K-Bro Announces Acquisition in Montreal

(TSX: KBL)

EDMONTON, June 29, 2011 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announced that it has reached an agreement to acquire all of the assets and operations of Les Buanderies Pierre R. Dextraze Inc. ("Dextraze") (www.dextraze.ca) for cash consideration of $4.2 million, including an amount contingent upon achieving certain EBITDA targets.

Established in 1981, Dextraze is a privately owned and operated commercial/industrial laundry which provides services to the hospitality industry in the Montréal area. It is one of the leading processors in Québec and currently operates 7 days per week with over 100 employees. For the year ended July 31, 2010, Dextraze recorded revenue of $4.0 million and adjusted EBITDA of $0.7 million. Dextraze's customer base is focused on the high-end hospitality market, including bed linen, towels and banquet linen.

Dextraze will continue to be branded and operate in the local market as Les Buanderies Dextraze. Ms. Stany Bergeron and Mr. Eric Ouellette, the two managing partners, will continue to lead Dextraze's business and will join the leadership team of K-Bro.

"Our vision includes growing K-Bro's businesses through acquisitions that have an excellent strategic fit and build shareholder value," said Linda McCurdy, President and CEO. "This acquisition delivers on that vision as it expands K-Bro's products and services into Montréal, a key market for K-Bro. We are extremely excited about the opportunity to acquire a well-managed business such as Dextraze, whose people share our vision of safety, quality and on-time delivery. In addition, we are confident that Dextraze's committed, well-trained and experienced management and employee team will fit in well with the K-Bro culture.  We are excited about growing Dextraze's business in the second largest market in Canada."

"We are very happy to be joining the K-Bro family," said Stany Bergeron. "This transaction immediately positions Dextraze to leverage the collective experience that K-Bro has repeatedly demonstrated across the country. Together we will be able to pursue additional contracts and clients, expand our service offering and increase our market share in both greater Montréal and Québec."

CORPORATE PROFILE

K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts.  K-Bro currently has seven processing plants in six Canadian cities: Québec City, Toronto, Edmonton, Calgary, Vancouver and Victoria.

Additional information regarding the Corporation including required securities filings are available on our website at www.k-brolinen.com and on the Canadian Securities Administrators' website at www.sedar.com; the System for Electronic Document Analysis and Retrieval ("SEDAR").

TERMINOLOGY

Throughout this News Release, and other documents referred to, and in order to provide a better understanding of the financial results, K-Bro uses the terms "EBITDA", "distributable cash flow" and "payout ratio". These terms do not have any standardized meaning under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. Therefore, EBITDA, distributable cash flow and payout ratio may not be comparable to similar measures presented by other issuers.

EBITDA is defined by management as revenue less operating expenses which represents income from operations before amortization.

FORWARD LOOKING STATEMENTS

This News Release contains forward-looking information that represents internal expectations, estimates or beliefs concerning, among other things, future activities or future operating results and various components thereof. The use of any of the words "anticipate", "continue", "expect", "may", "will", "project", "should", "believe", and similar expressions suggesting future outcomes or events are intended to identify forward-looking information.  Statements regarding such forward-looking information reflect management's current beliefs and are based on information currently available to management.

These statements are not guarantees of future performance and are based on management's estimates and assumptions that are subject to risks and uncertainties, which could cause K-Bro's actual performance and financial results in future periods to differ materially from the forward-looking information contained in this News Release.  These risks and uncertainties include, among other things, (i) risks associated with acquisitions, including the possibility of undisclosed material liabilities; (ii) K-Bro's competitive environment; (iii) utility and labour costs; (iv) K-Bro's dependence on long-term contracts with the associated renewal risk;, (v) increased capital expenditure requirements; (vi) reliance on key personnel; (vii) changing trends in government outsourcing; and (viii) the availability of future financing. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: (i) volumes and pricing assumptions; (ii) utility costs; (iii) expected impact of labour cost initiatives; and (iv) the level of capital expenditures. Although the forward-looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements.  Certain statements regarding forward-looking information included in this News Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release.

All forward-looking information in this News Release is qualified by these cautionary statements.  Forward-looking information in this News Release is presented only as of the date made. Except as required by law, K-Bro does not undertake any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.


SOURCE K-Bro Linen Inc.

For further information:

Linda McCurdy Christopher Burrows
President & Chief Executive Officer           Vice-President & Chief Financial Officer
   
K-Bro Linen Inc. (TSX: KBL)  
Phone: 780.453.5218   
Email: inquiries@k-brolinen.com  
Web: www.k-brolinen.com


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