CALGARY, Dec. 21, 2016 /CNW/ - Cervus Equipment Corporation (TSX: CVL) today announced that it has completed the long term sale and leaseback of approximately $55.7 million of real estate owned by the company. Pursuant to the transaction, Cervus sold the land and buildings where it operates 11 dealerships and leased back those properties with initial lease terms ranging from 15 to 20 years. After retiring mortgages associated with the properties and rent deposits under the leases, Cervus expects net free cash flow of approximately $27 million. The sales prices and lease rates for the properties result in overall average market capitalization rates of 7.7% for those properties, which is not expected to negatively impact earnings per share. In the short term, proceeds from the sale will be used to reduce debt.
About Cervus Equipment Corporation
Cervus acquires and operates authorized agricultural, construction, materials handling and transportation equipment dealerships. The company has interests in 66 dealerships in Canada, New Zealand, and Australia. The primary equipment brands represented by Cervus include John Deere agricultural equipment; Bobcat and JCB construction equipment; Clark, Sellick and Doosan material handling equipment; and Peterbilt transportation equipment. The common shares of Cervus are listed on the Toronto Stock Exchange and trade under the symbol "CVL".
Forward Looking Information
This news release contains certain forward-looking information within the meaning of applicable Canadian securities laws. In particular, this news release includes forward-looking information relating to the anticipated net free cash flow after retiring mortgages, anticipated impact on earnings per share, and anticipated impact on capital structure. Cervus believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon. The financial impact on Cervus may be materially different from those stated in this news release. Any forward-looking information is made as of the date hereof and, except as required by law, Cervus assumes no obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.
SOURCE Cervus Equipment Corp.