EDMONTON, Jan. 13 /CNW/ - K-Bro Linen Income Fund (TSX: KBL.UN) ("K-Bro" or the "Fund") announced today that it has reached an agreement to acquire an existing linen business located in Burnaby, B.C. The acquired business consists of Vancouver healthcare institutions and hospitality customers in both the greater Vancouver area and Whistler, British Columbia. K-Bro will acquire all assets of the owner's Vancouver linen business including the processing plant that operates from a leased facility.
The purchase price is $11.5 million, with additional amounts paid for working capital above a normalized level. Annual revenues from the acquired business were $14.4 million in its most recent fiscal year ended June 30, 2009. Management estimates that adjusted EBITDA was approximately $1.7 million for that fiscal year. These operating results, combined with potential synergies, results in an acquisition that management believes will be immediately accretive to the Fund.
Linda McCurdy, President and Chief Executive Officer of the Fund, stated, "We are very pleased with this acquisition as it strengthens our current customer base and presents additional opportunities in our markets. We intend to continue operating the acquired business out of its existing leased facility under the K-Bro name. We believe the addition of this business to our existing network will further strengthen our ability to grow and add value for our customers and unitholders and is consistent with our strategic focus of growing in existing and new markets."
The closing of the acquisition is subject to definitive documentation and finalization of customary conditions and is expected to occur in January, 2010. The purchase will be financed from the Fund's existing bank line of credit.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. The company provides a comprehensive range of general linen and operating room linen processing, management and distribution services to large healthcare institutions, hotels and other commercial accounts. K-Bro currently owns and operates laundry and linen processing facilities in six Canadian cities: Toronto, Edmonton, Calgary, Vancouver, Victoria and Quebec City.
Further information can be found in the disclosure documents filed by the Fund with the securities regulatory authorities, available at www.sedar.com.
Certain financial information contained in this news release, including references to "earnings before interest, taxes, depreciation and amortization" or "EBITDA", are not standard measures under Generally Accepted Accounting Principles ("GAAP") in Canada and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by the investment community to assess the source and sustainability of K-Bro's cash distributions and should be used to supplement other performance measures prepared in accordance with GAAP in Canada. For further information on non-GAAP financial measures used by K-Bro and a reconciliation of such measures to GAAP financial measures, see the annual and quarterly Management Discussion and Analysis and the notes to the annual and quarterly financial statements filed by the Fund with Canadian securities regulatory authorities, available at www.sedar.com.
NOTICE TO READERS
This news release contains forward-looking information that represents internal expectations, estimates or beliefs. Certain statements contained within this news release constitute forward-looking statements. The use of any of the words "anticipate", "continue", "expect", "may", "will", "project", "should", "believe", and similar expressions are intended to identify forward looking statements.
The expectations, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks and uncertainties which may cause the Fund's actual performance and financial results in future periods to differ materially from any expectations, estimates and beliefs of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, (i) risks associated with the acquisition of the Vancouver linen business, including the possibility that K-Bro pays more than the acquired business or assets are worth; the additional expense associated with completing an acquisition and amortizing any acquired intangible assets; the difficulty of assimilating the operations and personnel of the acquired business; the possibility of undisclosed material liabilities; the challenge of implementing uniform standards, controls procedures and policies throughout the acquired business; the inability to integrate, train, retain and motivate key personnel of the acquired business; the potential disruption of K-Bro's ongoing business and the distraction of management from its day-to-day operations; and the inability to incorporate acquired businesses successfully into K-Bro's operations. In addition, K-Bro may not be able to maintain the levels of operating efficiency that the seller had achieved (or might have achieved) as a separate business; (ii) K-Bro's competitive environment, (iii) utility costs, (iv) K-Bro's dependence on long-term contracts, (v) increased capital expenditure requirements; (vi) reliance on key personnel; (vii) the availability of future financing, and such other risks and uncertainties as described in the Fund's disclosure documents filed with Canadian securities regulatory authorities. Accordingly, unitholders of the Fund and potential investors are cautioned that events or circumstances could cause actual results to differ materially from those discussed. The Fund 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: For further information: Linda McCurdy, President & CEO, (780) 453-5218 x.27, email@example.com; or Doug Thomson, FCA., Vice President & CFO, (780) 453-5218 x.26, firstname.lastname@example.org