MONTREAL, Dec. 20, 2016 /CNW/ - Imvescor Restaurant Group Inc. ("IRG" or the "Company") (TSX: IRG) is pleased to announce that it has entered into a binding agreement to acquire Ben & Florentine, a leading franchisor in the breakfast and lunch category with over 40 locations across Quebec, Ontario and Manitoba. It will be an asset transaction with total consideration of approximately $17.7 million payable at closing with an additional earn-out payment of up to $7.3 million payable in the first quarter of 2018 based upon the achievement of certain financial results driven principally by the successful opening of new restaurants.
Frank Hennessey, President and Chief Executive Officer of IRG said, "We are excited by the Ben & Florentine acquisition which complements IRG's existing brands and consolidates IRG's solid position in Quebec. This acquisition of a homegrown Quebec business is consistent with our strategic acquisition strategy to act upon attractive opportunities, complements our strategic plan initiated in 2015 and is an example of acquisitions we intend to continue to pursue. We expect this transaction to be immediately accretive to earnings, while creating a new growth oriented brand. Ben & Florentine has been great at converting system sales into EBITDA at an even better margin than IRG has achieved in the past. The purchase price represents a significant discount to our trading multiple."
Lorne Cassoff, the founder and President of Ben & Florentine will continue to lead the brand and will join IRG's executive team. "I'm proud of the great organization that we have built since 2009 with our franchisee partners by delivering authenticity and transparency to our customers every single day. We intend to pursue our growth strategy for the brand, and we look forward to joining the Imvescor family with the many new opportunities that this acquisition will provide for all stakeholders".
Transaction Overview and Rationale
The acquisition of Ben & Florentine adds a leading brand to IRG's portfolio. Management believes that the acquisition presents several compelling strategic benefits:
- A growth oriented brand. Since opening its first restaurant in 2009, Ben & Florentine has demonstrated rapid growth to 12 locations by 2010, opening its first location in Ontario in 2012, and now boasts over 40 locations across Quebec, Ontario and Manitoba with $35 million in system sales and significant growth potential;
- Ability to generate economies of scale while leveraging IRG's shared services and operating track record;
- Increases IRG's critical mass in Quebec, cementing the Company's strong position;
- Single digit accretion to earnings per share while keeping debt leverage at approximately 1x EBITDA;
The Company intends to finance the acquisition through a combination of cash on hand and its existing credit facility.
The acquisition, which is expected to close in the first quarter of 2017, is subject to certain customary closing conditions and purchase price adjustments.
Conference Call Details
Frank Hennessey, President and Chief Executive Officer, and Tania M. Clarke, Chief Financial Officer will host a conference call to discuss Q4 2016 results at 8:30 am E.T. on Tuesday, December 20, 2016. To access the conference call by telephone, dial 1-888-231-8191 (Toll-Free), 514-807-9895 (Montreal) or 647-427-7450 (Toronto). Please connect approximately 10 minutes prior to the beginning of the call to ensure participation.
A live audio webcast of the conference call will be available at www.imvescor.ca/investor-relations/. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. A recording of the conference call will be archived for replay by telephone until Tuesday, December 27, 2016 at midnight. To access the archived conference call, dial 1-855-859-2056 (Toll-Free), 514-807-9274 (Montreal) or 416-849-0833 (Toronto) and enter the reservation number 26204905.
About Imvescor Restaurant Group Inc. Imvescor Restaurant Group Inc. is a dynamic and innovative organization in the family and casual dining restaurant industry. The Company is a franchise and licensing business that operates restaurants in Eastern Canada under four banners: Pizza Delight®, operating primarily in Atlantic Canada, in the family/mid-scale segment, Toujours Mikes and Scores®, operating primarily in Québec in the family and casual dining segments and the take-out and delivery segments, and Bâton Rouge®, operating in Québec, Ontario and Nova Scotia in the casual dining segment. The Company also licenses to third parties the right to manufacture and sell prepared food products under the Pizza Delight®, Toujours Mikes, Scores® and Bâton Rouge® brands and, through its wholly-owned subsidiary, Groupe Commensal Inc., manufactures and sells vegetarian branded food products in grocery stores and retail outlets under the Commensal® brand.
Non-IFRS Measures and Financial Metrics: The information contained in this press release includes some figures that are not performance measures consistent with International Financial Reporting Standards ("IFRS"). Because they do not have a standardized meaning prescribed by IFRS, they may not be comparable with similar measures presented by other issuers.
"EBITDA" is defined as earnings or loss before interest income, interest expense, depreciation and amortization and income tax expense.
