K-BRO ANNOUNCES CLOSING OF C$80 MILLION SUBSCRIPTION RECEIPT OFFERING, INCLUDING THE EXERCISE IN FULL OF THE OVER-ALLOTMENT OPTION

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

(TSX:KBL)

EDMONTON, AB, May 30, 2025 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") is pleased to announce that it has closed its previously announced bought deal offering of 2,334,500 subscription receipts of the Corporation ("Subscription Receipts") (including 304,500 Subscription Receipts issued pursuant to the exercise in full by the syndicate of Underwriters (as defined below) of their over-allotment option granted by the Corporation (the "Over-Allotment Option")) at a price of C$34.55 per Subscription Receipt, for gross aggregate proceeds of C$80,656,975 (the "Offering"). The Subscription Receipts issued pursuant to the Offering will trade on the Toronto Stock Exchange under the ticker symbol KBL.R.

The net proceeds from the Offering (including the net proceeds from the exercise in full of the Over-Allotment Option) will be used to (i) finance a portion of the previously announced acquisition of STAR Mayan Limited, a leading commercial laundry business in England serving the healthcare and hospitality markets (the "Acquisition"), and (ii) pay certain fees and expenses related to the Acquisition and Offering.

The underwriting syndicate was led by TD Securities Inc. and includes National Bank Financial Inc., Raymond James Ltd., ATB Securities Inc., BMO Nesbitt Burns Inc., CIBC Capital Markets, Acumen Capital Finance Partners Limited, Cormark Securities Inc., Stifel Nicolaus Canada Inc. and Leede Financial Inc. (collectively, the "Underwriters"). The proceeds from the sale of the Subscription Receipts will be held by a subscription receipt agent pending the fulfillment or waiver of certain limited conditions precedent to the closing of the Acquisition (other than the payment of the consideration for the Acquisition). There can be no assurance that the applicable closing conditions will be met or that the Acquisition will be consummated.

Upon the closing of the Acquisition (the "Acquisition Closing"), provided the Acquisition closes prior to the Termination Date (as defined below), one common share of the Corporation (a "Common Share") will be automatically issued for each Subscription Receipt (subject to customary anti-dilution protections), without payment of additional consideration or further action.

In addition, whether or not the Acquisition closes prior to the Termination Date, holders of Subscription Receipts will be entitled to receive an amount (the "Dividend Equivalent Payment"), if any, equal to the amount per Common Share of any cash dividends declared thereon for which record dates have occurred on or after the date of the closing of the Offering and before (i) the date on which Common Shares underlying the Subscription Receipts are issued in connection with the Acquisition Closing, if applicable, or (ii) the date (the "Termination Date") of the occurrence of a Termination Event (as defined below), as applicable, less any withholding taxes. Notwithstanding the foregoing, for the Corporation's dividend payable to holders of Common Shares of record on May 30, 2025 (the "May 2025 Dividend"), holders of Subscription Receipts of record on June 6, 2025 (the "May 2025 Dividend Equivalent Record Date") will be entitled to receive a Dividend Equivalent Payment equal to the May 2025 Dividend, payable on June 13, 2025. The Corporation has agreed that until after the May 2025 Dividend Equivalent Record Date, it will not close the Acquisition and, in the event a Termination Event occurs prior to that date, the Subscription Receipts will remain outstanding until following the May 2025 Dividend Equivalent Record Date.

If the Acquisition is not completed prior to June 30, 2025, the share purchase agreement relating to the Acquisition is terminated or if the Corporation otherwise advises the Underwriters or the public that it does not intend to proceed with the Acquisition (in each case, a "Termination Event"), the Subscription Receipts will be cancelled and the holders of Subscription Receipts will receive the gross proceeds of the Offering and any unpaid Dividend Equivalent Payment to which they are entitled, together with their pro rata portion of any remaining interest earned on the gross proceeds of the Offering, net of any applicable taxes. The Acquisition is expected to close on or about June 11, 2025.

This press release is not an offer of securities for sale in the United States. The securities to be issued pursuant to the Offering have not been and will not be registered under the United States Securities Act of 1933 (the "Act") and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of that Act. 

DESCRIPTION OF K-BRO

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 operates eleven processing facilities in eight Canadian cities: Québec City, Montréal, Toronto, Regina, Edmonton, Calgary, Vancouver and Victoria.

