EDMONTON, ALBERTA--(Marketwired - April 1, 2015) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
MEDWELL CAPITAL CORP. ("Medwell" or the "Company") (TSX VENTURE:MWC) is pleased to announce that it has entered into an arrangement agreement (the "Arrangement Agreement") on March 31, 2015 with GDI Integrated Facility Services Inc. ("GDI") relating to a transaction (the "Arrangement") pursuant to which the Company proposes to acquire, among other things, all of the issued and outstanding securities of GDI (the "GDI Shares") in exchange for the issuance of shares of the Company and a cash consideration (the "Cash Consideration").
Pursuant to the Arrangement Agreement, the Company has been assigned a value fixed at $11,200,000 (the "Medwell Valuation Amount"), an amount equal to approximately $1.54 per currently issued and outstanding common share of the Company (the "Common Shares"), representing a premium of approximately 121% over the volume weighted average price of the Common Shares on the TSX Venture Exchange (the "Exchange") of $0.697 over the last 20 trading days. The Arrangement Agreement is the result of arm's length negotiations conducted between representatives of the Company and GDI.
As part of the Arrangement, GDI will be combined into Medwell to form a single entity to be renamed "GDI Integrated Facility Services Inc." (the "Resulting Issuer") that will carry on the business of GDI. The Arrangement requires the approval of the shareholders of the Company (the "Shareholders") at an annual general and special meeting of the Shareholders (the "Meeting") to be held on May 13, 2015 or such later date as adjourned or postponed.
In connection with the Arrangement, a public offering of securities will be carried out by the Company (the "Offering"), which will be conditional on, and will close concurrently with, the Arrangement.
Trading in the Common Shares has been halted in accordance with the policies of the Exchange and will remain halted until completion of the Offering and the Arrangement.
The Arrangement will be deemed to be a Change of Business (COB) under the policies of the Exchange.
GDI Integrated Facility Services Inc.
GDI is a Montreal-based janitorial services provider which offers a range of commercial cleaning services and other complementary services such as mechanical maintenance services and restoration services to owners or managers of large property portfolios and large specialized facilities in Canada and the United States (the "U.S."). With approximately 17,000 employees across Canada and in selected cities in the U.S., GDI is the largest outsourced janitorial services provider in Canada (approximately 1.3 times larger than its nearest competitor), and one of the top five in North America. GDI's services are used by the majority of the largest multi-property owners or managers in Canada, and by an increasing number of clients in the U.S.
GDI is a private corporation incorporated in its current form on January 1, 2013 under the Canada Business Corporations Act (the "CBCA"). Birch Hill Equity Partners IV, LP, Birch Hill Equity Partners (US) IV, LP and Birch Hill Equity Partners (Entrepreneurs) IV, LP (collectively, the "Birch Hill Entities"), partnerships formed under the laws of Ontario and acting through their general partner, Birch Hill Equity Partners Management Inc. ("Birch Hill Management"), a corporation incorporated in the Province of Ontario, are collectively a controlling shareholder of GDI. Mr. Claude Bigras (residing in Montreal, Quebec), the current President and CEO of GDI, through his holding company Gestion Claude Bigras Inc. ("Group CB") incorporated in the Province of Quebec, is also a significant shareholder of GDI.
Unanimous Recommendation of the Board of Directors
The Board of Directors of the Company formed a special committee comprised solely of independent directors (the "Special Committee") to consider the Arrangement and to determine if such transactions would be in the best interests of the Company and the Shareholders.
The Special Committee retained Deloitte LLP to evaluate the fairness of the Arrangement and Deloitte LLP concluded that, based upon and subject to the various assumptions, matters considered and limitations set forth in their opinion, that the Medwell Valuation Amount is fair, from a financial point of view, to the Shareholders.
The Board of Directors of the Company, following the unanimous favourable recommendation of the Special Committee, has unanimously determined (with Kevin A. Giese, Michael Salamon and Patrick Barry abstaining) that the Arrangement is in the best interests of the Company and the Shareholders. The Board of Directors has unanimously (with Kevin A. Giese, Michael Salamon and Patrick Barry abstaining) approved the Arrangement and unanimously recommends that Shareholders vote in favour of the Arrangement.
