TORONTO, ON--(Marketwired - February 13, 2017) - Clairvest Group Inc. (TSX: CVG) today reported results for the third quarter and nine months ended December 31, 2016. (All figures are in Canadian dollars unless otherwise stated)
- December 31, 2016 book value was $532.9 million or $35.08 per share versus $502.2 million or $33.05 per share at September 30, 2016
- Net income for the quarter and for the nine months was $30.8 million or $2.03 per share and $52.9 million or $3.48 per share respectively
- Clairvest invested an additional $20 million in Centaur Gaming
- Clairvest and its managed funds provided a $25 million revolving credit facility to Discovery Air Defence Services Inc. ("DA Defence"), a subsidiary of Discovery Air Inc. ("Discovery Air")
- Rivers Casino completed a financing and paid US$42.7 million in distributions to Clairvest and Clairvest Equity Partners IV ("CEP IV")
- Clairvest closed on a new 5-year $100 million credit facility
- Subsequent to quarter end, Clairvest and CEP IV completed the sale of Cieslok Media Inc. ("Cieslok") and realized 8.4 times invested capital
- Subject to the approval of the Toronto Stock Exchange, Clairvest's Board of Directors approved a new normal course issuer bid
Clairvest's book value was $532.9 million or $35.08 per share at December 31, 2016, compared with $502.2 million or $33.05 per share at September 30, 2016. Net income for the third quarter of fiscal 2017 was $30.8 million, or $2.03 per share, which reflects the net investment gains on the sale of Cieslok as described below. For the nine months ended December 31, 2016, net income was $52.9 million or $3.48 per share.
At December 31, 2016, Clairvest had approximately $676 million of capital available for future investments through treasury funds, credit facilities, access to funds in its acquisition entities and uncalled committed capital in various Clairvest Equity Partnerships (the "CEP Funds").
During the quarter, Clairvest invested an additional $20 million in Centaur Gaming in the form of term loans with stapled warrants. The investment was made by CEP IV Co-Investment Limited Partnership ("CEP IV Co-Invest"). In aggregate, the investment held by CEP IV Co-Invest is convertible upon exercise into 12.7% of Class A and B units in Centaur Gaming. As at December 31, 2016, Clairvest's carrying value of the investment in Centaur Gaming was $107.2 million representing 20.1% of the book value of Clairvest.
Also during the quarter, Clairvest and its managed funds (the "DA Investor Group") provided a $25 million revolving credit facility ("Revolver") to DA Defence, $20 million of which was drawn at closing and outstanding at December 31, 2016. All drawn amounts under the Revolver are secured, bear interest at a rate of 12% per annum and mature on June 30, 2017 subject to acceleration in the event of certain refinancing transactions. Clairvest's portion of the investment was made by CEP IV Co-Invest, which committed $8.0 million for this Revolver and at December 31, 2016, $6.7 million of which was drawn by DA Defence. In conjunction with this transaction, Discovery Air repaid in full its secured revolving credit facility with the DA Investor Group which had $5.5 million outstanding at September 30, 2016. The DA Investor Group also purchased an additional 4,179,122 common shares in Discovery Air for $0.8 million increasing their aggregate ownership in Discovery Air to 86.1%. In aggregate, CEP IV Co-Invest made net additional investments in Discovery Air and its subsidiaries of $5.2 million during the third quarter of fiscal 2017.
In December 2016, Rivers Casino, a gaming entertainment complex located in Des Plaines, Illinois, completed a financing and paid US$42.7 million in distributions to Clairvest and CEP IV. Clairvest's portion of the investment was made by CEP IV Co-Invest, which received US$11.4 million in distributions. Rivers Casino commenced operations in July 2011, and to December 31, 2016, it had made distributions totaling 4.3 times invested capital to Clairvest and CEP IV.
In December 2016, Clairvest closed on a new 5-year $100 million committed revolving credit facility with several Schedule 1 Canadian chartered banks. The new credit facility replaced the $95 million in prior credit facilities. The new credit facility has an initial maturity date of December 22, 2021 and is eligible for a one-year extension on each anniversary of the closing date. At closing and at December 31, 2016, no amounts were drawn on this new credit facility.
Subsequent to quarter end, Clairvest and CEP IV completed the sale of Cieslok Media and realized 8.4 times invested capital or an IRR of 92% over a holding period of approximately three years. Clairvest's portion of the investment was made by CEP IV Co-Invest. Inclusive of the carried interest from CEP IV and management participation entitlements, the sale of Cieslok Media increased Clairvest's book value by $1.24 per share, substantially all of which was recognized during the third quarter of fiscal 2017.
"We concluded the third quarter on a very positive note, realizing an outstanding return on Clairvest's investment in Cieslok and completing a successful recapitalization of the Rivers casino. In addition, we further strengthened our balance sheet by closing on a new $100 million credit facility to ensure that our liquidity and staying power are uncompromised. With this press release we also proudly celebrate 30 years in business. The recent wins are a testament that our disciplined investment approach and unwavering focus on partnership continue to be the foundation of our success", said Ken Rotman Co-CEO of Clairvest.
Subject to the approval of the Toronto Stock Exchange, Clairvest's Board of Directors has approved a new normal course issuer bid to purchase up to 5% of the outstanding common shares on the Toronto Stock Exchange during a 12-month period expected to commence on March 7, 2017.
Summary of Financial Results - Unaudited
|| ||Quarters ended December 31
|| ||Nine months ended December 31
|($000's, except per share amounts)
|Net investment gains
|Net carried interest income - realized and unrealized changes
|Distributions, interest income, dividends and fees
|Total expenses, excluding income taxes
|Net income and comprehensive income
|Basic and fully diluted net income per share
| || || || || || || || || |
|| ||December 31, 2016
|| ||March 31, 2016
|($000's, except share information and per share amounts)
|Total cash, cash equivalents and temporary investments(1)
|Unrealized carried interest from the CEP Funds(1)
|Corporate investments, at fair value(1)
|Common shares outstanding
|Book value per share(2)
| || || || || |
|(1) Under IFRS, the Company is required to fair value certain acquisition entities and wholly-owned holding entities and record them as corporate investments. The Company is also required to recognize as revenue that portion of the carried interest from the CEP Funds which are allocated to the principals and employees of Clairvest through various limited partnerships which are controlled by Clairvest. In addition, Clairvest is required to record a liability for any entitlements of limited partners of a partnership where the limited partners are not part of the consolidated group of the Company but where the partnership is required to be consolidated by the Company. Accordingly, that portion of the carried interest from the CEP Funds that is allocated to the limited partners of these partnerships ("MIP Partnerships") and the carried interest payable to MIP Partnerships by other partnerships which are consolidated by Clairvest (collectively, the "Management participation") are recorded as an expense and a liability of the Company. |
|(2) Book value is a Non-IFRS measure calculated as the value of total assets less the value of total liabilities. The term book value does not have any standardized meaning according to IFRS and therefore may not be comparable to similar measures presented by other companies. There is no comparable IFRS measure presented in Clairvest's consolidated financial statements and thus no applicable quantitative reconciliation for such non-IFRS financial measure. The Company has calculated book value consistently for many years and believes that book value can provide information useful to its shareholders in understanding its performance, and may assist in the evaluation of its business relative to that of its peers.|
Clairvest's third quarter fiscal 2017 financial statements and MD&A are available on the SEDAR website at www.sedar.com and on the Clairvest website at www.clairvest.com.
Clairvest Group Inc. is a private equity investor 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.
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.