) and expected approximately
$5.0 million of free cash flow (2023E) - Continued Management and Board, Supported by Management with Complementary Expertise
- Aegis' current Board and management, having extensive experience across M&A and multi-national franchise businesses will continue to advise and support Aegis with the growth of the
St. Louis and Bridgehead brands St. Louis' management team (other thanBrent Poulton andBarry Poulton ), with a track-record of success and experience in a wide variety of restaurant formats will join Aegis, expanding the depth and breadth of Aegis' expertise
Offering
In connection with the Transaction, Aegis engaged the Agents to conduct a "best efforts" private placement offering of subscription receipts. Aegis is pleased to announce that is has closed the Offering today for gross proceeds of
The Offering consisted of: (i) up to
Each Common Share Subscription Receipt will entitle the holder thereof to receive, upon the satisfaction of certain conditions, including the completion of the Transaction, and without payment of additional consideration or further action, one common share in the capital of the Company (each a "Common Share").
Each Debenture Subscription Receipt will entitle the holder thereof to receive, upon the satisfaction of certain conditions, one
The Common Shares, Convertible Debentures, and the Common Shares issued upon conversion of the Convertible Debentures will be subject to a statutory hold for a period of four months and one day from the closing date of the Offering.
The Company has received conditional approval to list the Common Shares, Convertible Debentures, and the Common Shares issuable upon conversion of the Convertible Debentures, on the
Upon completion of the Transaction, the Company expects to have approximately 33.6 million Common Shares outstanding.
Certain directors, officers and holders of more than 10.0% of the issued and outstanding Common Shares of Aegis ("Insiders") together with certain associates and affiliates of Insiders have acquired an aggregate of
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of securities in
Senior Facility
The Purchase Price will be partially funded through Aegis' existing development line of credit with Canadian Western Bank Franchise Finance (the "Senior Facility") for an aggregate gross amount of
Transaction Structure
The Transaction will be completed through Aegis' wholly-owned subsidiary,
In light of the participation by Insiders, the number of Common Shares issuable under the Offering, the deemed discount to the market price under the applicable rules of the TSX and the pricing of the securities prior to the announcement of the Transaction, the approval of Aegis' shareholders (the "Shareholders") to the Offering is required in accordance with the applicable rules of the TSX. As participation by Insiders is considered to be a "related party transaction" as defined in applicable securities laws, the approval of a majority of disinterested Shareholders, excluding existing Shareholders who are Insiders or associates and affiliates of Insiders, will also be required.
Aegis will seek the required approval of disinterested Shareholders holding greater than 50% of the Common Shares represented in person or by proxy at a special meeting of Shareholders (the "Special Meeting") called for the purpose of approving the Offering in addition to any other required Shareholder approvals.
The Special Meeting is anticipated to be held in
The Transaction is expected to close during the fourth quarter of 2022.
Investor Participation
Additionally, Aegis and EMI have agreed that EMI shall have the right, but not the obligation, to designate one individual for nomination to the board of directors of Aegis at each annual meeting of the Shareholders or any special meeting at which all directors are to be elected.
"As providers of growth capital, we are delighted to support Aegis in completing this acquisition. We are confident that Steve and his team will be great shepherds of the
Advisors
Aegis currently owns and operates Bridgehead Coffee. The Company's vision is to build a portfolio of amazing brands that can grow and flourish with access to Aegis' resources and expertise. The Company is committed to letting each brand operate independently while providing shared expertise to help them thrive. For more information, please visit aegisbrands.ca.
Certain information contained in this news release are not statements of historical fact and are "forward-looking" statements. Forward-looking statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events and include, but are not limited to, statements regarding the Company's expectations with respect to the issuance of the Subscription Receipts, completion of the Acquisition and the use of proceeds from the Offering.
In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "outlook", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In making the forward-looking statements in this news release, the Company has applied certain factors and assumptions that are based on information currently available to the Company as well as the Company's current beliefs and assumptions. These factors as well as the risk factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended, many of which are beyond the Company's ability to control or predict. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and all forward-looking statements in this news release are qualified by these cautionary statements.
The forward-looking statements in this press release are made as of the date it was issued and Aegis does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
SOURCE
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