Concurrent Public Offering
In connection with the Arrangement, the Company will carry out the Offering. The Offering will be conditional on, and will close concurrently with, the Arrangement.
The Company will file a prospectus to qualify the distribution of a number of subordinate voting shares of the Company (the "Subordinate Voting Shares") pursuant to the terms of an underwriting agreement to be entered into with certain underwriters.
Upon completion of the Offering and the Arrangement, the Resulting Issuer will have two classes of issued and outstanding shares: the Subordinate Voting Shares and the multiple voting shares of the Company (the "Multiple Voting Shares").
A portion of the proceeds to be received by the Company from the Offering will be used to pay the Cash Consideration.
Details of the Arrangement
The Arrangement is expected to be effected by way of a plan of arrangement (the "Plan of Arrangement") under section 192 of the CBCA.
The Arrangement Agreement and the Plan of Arrangement are the legal documents that govern the Arrangement. The following is a summary of the Arrangement and is subject to, and qualified in its entirety by, the full text of the Arrangement Agreement and the Plan of Arrangement, copies of which are filed on SEDAR under the Company's issuer profile at
www.sedar.com.
Effect of the Arrangement
As part of the Arrangement, the Company will consolidate its currently issued and outstanding Common Shares by a ratio to be mutually determined by the Company and GDI (the "Consolidation"), amend the terms of the Common Shares to create the Subordinate Voting Shares and create the Multiple Voting Shares. Moreover, the Company will be continued under, and in accordance with, the CBCA (the "Continuance").
The closing of the Arrangement is subject to, and will occur concurrently with, the completion of the Offering, and as a result:
a. investors in the Offering will become shareholders of the Resulting
Issuer and will hold Subordinate Voting Shares upon completion of the
Offering and the Arrangement;
b. Group CB will receive a portion of the Cash Consideration and Multiple
Voting Shares upon completion of the Offering and the Arrangement;
c. certain executives of GDI, excluding Claude Bigras, will receive a
portion of the Cash Consideration and Subordinate Voting Shares upon
completion of the Offering and the Arrangement;
d. the Birch Hill Entities will receive a portion of the Cash Consideration
and Multiple Voting Shares upon completion of the Offering and the
Arrangement;
e. Shareholders holding Common Shares prior to the closing date of the
Arrangement (the "Closing Date") will become shareholders of the
Resulting Issuer and will own Subordinate Voting Shares upon completion
of the Offering and the Arrangement;
f. GDI will be combined into the Company to form the Resulting Issuer;
g. Claude Bigras, Michael Boychuk, David A. Galloway, Richard G. Roy, David
G. Samuel and Carl M. Youngman will join Kevin A. Giese, Patrick G.
Barry and Will Sawchyn on the Board of Directors of the Company, and
Laine Woollard and Michael Salamon will resign;
h. KPMG LLP, the current auditors of GDI, will be appointed as auditors of
the Resulting Issuer;
i. a new stock option plan (the "New Stock Option Plan") with respect to
the Resulting Issuer will enter into force and effect in accordance with
its terms; and
j. the Company's previous stock option plan will be terminated.Conditions Precedent to the Completion of the Arrangement
The Arrangement is subject to the satisfaction of certain conditions including, among other things:
1. the granting of an interim order of the Superior Court of Quebec
(Commercial Division) (the "Court") providing for, among other things,
the calling and holding of the Meeting;
2. the approval by the Exchange of the Arrangement and the Offering;
3. the approval of the Continuance by at least two-thirds of the votes cast
by the Shareholders present in person or represented by proxy at the
Meeting;
4. the approval of the resolution approving the Arrangement by:
i. at least two-thirds of the votes cast by the Shareholders, and
ii. at least a simple majority of the votes cast by the Shareholders
(excluding the Birch Hill Entities and Kevin A. Giese), present in
person or represented by proxy at the Meeting;
5. the listing approval of the Subordinate Voting Shares on the Toronto
Stock Exchange (the "TSX");
6. the approval of the New Stock Option Plan by at least a simple majority
of the votes cast by the Shareholders present in person or represented
by proxy at the Meeting;
7. the granting of a final order of the Court approving the Arrangement;
and
8. the Offering being simultaneously completed with the Arrangement.Principal Shareholders
Following the closing of the Arrangement, it is anticipated that Mr. Claude Bigras, through Group CB, and Birch Hill Management, through the Birch Hill Entities, will constitute the principal shareholders of the Resulting Issuer, with no other individual or entity holding greater than 10% of its issued and outstanding shares.
