CALGARY, Nov. 24, 2016 /CNW/ - Cervus Equipment Corporation ("Cervus" or the "Company") (TSX: CVL) previously announced that it has entered into a definitive agreement for the long term sale and leaseback of approximately $55.7 million of real estate currently owned by the Company. Today Cervus announced that the purchaser, Skyline Commercial REIT, has waived its conditions relating to it obtaining financing and satisfactorily completing its due diligence review of the properties meaning that all material conditions to closing the transaction, other than the delivery of closing payments and customary closing documentation, have been satisfied or waived. The transaction is expected to close in December 2016.
The agreement provides for the sale of the land and buildings of 11 dealerships operated by Cervus and the leaseback by Cervus of those properties with initial lease terms ranging from 15 to 20 years. After retiring mortgages associated with the properties and rent deposits under the proposed lease, Cervus expects net free cash flow of approximately $27 million. The proposed 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 a successful transaction 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 73 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 ("forward-looking information") within the meaning of applicable Canadian securities laws. In particular, this news release includes forward-looking information relating to the anticipated sale and leaseback of certain real estate holdings by Cervus, 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. At this time, Cervus is assuming that the conditions precedent to successfully completing the transaction, including the delivery of closing payments and customary closing documentation, will be satisfied. However, there can be no guarantee that any conditions precedent to the completion of the contemplated transaction will be satisfied to the satisfaction of either the purchaser or Cervus and certain of those conditions are not within the control of Cervus. As such, there can be no assurance that the contemplated transaction will be completed as currently agreed upon or at all. Further, if a transaction is completed on terms different from those currently contemplated, 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.