K-Bro Announces New Vancouver-area Contract

(TSX: KBL)

EDMONTON, March 2, 2016 /CNW/ - K-Bro Linen Inc. (the "Company") announced today that it has been awarded a new 10 year contract to provide laundry and linen services for 23 healthcare facilities in Vancouver and the surrounding area. The contract is the result of a competitive RFP process and contains a renewal option for an additional 10 years. K-Bro is excited to extend its existing relationships with Fraser Health Authority, Provincial Health Services Authority, and Vancouver Coastal Health Authority.

The contract renews all of K-Bro's existing volume and awards additional healthcare volume at 6 new facilities which are currently processed by a competitor. A net increase in revenue of approximately $5.2mm per year (after taking into account price reductions on certain existing accounts) is expected.

K-Bro anticipates building a new state-of-the-art facility in the Vancouver area within the next 30 months with a projected investment of up to $50 million. The new facility will enable the Company to expand current capacity as well as consider partial consolidation with its existing two Vancouver-area facilities. In addition, part of the Company's investment in the new facility will provide for an upgrade and replacement of equipment at its existing Vancouver-area facilities. K-Bro believes it will achieve significant operating efficiencies at its new plant. The Company will consider appropriate financing arrangements over the next two years. 

"We are very pleased to have the opportunity to expand our long-term relationship with so many Lower Mainland Health Authorities", said Linda McCurdy, President & Chief Executive Officer. "We began processing healthcare volume in the Vancouver area in 2002, and we innovated and worked collaboratively with our customers over the past 14 years to earn their confidence and trust. The awarding of this contract demonstrates confidence in our ability to deliver excellent service. After partnering with us and our competitor in the region for many years, we are delighted to be selected for all of the business after a robust RFP process. We expect to make a significant long-term investment in a new state-of-the-art processing facility, and we look forward to continuing our collaborative partnerships with our customers."

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 operates nine processing facilities under three distinctive brands, including K-Bro Linen Systems Inc., Buanderie HMR and Les Buanderies Dextraze, in eight Canadian cities: Québec City, Montréal, Toronto, Regina, 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").

K-Bro est le plus important propriétaire et exploitant de buanderies au Canada. K-Bro fournit une gamme étendue de services de buanderie aux établissements de soins de santé, hôtels et autres clients commerciaux. K-Bro exploite actuellement neuf usines sous trois marques distinctives, incluant K-Bro Linen Systems Inc., Buanderie HMR et Les Buanderies Dextraze, dans huit villes canadiennes: Québec, Montréal, Toronto, Regina, Edmonton, Calgary, Vancouver et Victoria.

Vous pouvez obtenir des renseignements supplémentaires sur la Société, y compris les documents déposés auprès des autorités de réglementation, sur notre site Web, au www.k-brolinen.com et sur le site Web des autorités canadiennes en valeurs mobilières au www.sedar.com, le site Web du Système électronique de données, d'analyse et de recherche (« SEDAR »).

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 inherent 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; and (vii) 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, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

SOURCE K-Bro Linen Inc.

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