Supporting Shareholders
The Birch Hill Entities as well as certain directors and officers of the Company (Kevin A. Giese (President and CEO), Tami Reich (CFO), Michael Kennedy (Secretary) and Will Sawchyn (director)) (collectively the "Supporting Shareholders") have each entered into a separate support and voting agreement with the Company and GDI in connection with the Arrangement (collectively the "Support and Voting Agreements"). The Supporting Shareholders who have entered into such Support and Voting Agreements beneficially own, directly and indirectly, or exercise control or direction over, in the aggregate, 3,529,340 Common Shares as at the date hereof, which represent approximately 48.46% of the outstanding Common Shares and have agreed, subject to the terms of the Support and Voting Agreements, to vote such Common Shares held by them in favour of the Arrangement Resolution.
Non-Solicitation
Each of the Company and GDI have agreed to customary non-solicitation covenants with a right to match any superior proposal. Under certain circumstances where the Arrangement is not completed, a termination fee of up to $500,000 is payable by one party to the other.
TSX Listing
The Company will apply to the TSX for approval of the listing of all the issued and outstanding Subordinate Voting Shares upon completion of the Offering and the Arrangement under the symbol "GDI". The listing is subject to the Company fulfilling all of the requirements of the TSX. If the TSX approves the application, the Common Shares shall become Subordinate Voting Shares, will be delisted from the Exchange and the Subordinate Voting Shares will be listed on the TSX.
Annual General and Special Meeting of the Shareholders
The Company will disseminate a subsequent news release confirming the date, time and location of the Meeting. The Meeting is currently scheduled to be held at 10:00 a.m. (Edmonton Time) on May 13, 2015 at 2900 Manulife Place, 10180 - 101 Street, Edmonton, Alberta, or on such later date as adjourned or postponed.
Record Date
The record date for those Shareholders entitled to receive notice of, and vote at, the Meeting is April 10, 2015. Only Shareholders whose names have been entered in the register of the Company as of the close of business on such date are entitled to receive notice and to vote at the Meeting.
Matters to be Approved at the Meeting
At the Meeting, Shareholders will be asked, among other things, to consider, and if thought advisable, to pass (i) an ordinary resolution authorizing the adoption of the New Stock Option Plan (the "SOP Resolution") (ii) a special resolution authorizing and approving the Continuance (the "Continuance Resolution"), and (iii) a special resolution authorizing and approving the Arrangement (the "Arrangement Resolution"). To be effective, each of the Continuance Resolution and the Arrangement Resolution requires the affirmative vote of not less than two-thirds (66 2/3%) of votes cast by Shareholders in person or represented by proxy at the Meeting. Pursuant to TSX Venture Exchange Policy 5.9 ("Policy 5.9") and Multilateral Instrument 61-101 ("MI 61-101"), the Company must also obtain minority shareholder approval for the Arrangement Resolution (50% +1). The SOP Resolution requires the affirmative vote of a majority of votes cast by Shareholders in person or represented by proxy at the Meeting.
At the Meeting, Shareholders will also be asked to receive and consider matters independent from the Arrangement, including, among others, (i) the report of the directors of the Company and the audited financial statements of the Company for Fiscal 2014, together with auditor's report thereon, (ii) the election of directors of the Company to serve for a term expiring on the earlier of the Closing Date and the date of the next annual general meeting of the Company, and (iii) the appointment of PricewaterhouseCoopers LLP, as auditors for a term expiring on the earlier of the Closing Date and the date of the next annual general meeting of the Company and to authorize the Board of Directors of the Company to fix the remuneration to be paid to the auditors.
