Clairvest Group Inc.
TSX : CVG

November 10, 2011 15:32 ET

Clairvest Reports Fiscal 2012 Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2011) - Clairvest Group Inc. (TSX:CVG) today reported results for the quarter ended September 30, 2011. (All figures are in Canadian dollars unless otherwise stated).

Highlights

  • September 30, 2011 book value was $299.1 million or $19.37 per share versus $19.53 at June 30, 2011. Cash or near cash represented 30.1% of the September 30, 2011 book value, or $5.83 per share
  • Net loss for the quarter and for the six months was $1.8 million or $0.11 per share and $0.5 million or $0.03 per share respectively. Net loss was the result of unrealized mark to market valuations during the quarter
  • Grey Eagle Casino, located southwest of the City of Calgary, Alberta, completed a financing and repaid, in full, its debentures and accrued interest totaling $31.1 million owing to Clairvest and CEP. Clairvest's portion of the proceeds was $7.8 million
  • Clairvest, CEP IV, CEP IV-A and co-investors invested $70 million in Discovery Air, a specialty aviation services company operating across Canada and in select locations internationally
  • Clairvest and co-investors invested a further US$8 million in Centaur, a gaming operator which holds various gaming interests including the Hoosier Park Racing & Casino in Indianapolis, Indiana. Subsequent to quarter end, Centaur emerged from Chapter 11 protection and implemented its court-approved Plan of Reorganization
  • Subsequent to quarter end, Clairvest, CEP IV and CEP IV-A invested US $8.6 million in Linen King, an Oklahoma based textile rental company that provides commercial laundry services to the healthcare and hospitality industries
  • Clairvest paid an annual ordinary dividend of $1.5 million, or $0.10 per share, and a special dividend of $1.5 million, or $0.0965 per share, which in aggregate represent 1% of the March 31, 2011 book value

Clairvest's book value was $299.1 million or $19.37 per share, at September 30, 2011, compared with $19.53 per share at June 30, 2011. The decrease in book value per share was attributable to a net loss for the quarter primarily the result of pre-tax net unrealized losses on corporate investments of $4.0 million. Clairvest determines the fair value of a significant number of its corporate investments based on public market trading comparables and was negatively impacted by deteriorating public market prices during the quarter.

As previously announced, Grey Eagle Casino completed a financing and repaid in full its debentures plus accrued interest totaling $31.1 million owing to Clairvest and Clairvest Equity Partners Limited Partnership ("CEP"). The Grey Eagle Casino is located on Tsuu T'ina First Nation reserve lands, southwest of the City of Calgary, Alberta. Consistent with its ownership, Clairvest received 25% of this amount, or $7.8 million, materially the same as the June 30, 2011 carrying value for the debenture investment. Clairvest continues to hold an equity participation interest in the Grey Eagle Casino, enabling it to receive between 2.8% and 9.6% of the earnings of the casino until December 18, 2022.

Clairvest, Clairvest Equity Partners IV Limited Partnership and Clairvest Equity Partners IV-A Limited Partnership (collectively, "CEP IV"), and co-investors invested $70 million in Discovery Air Inc. ("Discovery Air"), a speciality aviation services company operating across Canada and in select locations internationally. The investment is by way of secured convertible debentures (the "Debentures") which accrue interest at a rate of 10% per annum. The Debentures and the accrued interest are convertible into 9,333,334 common shares of Discovery Air, representing a 32.8% equity interest on an "as converted" basis. Clairvest's portion of the investment in Discovery Air was $22.0 million which is convertible into 2,939,300 common shares of Discovery Air, which, together with the 59,521 Discovery Air shares Clairvest owned prior to this investment, represents a 10.5% equity interest on an "as converted" basis.

During the quarter, Clairvest and co-investors invested a further US$8 million in senior secured first lien loans of Centaur, LLC ("Centaur"). Clairvest's portion of the investment was US$5 million ($5.2 million), bringing Clairvest's total investment in Centaur at September 30, 2011 to US$35.3 million ($35.7 million). Subsequent to quarter end, Centaur emerged from Chapter 11 protection and implemented its court-approved Plan of Reorganization. As holders of US$141.0 million in pre-petition first lien debt, Clairvest, CEP IV and co-investors received US$23.0 million in cash, US$59.2 million in new first lien secured notes, US$22.2 million in new second lien secured notes and US$18.5 million in unsecured term loan with stapled warrants which, subject to regulatory approval, are convertible upon exercise into 35.8% of Centaur's Class A units. Clairvest received US$6.4 million in cash, US$16.4 million in new first lien secured notes, US$6.2 million in new second lien secured notes and US$5.1 million in unsecured term loan with stapled warrants which, subject to regulatory approval, are convertible upon exercise into 9.9% of Centaur's Class A units. No gain or loss was realized as a result of the exchange.

Subsequent to quarter end, Clairvest and CEP IV invested US $8.6 million in Linen King, LLC ("Linen King"), an Oklahoma based textile rental company that provides commercial laundry services to the healthcare and hospitality industries. Clairvest's portion of the investment is US$2.3 million.

"We have had an active and successful quarter at Clairvest," said Jeff Parr Co-Chief Executive Officer and Managing Director of Clairvest. "With the recent new investment in Discovery Air, the subsequent investment in Linen King and the positive growth across our investment portfolio, our team has been working hard to source new investment opportunities and to increase the value of our existing portfolio. We are well positioned to capitalize on current market turmoil to seek opportunities others may not see and feel confident that our proven investment strategy will benefit both our shareholders and limited partners."

Clairvest paid an annual ordinary dividend of $0.10 per share and a special dividend of $0.0965 per share, such that in aggregate, the dividends represent 1% of the March 31, 2011 book value. The dividends were paid on July 25, 2011 to common shareholders of record as of July 8, 2011 and are eligible dividends for Canadian income tax purposes.

Summary of Financial Results – Unaudited

Financial Performance Measures Quarters ended September 30 Six months ended September 30
2011 2010 2011 2010
($000's, except per share amounts) $ $ $ $
Net realized gains (losses) on corporate investments (22 ) 4 555 52
Net unrealized gains (losses) on corporate investments (3,979 ) 103 (3,096 ) 1168
Net income (loss) (1,778 ) 69 (524 ) 960
Basic net income (loss) per share (0.11 ) - (0.03 ) 0.06
Fully diluted net income (loss) per share (0.11 ) - (0.03 ) 0.06
Financial Condition Measures September
2011
March
2011
($000's, except per share amounts) $ $
Total assets 321,798 318,860
Total cash, cash equivalents and temporary investments(1) 89,926 138,338
Total corporate investments 170,386 162,177
Total liabilities 22,734 16,458
Book value 299,064 302,402
Book value per share 19.37 19.65
(1) Excludes restricted cash

Clairvest's second quarter fiscal 2012 financial statements and MD&A are available on the SEDAR website at www.sedar.com and on the Clairvest website at www.clairvest.com.

About Clairvest

Clairvest Group Inc. is a private equity management firm which invests its own capital, and that of third parties through the Clairvest Equity Partners ("CEP") limited partnerships, in businesses that have the potential to generate superior returns. In addition to providing financing, Clairvest contributes strategic expertise and execution ability to support the growth and development of its investee partners. Clairvest realizes value through investment returns and the eventual disposition of its investments.

Forward-looking Statements

This news release contains forward-looking statements with respect to Clairvest Group Inc., its subsidiaries, its CEP limited partnerships and their investments. These statements are based on current expectations and are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Clairvest, its subsidiaries, its CEP limited partnerships and their investments to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general and economic business conditions and regulatory risks. Clairvest is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

www.clairvest.com

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