Fishers was established in 1900 and is an operator of laundry and linen processing facilities in Scotland, providing linen rental, workwear hire and cleanroom garment services to the hospitality, healthcare, manufacturing and pharmaceutical sectors. Fishers' client base includes major hotel chains and prestigious venues across Scotland and the North East of England. The company operates five sites in Scotland and the North East of England with facilities in Cupar, Perth, Newcastle, Livingston and Coatbridge.

Shortridge has operated as a family run business since the 1990s and is based in Cumbria, with plants in Workington, Dumfries and a distribution depot in Darlington. It specializes in providing high quality laundry services to local independent hospitality businesses, including hotels, B&Bs, self-catering units and restaurants.

Additional information regarding the Corporation including the Final Prospectus and other required securities filings are available on our website at www.k-brolinen.com and through SEDAR+ at www.sedarplus.ca. 

DESCRIPTION OF STAR MAYAN

Star Mayan is an investment and holding company which owns 100% interests in three operating businesses: Synergy, Grosvenor and AeroServe. Star Mayan is a leading commercial laundry business in England, serving the healthcare and hospitality markets. Typical services offered include processing, management and distribution of healthcare and hospitality linens, including sheets, blankets, towels, surgical gowns and other linen. Star Mayan has seven operating facilities strategically located across England: Bermondsey, Derby, Dunstable, Sheffield, Slough (2), and St. Helens, in addition to a distribution depot in Manchester.

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. In particular, this news release contains forward-looking statements pertaining to the Corporation's business strategy, plans and other expectations, beliefs, goals and objectives, including relating to: the Acquisition; the expected closing date of the Acquisition; the satisfaction of the limited conditions to the closing of the Acquisition; the financing of the Acquisition, including statements regarding the Offering, as well as the Corporation's expectations with respect thereto; the timing of the distribution of Common Shares upon closing of the Acquisition; and the listing on the TSX of the Subscription Receipts and Common Shares issuable pursuant to the terms of the Subscription Receipts, including the Subscription Receipts issuable pursuant to the Over-Allotment Option. The use of any of the words "anticipate", "continue", "expect", "may", "will", "project", "intend", "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 the Corporation's actual performance and financial results in future periods to differ materially from the forward-looking information contained in this news release. Such information is based on numerous assumptions regarding present and future business strategies and the environment in which the Corporation will operate in the future.

In evaluating these forward-looking statements, investors should also consider various risk factors, which, if realized, could cause the Corporation's actual results to differ materially from those expressed or implied in forward-looking statements, Such risk factors include, but are not limited to risks relating to: the Acquisition, including the ability of the Corporation and the shareholders of Star Mayan to close the Acquisition on a timely basis or at all; the possibility of undisclosed material liabilities, disputes or contingencies relating to the Acquisition and the Corporation more generally; the failure to realize the anticipated benefits or synergies of the Acquisition following completion thereof due to integration or other issues; challenges or delays in achieving synergies and integration targets; risks associated with historical and pro forma financial information; adverse general economic and market conditions in Canada and the U.K., including in connection with actual and threatened tariff policies and other trade barriers; the diversion of management's time and focus from other business concerns; the use of resources that may be needed in other parts of our business; the Corporation's competitive environment; utility costs, minimum wage legislation and labour costs; the Corporation's dependence on long-term contracts with the associated renewal risk and the risks associated with (i) maintaining short term contracts; (ii) increased capital expenditure requirements, and (iii) reliance on key personnel; changing trends in government outsourcing; changes or proposed changes to minimum wage laws in Ontario, British Columbia, Alberta, Quebec, Saskatchewan and the U.K.; textile demand; availability and access to labour; rising wage rates in all jurisdictions the Corporation operates; foreign currency risk; and certain other risks and uncertainties detailed in the Annual Information Form for the year ended December 31, 2024, Management's Discussion and Analysis for the years ended December 31, 2024 and 2023 and Management's Discussion and Analysis for the three months ended March 31, 2025 and from time to time in the Corporation's public disclosure documents available at www.sedarplus.ca and the Corporation's website at www.k-brolinen.com.

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. Forward-looking information included in this news release includes the expected annual healthcare revenues to be generated from the Corporation's contracts with new customers, calculation of costs, including one-time costs impacting the quarterly financial results, anticipated future capital spending and statements with respect to future expectations on margins and volume growth.

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, the Corporation does not undertake any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

SOURCE K-Bro Linen Inc.

For more information, please contact: Linda McCurdy, President & Chief Executive Officer; Kristie Plaquin, Chief Financial Officer; K-Bro Linen Inc. (TSX: KBL), Phone: [phone], Email: [email protected], Web: www.k-brolinen.com