Management Information Circular
The Company will prepare and mail a management information circular (the "Circular") to Shareholders. The Circular will set forth important information, including the process that culminated in the Company entering into the Arrangement Agreement with GDI, a description of the Arrangement and other information relating to the Meeting. The Company encourages Shareholders to read the Circular carefully.
Certain information relating to the Offering and the Arrangement will not be determinable as of the mailing date and an estimate of such information will instead be provided in the Circular, as applicable. The Circular will provide an estimate of, among other things: (i) the ratio by which the Common Shares will be consolidated pursuant to the Consolidation; (ii) the consideration payable by the Company in connection with the Arrangement, namely the amount of the Cash Consideration to be paid, and the number of Multiple Voting Shares and Subordinate Voting Shares to be issued, (iii) the number of Subordinate Voting Shares to be sold pursuant to the Offering and the price at which they will be offered; (iv) the anticipated net proceeds from the Offering; and (v) the number and percentage of the issued and outstanding shares of the Resulting Issuer which will be held by the Shareholders upon completion of the Offering and the Arrangement.
Upon filing of the final long form prospectus and at least 5 days prior to the Meeting, the Company will file on SEDAR and disseminate a news release which will confirm and complete any information that was not determinable as of the mailing date of the Circular.
Executive Officers of the Resulting Issuer
The executive management team of the Resulting Issuer will be comprised of the following persons:
Claude Bigras, Director, President and CEO. Mr. Bigras joined GDI in 1994 and later became a major shareholder in 1998. In December 2004, he became President and CEO of GDI and has since overseen GDI's significant organic growth. Mr. Bigras has driven the development of GDI's key financial strategic planning, and brings with him an exceptional track record of strategic acquisitions. Mr. Bigras holds certificates in Finance and Management from Ecole des Hautes Etudes commerciales in Montreal.
Pierre Gagne, CFO. Mr. Gagne joined GDI in November 2014 and is responsible for GDI's finance strategy, investor relations, merger and acquisition activities, financial and operational management, and accounting and administration. From 1995 to 2014, he was the Senior Vice President (prior to 2009, Vice President, Finance) and CFO of Cogeco Inc. and Cogeco Cable Inc. Mr. Gagne holds an MBA from Concordia University, a bachelor's degree in Business Administration from Ecole des Hautes Etudes commerciales in Montreal, a CPA (CA) designation from the Quebec Order of Chartered Accountants and an ICD.D designation from the Rotman School of Management at the University of Toronto.
Robert Crozier, President, Atlantic Region. Mr. Crozier joined GDI in 2011 and is currently the President of its Atlantic Region division. In this role, he oversees all operations in Atlantic Canada and assists GDI's senior management with respect to ongoing corporate matters. He holds a bachelor's degree in Business Administration from Mount Saint Vincent University in Halifax, Nova Scotia.
Fred Edwards, President, Western Region. Mr. Edwards joined GDI in 2013 and is currently the President of its Western Region division. In this role, he oversees all operations in the Canadian western provinces and coordinates efforts with respect to ongoing corporate matters. Mr. Edwards has over 35 years of experience in the janitorial services industry and was previously President and CEO of Servpro Cleaning (Calgary) Inc.
David Hinchey, Senior Vice President, Strategic Development. Mr. Hinchey joined GDI in 2014 as its Senior Vice President, Strategic Development after a 14 year career in the investment banking industry. Prior to joining GDI, he served as Managing Partner of Milton Capital Partners Ltd., an advisory firm providing mergers and acquisitions and capital markets advisory services to public and private companies, where he specialized in the facility services industry for several years. From 2009 to 2011, Mr. Hinchey served as Managing Director, Investment Banking of Laurentian Bank Securities Inc. At GDI, he is responsible for the company's mergers and acquisitions activities and strategic business initiatives. Mr. Hinchey holds an MBA from McGill University and is a CFA charterholder.
