Follow-on contribution to royalty partner

RNS Number : 2040A

Duke Royalty Limited

28 May 2019

 

28 May 2019

Duke Royalty Limited

("Duke Royalty", "Duke" or the "Company")

£1.4 Million Follow-On Contribution with Existing Royalty Partner

Duke Royalty Limited (AIM: DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce a follow-on investment of £1.4 million into its royalty partner Welltel (Ireland) Limited ("Welltel"). 

Highlights:

·    The investment represents the first follow-on investment that Duke has made into the portfolio recently acquired via Capital Step

·    Duke's total investment in Welltel amounts to approximately €6.9 million

·    A pro forma cash yield of approximately 16% on the total amount

·    Welltel is a telecommunications solutions provider for over 3,000 business customers and a multiple winner of Deloitte's "Fast-50" award in Ireland

Royalty Partner - Welltel

Welltel, which was founded in 2007 and is headquartered in Dublin, is a rapidly growing communications company currently employing 70 people and providing managed services to over 3,000 business customers in Ireland and internationally.

Welltel became a Duke royalty partner as a result of its recent acquisition of Capital Step, which initially invested in Welltel in June 2017. Capital Step subsequently upsized its position in Welltel in February 2018 to €5.3 million via a senior-secured Uni-tranche product, consisting of a €3.55 million term loan and a €1.75 million perpetual royalty.

In 2018, Welltel was a winner for the fifth consecutive year of the Deloitte "Fast-50" award, which is an award given to the fifty fastest growing technology companies in Ireland.   

About the Financing

As a result of its latest contribution, Duke's new exposure to Welltel amounts to approximately €6.9 million with a pro forma cash yield of approximately 16%. 

Use of proceeds for the £1.4 million include the settlement of all outstanding deferred consideration in relation to Welltel's two previous acquisitions and for general working capital purposes.  

The investment secures Duke's first ranking position in the capital structure and provides Welltel with a strong and liquid balance sheet that will allow it to continue its path of strong organic sales growth as well as allowing it to investigate new accretive acquisition targets.  

In that regard, as part of this new investment Duke has secured the right to provide additional follow-on investment into Welltel in the future as and when new acquisition targets are identified and consummated.  Both parties have signed a formal exclusivity agreement which gives Duke the right, but not the obligation, to provide additional senior secured funding to Welltel as part of the overall funding solution for the next acquisition.

Neil Johnson, CEO of Duke Royalty, said:

"This investment represents the first follow-on investment that Duke has made into the portfolio recently acquired via Capital Step. Having spent time with CEO and co-founder Ross Murray and his team over the past few months, we've been impressed with their drive to continue expanding the business both organically and through accretive acquisitions."

Ross Murray, CEO of Welltel, said:

"Duke's funding solution is an excellent fit, allowing companies like ours to maintain control whilst benefiting from flexible and long-term capital that provides us the platform to implement our acquisition strategy without re-financing risk."

Duke Royalty Portfolio

Following this follow-on investment into Welltel, Duke's portfolio of core royalty investments is as follows:

Royalty Partner	Total Investment Amount	Date of Initial Investment
Temarca B.V.	€10,700,000	April 2017
Berkley Recruitment (Group) Limited	€1,300,000	June 2017
Welltel (Ireland) Limited	€6,900,000	June 2017
Lynx Equity (UK) Limited	£10,000,000	October 2017
Xtremepush Limited	£2,000,000	February 2018
Trimite Global Coatings Limited	£10,000,000	March 2018
United Glass Group Ltd (formerly Brownhills Investments Limited)	£7,500,000	April 2018
Pearl & Dean Cinemas Limited	£2,500,000	June 2018
BHPC Limited	€4,600,000	August 2018
InterHealth Canada	£10,000,000	August 2018
Brightwater Selection (Ireland) Limited	€1,875,000	September 2018
MRDB Holdings Limited Group	£10,000,000	February 2019

***ENDS***

About Duke

For further information, please contact www.dukeroyalty.com, or contact:

Duke Royalty Limited	Neil Johnson / Charlie Cannon-Brookes	[phone]
Cenkos Securities plc (Nominated Adviser and Broker)	Stephen Keys / Callum Davidson (Nomad) / Julian Morse / Michael Johnson (Brokers)	[phone]
Newgate Communications (PR)	Elisabeth Cowell / Ian Silvera / Tom Carnegie	[phone] [e-mail]

About Duke Royalty

Duke Royalty Limited provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.

 About Welltel

Welltel designs, commissions and maintains telecoms and connectivity solutions to over 3,000 customers in Ireland and internationally. Welltel works with leading manufacturers, including Alcatel-Lucent Enterprise, Avaya, Cisco, Liquid Voice, NEC, Polycom and Verint to ensure its customers benefit from the latest, business-centric technology to help their business function and grow effectively.

For more information, visit www.welltelgroup.com.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

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