The Company uses EBITDA because the measure enable management to assess the Company's operational performance and is a financial indicator of the Company's ability to service and incur debt. This measure should not be considered by an investor as an alternative to earnings, an indicator of operating performance or cash flows, or as a measure of liquidity. Refer to the Reconciliations of Non-IFRS Measures section of this MD&A for more details.
"System Sales" is the aggregate sales achieved by all "Pizza Delight", "Toujours Mikes", "Scores" and "Bâton Rouge" restaurants, whether they are company-owned restaurants or franchises. This performance measure indicates the Company's overall growth and reflects the direct impact of the restaurant openings and closures.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities laws, including but not limited to, IRG's business objectives, estimates, outlook, strategies and priorities and all other statements other than statements of historical facts. Forward-looking statements may include estimates, intentions, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements are often, but not always, identified by the use of words such as "may", "should", "would", "will", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential, "targeting", "intend", "could", "might", "continue", "outlook" or the negative of these terms or other comparable terminology. All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable securities laws.
Forward-looking statements involve known and unknown risks, uncertainties and other factors outside of IRG's control. A number of factors could cause the actual results of IRG to differ materially from the results discussed in the forward-looking statements, including, but not limited to: risks associated with quality control, food borne illnesses and health concerns, adverse changes to economic conditions, the Company's ability to retain certain key personnel, the Company's ability to respond to various competitive factors affecting its operations, franchise development and growth of the retail licensing opportunities, changes in consumer preferences, the Company's retail products dependence on the strength of the Company's restaurant brands, the protection of the Company's intellectual property, the success of the restaurant rejuvenation plan, the Company's dependence on royalty stream, the Company's reliance on suppliers and availability and quality of raw materials, changes in the Company's relationships with its franchisees, the Company's ability to open new restaurants, the closure of restaurants, the impact of an increase in Company-owned restaurants, the Company's ability to renew leases and limit lease exposure, the risks associated with negative publicity and its impact on the Company's reputation, compliance with regulations governing confidentiality of guest information, potential litigation and other complaints, compliance with government regulations, the Company's dependence on third parties, changes in laws concerning employees, changes in the Company's relationships with its employees, the Company's ability to ensure workplace safety, risks associated with franchise regulations, compliance with regulations governing alcoholic beverages, environmental risks and regulations, public safety issues, the Company's dependence on technology, risks of underreporting of sales by franchisees, inherent risks associated with internal control over financing reporting, the indebtedness of the Company and the restrictive covenants to which it is subject, the impact of sales tax upon System Sales, the risk associated with the Company's dividend policy, the impact of seasonality and other factors on quarterly operating results, the risk of uninsured losses, changes in commodity prices and other factors referenced in the Company's Annual Information Form and the Company's other continuous disclosure filings which are available on SEDAR at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect IRG but should, however, be considered carefully.
Further, although the forward-looking statements contained herein are based on information currently available to IRG's management and on the current assumptions, intentions, plans, expectations, estimates, opinions, forecasts, projections and other assumptions made by IRG's management in light of its experience and perception of historical trends, current conditions and expected future developments (such as IRG's future growth, results of operations, performance and opportunities as well as the future of the economic environment in which it operates), as well as other factors that IRG's management believes are appropriate and reasonable in the circumstances and on the date of this press release, there can be no assurance that such assumptions, intentions, plans, expectations, estimates, opinions, forecasts, projections and other assumptions will prove to be correct or that actual results will not differ materially from those anticipated in such forward-looking statements.
In particular, the forward-looking statements in this press release include statements relating to IRG's expectations with respect to the completion of the Ben & Florentine acquisition and the timing thereof, IRG's ability to achieve the expected benefit of the Ben & Florentine acquisition, the anticipated impact of the Ben & Florentine acquisition on IRG business and IRG outlook for the financial and operating performance of the Ben & Florentine division.
Forward-looking statements are provided herein for the purpose of giving information about IRG's current strategic priorities, expectations and plans, thereby allowing investors and others to get a better understanding of IRGI's business outlook and operating environment. Readers are cautioned, however, that such information may not be appropriate for other purposes and should not place undue reliance on the forward-looking statements contained in this press release. IRG assumes no obligation to update or revise such forward-looking statements to reflect new information, future events or otherwise, except as required by applicable securities laws. Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any transactions that may be announced or that may occur after the date of this press release. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. IRG therefore cannot describe the expected impact in a meaningful way or in the same way it presents known risks affecting the business. IRG's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
SOURCE Imvescor Restaurant Group Inc.
For further information: Imvescor: 514.341.5544, http://www.imvescor.ca; Investor Relations: firstname.lastname@example.org, Frank Hennessey, President and Chief Executive Officer; Tania M. Clarke, Chief Financial Officer; Media Relations: ACJ Communication - Daniel Granger 514.840.7990