Serge Lavoie, Executive Vice-President, GDI and President, Quebec Region. Mr. Lavoie joined GDI in 2012 as President of its Quebec division. In this role, Mr. Lavoie oversees all operations in the province and coordinates efforts with respect to ongoing corporate matters, mainly in connection with business development opportunities. Prior to joining GDI, he spent 17 years at JEVCO Insurance Company where he became President and CEO in 2006 and, as such, oversaw the company's general operations. Mr. Lavoie graduated in Administration and Management from the Universite du Quebec a Montreal (UQAM) in 1986.
Daniel Sklivas, President, Central Region. Mr. Sklivas joined GDI in 2006, and is currently the President of its Central Region division. In this role, he oversees all operations in the Canadian central provinces and coordinates efforts with respect to ongoing corporate matters. Prior to joining GDI, he spent five years at Manulife Financial as a director of facilities and property management. Mr. Sklivas holds a Management Certificate from Concordia University, as well as Real Property Administrator (RPA) and Facility Management Administrator (FMA) designations from the Building Owners and Managers Institute.
Board of Directors of the Resulting Issuer
In addition to Mr. Claude Bigras, the Board of Directors of the Resulting Issuer will be comprised of the following persons:
Patrick G. Barry, Director. Mr. Barry is a partner at the law firm of Davies Ward Phillips & Vineberg LLP. He received his A.B. from Harvard University in 1988 (magna cum laude), his LL.B. from the University of Toronto Law School in 1991 and was admitted to the Law Society of Upper Canada in 1993.
Michael Boychuk, Director. Mr. Boychuk has been President and CEO of Bimcor Inc. since 2009. He currently serves as director at Laurentian Bank of Canada. From 1999 to 2009, he was Senior Vice-President and Treasurer of BCE Inc./Bell Canada, being responsible for all treasury, corporate security as well as environment and sustainability activities, and for the BCE Group of companies' pension plans. Mr. Boychuk is a graduate of McGill University (BCom 1977, GDPA 1978, CPA, CA 1979, FCPA, FCA 2012) and has been a professional chartered accountant since 1979. He became a Fellow of the Ordre des comptables professionnels agrees du Quebec in 2012.
David A. Galloway, Director. From 1998 to 2002, Mr. Galloway was a member of Bank of Montreal's board of directors and was appointed Chairman of the board of directors on May 1, 2004. While at the Bank of Montreal, he served on the Risk Review Committee and the Human Resources and Management Compensation Committee. He was also a director of Harris Financial Corp. and served on its Risk Oversight Committee. Mr. Galloway is the former President and CEO of Torstar Corporation, a position he held from 1988 to 2002. Mr. Galloway has a bachelor's degree (Honours) in political science and economics from the University of Toronto and an MBA from Harvard Business School.
Kevin A. Giese, Director. Since 1999, Mr. Giese has been the President and CEO of the Company, in addition to holding the office of director and Chairman. Mr. Giese completed a bachelor's degree from the University of Alberta in 1980, received his Juris Doctor in law from the University of Victoria in 1984 and obtained his MBA from York University in 1988.
Richard G. Roy, Director. For the past 15 years, Mr. Roy has spent his career at Uni-Select Inc., a leader in the automotive aftermarket industry, the fifth-largest automotive parts distributor and largest independent paint distributor in North America. Mr. Roy has occupied an array of executive positions with Uni-Select - from 1999 to 2007 he acted as the company's CFO, from 2007 to 2008 he acted as its Chief Operating Officer and from 2008 on he assumed the position of President and CEO. Mr. Roy holds a bachelor's degree from Ecole des Hautes Etudes commerciales in Montreal and holds FCPA and FCA designations.
David G. Samuel, Director. Mr. Samuel joined Birch Hill in 2005 and is currently the Chairman of Shred-it International. Prior to joining Birch Hill, Mr. Samuel had over 15 years of experience in private equity, operations, consulting and investment banking. Mr. Samuel received his MBA from Harvard Business School and his HBA from the Richard Ivey School of Business, Western University.
Will Sawchyn, Director. Mr. Sawchyn has been a practicing Chartered Accountant since 1993. Over the course of his career, Mr. Sawchyn has held senior financial management, mergers and acquisition and operational management roles in the construction, utility and heavy equipment industries. He is currently a director on the Board of Directors of the Company and holds a bachelor's degree in Commerce from the University of Saskatchewan.
Carl M. Youngman, Director. Mr. Youngman is founder, Chairman and CEO of Youngman & Charm, a private equity investment management and consulting firm, and is on the Advisory Board of Schultze Asset Management, LLC, a U.S. based distressed securities manager. For over 30 years he has been helping public and private companies, their managements, investors in companies and lenders to companies resolve their operational and financial problems. Mr. Youngman holds the designation of Certified Turnaround Professional (CTP) from the Turnaround Management Association and an Executive Masters degree from The American College of Corporate Directors. Mr. Youngman holds an MBA from Harvard Business School and a BS in electrical engineering from Worcester Polytechnic Institute.
Related Party Transaction
The Arrangement constitutes a Related Party Transaction for the Company within the meaning of the Policy 5.9 and of MI 61-101. The Birch Hill Entities hold a significant equity position (78% of the voting interests) in GDI, are creditors of GDI and hold a significant equity interest (44.6% of the voting interests) in the Company and, accordingly, Birch Hill Management, the Birch Hill Entities and Michael Salamon are considered to be "related parties" under Policy 5.9 and MI 61-101. Michael Salamon is a director of the Company and is a partner of Birch Hill Management. Kevin A. Giese, the President, CEO and a director of the Company, will receive a termination payment on completion of the Arrangement and may be considered an "interested party" under Policy 5.9 and MI 61-101. Patrick G. Barry is a Birch Hill Management nominee to the Board of Directors of the Company. All matters requiring the consideration of the Board of Directors of the Company have been handled by directors other than Kevin A. Giese, Michael Salamon and Patrick G. Barry, and a special committee (the "Special Committee") comprised of Will Sawchyn and Laine Woollard was formed to consider the Arrangement.
The Arrangement is exempt from the formal valuation requirements of Policy 5.9 and MI 61-101 pursuant to the provisions of section 5.5(b) of MI 61-101 in that the securities of the Company are not listed on certain specified exchanges. The Arrangement is subject to the evidence of value requirements of Exchange Policy 5.4.
Selected Financial Information regarding GDI
The following table sets out selected consolidated financial information for the fiscal year ended
December 31, 2014 ("Fiscal 2014"), the fiscal year ended December 31, 2013 ("Fiscal 2013") and the fiscal year ended December 31, 2012 ("Fiscal 2012"). The selected consolidated financial information set out below for each fiscal year end has been derived from GDI's consolidated financial statements and accompanying notes.
Fiscal
--------------------------------------------
2014 2013 2012
------------ ------------ ------------
(in thousands of Canadian
dollars)
-------------------------------
Revenues by segment
Canada - Janitorial 452,326 424,373 388,638
United States - Janitorial 100,593 36,942 6,025
Complementary Services 55,880 41,566 34,336
Inter-segment (6,359) (2,624) (1,103)
------------ ------------ ------------
Total revenue 602,440 500,257 427,896
Cost of services 497,239 414,995 356,271
Selling and administrative
expenses 68,183 54,863 43,774
Transaction and reorganization
costs 1,665 1,512 2,263
Depreciation and amortization 17,134 11,250 10,006
Goodwill impairment 2,023 - -
------------ ------------ ------------
Operating income 16,196 17,637 15,582
Net finance expense 32,347 17,731 8,066
------------ ------------ ------------
Income (loss) before income
taxes (16,151) (94) 7,516
Income tax expense (recovery) 2,442 (11,479) 2,709
------------ ------------ ------------
Net (loss) income (18,593) 11,385 4,807
------------ ------------ ------------
Net (loss) income attributable
to:
Owners of the Company (21,100) 7,776 4,898
Non-controlling interest 2,507 3,609 (91)
------------ ------------ ------------
(18,593) 11,385 4,807
Revenue Growth
Organic Growth 5.5% 4.0%
Acquisition Growth 14.4% 12.9%
Foreign Exchange 0.5% -%
------------ ------------
Total Growth 20.4% 16.9%
EBITDA(1) 35,353 28,887 25,588
As a percentage of revenues 5.87% 5.77% 5.98%
Adjusted EBITDA(2) 37,507 31,818 27,851
As a percentage of revenues 6.23% 6.36% 6.51%
EBITDA Normalization
Adjustments(3) 2,145
Normalized Adjusted EBITDA(4) 39,652
Financial Position Data
Cash 12,772 16,831 (2,058)
Working capital (5) 36,701 38,451 12,687
Property, plant and equipment 23,345 18,303 14,488
Total assets 375,545 337,302 301,691
Total non-current financial
liabilities 227,314 184,038 211,615
Total liabilities 312,221 256,564 280,077
Shareholders' equity 63,324 80,738 21,614
Cash Flows Data
Cash flows generated from
operations before changes in
working capital 31,505 30,374 20,698
Changes in working capital (996) (7,132) (17,190)
Net cash flows generated from
operating activities 30,509 23,242 3,508
Net cash flows used in
investing activities(6) (38,896) (11,336) (149,878)
Net cash flows generated by
financing activities 6,064 7,464 28,165Notes:
1. EBITDA is a non-IFRS measure used by GDI assess its operating
performance and is calculated as net (loss) income before net finance
expense, income tax expense or recovery, depreciation and amortization
and goodwill impairment. For a reconciliation of net (loss) income to
EBITDA, see the reconciliation table for EBITDA and Adjusted EBITDA
below.
2. Adjusted EBITDA is a non-IFRS measure used by GDI to assess its
operating performance and is calculated as EBITDA, adding back
transaction and reorganization costs and capital appreciation plan
expense or stock-based compensation expenses. For a reconciliation of
net (loss) income to Adjusted EBITDA, see the reconciliation table for
EBITDA and Adjusted EBITDA below.
3. EBITDA Normalization Adjustments consist of: (i) $3.0 million addition
for full-year contribution from acquisitions completed in Fiscal 2014
(Matrix, L.L.C., Atelier Multi Expert (2003) Inc., Cardinal Building
Maintenance, Inc. and Ability Janitorial Services (Ottawa) Ltd.), and
(ii) $0.9 million reduction for full-year compensation expense for
executives hired in 2014. Furthermore, GDI generated US$7.8 million of
EBITDA in Fiscal 2014 in the U.S., including full-year adjustments for
U.S. acquisitions. EBITDA Normalization Adjustments do not include the
benefit of foreign exchange movement from an average rate of C$1.10 per
US$1.00 over 2014 to C$1.27 per US$1.00 as at March 31, 2015, which
would have added a further C$1.3 million to Adjusted EBITDA.
4. Normalized Adjusted EBITDA is a non-IFRS measure used by the entity to
assess its operating performance and is calculated as Adjusted EBITDA
plus EBITDA Normalization Adjustments.
5. Working capital calculated as current assets less current liabilities.
6. Composed primarily of business acquisitions (net of cash acquired) of
$27.8 million in Fiscal 2014, $5.9 million in Fiscal 2013 and $146.8
million in Fiscal 2012 as well as additions to property, plant and
equipment for an amount of $11.0 million in Fiscal 2014, $6.1 million in
Fiscal 2013 and $3.6 million in Fiscal 2012. Additions to property,
plant and equipment in Fiscal 2014 include $5.4 million of additions to
land and buildings. Excluding the non-recurring addition to land and
buildings in Fiscal 2014, capital expenditures related to acquisition of
property, plant and equipment represented approximately 1% of GDI's
revenue in Fiscal 2014, Fiscal 2013 and Fiscal 2012. Capital
expenditures are primarily incurred when GDI purchases cleaning
equipment to begin work on a new contract or to upgrade or replace
equipment following contract renewals.
----------------------------------------------------------------------------
RECONCILIATION TABLE OF NON-IFRS MEASURES
----------------------------------------------------------------------------
Fiscal
--------------------------------------
2014 2013 2012
---------- ---------- ----------
(in thousands of Canadian dollars)
--------------------------------------
Net (loss) income (18,593) 11,385 4,807
Plus: Income tax expense /
(recovery) 2,442 (11,479) 2,709
Plus: Net finance expense 32,347 17,731 8,066
Plus: Depreciation and amortization 17,134 11,250 10,006
Plus: Goodwill impairment 2,023 - -
---------- ---------- ----------
EBITDA(1) 35,353 28,887 25,588
Plus: Transaction and reorganization
costs 1,665 1,512 2,263
Plus: Capital appreciation plan /
stock based compensation expenses 489 1,419 -
---------- ---------- ----------
Adjusted EBITDA(2)(3) 37,507 31,818 27,851
EBITDA Normalization Adjustments(4) 2,145
----------
Normalized Adjusted EBITDA(5) 39,652Notes:
1. EBITDA is a non-IFRS measure used by GDI to assess its operating
performance and is calculated as net (loss) income before net finance
expense, income tax expense or recovery, depreciation and amortization
and goodwill impairment.
2. Adjusted EBITDA is a non-IFRS measure used by GDI to assess its
operating performance and is calculated as EBITDA, adding back
transaction and reorganization costs and capital appreciation plan
expense or stock-based compensation expenses.
3. Prior to Revenue Normalization Adjustments and EBITDA Normalization
Adjustments.
4. EBITDA Normalization Adjustments consist of: (i) $3.0 million addition
for full-year contribution from acquisitions completed in Fiscal 2014
(Matrix, L.L.C., Atelier Multi Expert (2003) Inc., Cardinal Building
Maintenance, Inc. and Ability Janitorial Services (Ottawa) Ltd.), and
(ii) $0.9 million reduction for full-year compensation expense for
executives hired in 2014. Furthermore, GDI generated US$7.8 million of
EBITDA in Fiscal 2014 in the U.S., including full-year adjustments for
U.S. acquisitions. EBITDA Normalization Adjustments do not include the
benefit of foreign exchange movement from an average rate of C$1.10 per
US$1.00 over 2014 to C$1.27 per US$1.00 as at March 31, 2015, which
would have added a further C$1.3 million to Adjusted EBITDA.
5. Normalized Adjusted EBITDA is a non-IFRS measure used by the entity to
assess its operating performance and is calculated as Adjusted EBITDA
plus EBITDA Normalization Adjustments.About Medwell Capital Corp.
The Company is a Canadian-based investment and advisory firm which invests in and advises companies on strategy and technology development. For further information, you may contact the Company at 1-866-701-6033 or visit
www.medwellcapital.com.
Forward-Looking Information
This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the Arrangement and the future financial or operating performance of the Company, GDI and their subsidiaries. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is based on a number of assumptions management believes to be reasonable and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and GDI to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Forward-looking information is subject to risks associated with our business, including but not limited to the risk that the Arrangement may not be completed on the terms expected or at all. Forward-looking statements contained herein are made as of the date of this news release and the Company and GDI disclaim, other than as required by law, any obligation to update any forward-looking information whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated. Accordingly, the reader is cautioned not to place undue reliance on forward-looking information.
Completion of the transaction is subject to a number of conditions, including Exchange approval and Shareholder approval. The transaction cannot close until the required Exchange and shareholder approvals are obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that any information released or received with respect to the transaction that is not disclosed or derived from the Circular to be prepared in connection with the transaction may not be accurate or complete and should not be relied upon. Trading in securities of the Company should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction described herein and has neither approved nor disapproved the contents of this news release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All information contained in this news release with respect to GDI was supplied by GDI for inclusion herein.
The securities of the Company being offered have not been, nor will be, registered under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This news release does not constitute an offer or sale of securities in the United States.