People Corporation
TSX VENTURE : PEO

People Corporation

June 12, 2015 13:50 ET

People Corporation Significantly Expands Its Third Party Administration Business

Coughlin & Associates Ltd. Joins the People Corporation Group of Companies

TORONTO, ONTARIO--(Marketwired - June 12, 2015) - People Corporation (TSX VENTURE:PEO) ("People" or the "Company") announced today that Coughlin & Associates Ltd., one of Canada's preeminent independent full service national benefit and pension consulting and administration firms is joining the People Corporation group of companies. Highlights of the transaction include:

  • The People Corporation family becomes one of Canada's largest independent Third Party
    Administration (TPA) businesses, serving clients across the country

  • People Corporation positioned as Canada's fastest-growing group benefits, group retirement and human resources consulting services organization with approximately $1 billion in annual premiums and $3 billion in pension assets under administration

  • People Corporation now serves approximately 750,000 Canadians from coast to coast with broad capabilities in the benefits consulting, third party administration, pension consulting and administration and human resources consulting sectors

  • People Corporation's largest transaction to date, accelerating its strategy to build Canada's leading independent provider of innovative group benefits, group retirement and human resources consulting services

  • The transaction will be immediately accretive to EBITDA per share

Established in 1958, and based in Ottawa, Ontario and Winnipeg, Manitoba, Coughlin & Associates Ltd. provides group benefit consulting, pension consulting, administrative solutions and claims management services to many of Canada's most respected corporations, unions and public service organizations. Through this acquisition, People Corporation is significantly enhancing its national footprint and capability. Consistent with People's philosophy, Coughlin's shareholders will continue to have an economic interest in the business.

On a combined basis the People Corporation group of companies now provides group benefit, group retirement and human resources consulting services to approximately 750,000 Canadians, with approximately $1 billion in annual benefit premiums and $3 billion in pension assets under administration. People Corporation is now firmly positioned as the best in class provider in the Canadian group pension and benefits and human resources consulting industry.

"The addition of Coughlin & Associates to the People Corporation family represents another milestone in our history and significantly enhances our capabilities in the TPA business," commented Mr. Laurie Goldberg, Chairman and CEO of People Corporation. "As such, it is an important step in our ongoing quest to build the premier independent national provider of group benefits, group retirement and human resources consulting services." Mr. Goldberg added, "The sterling reputation, deep capability and very high quality of Coughlin professional management and staff in partnering with a large, well-capitalized, national organization such as ours provides the combined organizations with a competitive advantage."

Brian Bockstael, CEO and President of Coughlin & Associates Ltd. commented, "As one of Canada's well known and established benefits firms with a large and important client base we wanted to partner with a strong and like-minded national benefits organization that shares our vision, values and commitment to providing exceptional products, services and advice to our clients. We have found that partner in People Corporation." Kirby Watson, Coughlin's Chief Operating Officer added, "Working together with People Corporation, we look forward to continuing to provide our clients with superior advice and service, and access to the solutions that best meet their needs."

Coughlin & Associates principals, Brian Bockstael, Kirby Watson, Mark Hogan, Michel Quenneville, Brett Becker, Don McLennan and Ken Kaitola (the "Principals"), and their staff bring significant experience in the group benefits and pension sector, and have used their deep knowledge and expertise to grow Coughlin into one of the premier pension and benefit consulting firms in the Canadian marketplace. In addition to providing consulting advice and service in the group benefits and pension administration market, they have developed unique capabilities as a Third Party Administrator providing pension administration, benefits administration, benefit claims adjudication, payment and management to many of the most well known private and public sector organizations in Canada. As a result, Coughlin has established an enviable reputation and very strong loyalty among its client base.

Consistent with People Corporation's other partner companies, the Coughlin brand will continue but will leverage the advantages of being part of the People Corporation family. The key Principals, as well as the staff that support them, will be continuing on after closing of the transaction and will continue to be the primary operators of the business.

The purchase price of $30.2 million on closing, subject to adjustment for working capital, represents the purchase of an initial 66% economic interest in Coughlin paid by way of $26.4 million of cash on closing, 626,566 shares of People Corporation issued (at a volume weighted average trailing price of $3.99 per share) to certain of the Principals for an aggregate value of $2.5 million and $1.3 million of vendor take- back notes issued to certain of the Principals. The cash portion of the purchase price was funded by the Company from a combination of existing cash resources of $10.6 million and $15.8 million drawn on the Company's existing senior credit facility. The Company has also entered into an agreement with certain of the Principals whereby they will retain an initial 34% economic interest in the business through the ownership of newly issued non-voting, non-cumulative, subordinate dividend-bearing shares of Coughlin and Associates. These shares may, in the future, be acquired by People Corporation, or sold by the holders to People, at a pre-negotiated price, subject to certain terms and conditions. In addition, certain of the vendors have the potential to earn additional consideration in the future based on achieving financial performance targets over the next five years.

"The Company continues to be positioned for ongoing growth, given our cash position as well as the additional credit availability remaining after the closing of this transaction," added Keith McMahon, Chief Financial Officer of People Corporation. "In addition to the strategic rationale underlying this transaction, its structure and terms are expected to generate strong financial returns to the Company while being immediately accretive to EBITDA per share."

About People Corporation

People Corporation is a national provider of group benefits, group retirement and human resource services. People has offices across Canada; each led by a team of experts and backed by the resources of a national company that is traded on the TSX-V. People's industry experts provide uniquely valuable insight while customizing People's innovative suite of services to the specific needs of its clients. Whatever your sector, whatever your scale, putting our expertise and proven track record to work will make a difference to your people and your bottom line.

Further information is available at www.peoplecorporation.com.

Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws, such as information concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", or other words of similar effect may indicate forward-looking information including the completion of the transaction, the impact of that transaction on the Company's earnings and cash flow, and the anticipated benefits of the transaction. This information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in the Company's publicly filed documents (which are available on SEDAR at www.sedar.com). Those risks and uncertainties include: the Company's ability to maintain profitability and manage growth; strong competition from other advisors and changes in the current legislation that could result in significant competition from the banking industry; failure of information systems and technology; dependence on key clients; seasonality of revenues and the resulting possible impairment on working capital; reliance on key professionals; additional financing may be required and may not be available under terms favourable to the Company; there can be no assurance that any suitable future acquisition will be available to the Company or that, if available, the terms of the acquisition will be favourable to the Company; and a change in general economic conditions. Many of these risks and uncertainties can affect the Company's actual results and could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information made by the Company or on its behalf. Given these risks and uncertainties, investors should not place undue reliance on forward looking information as a prediction of actual results. All forward- looking information in this news release is qualified by these cautionary statements. This information is made as of the date of this news release and, except as required by applicable law, the Company does not undertake any obligation to publicly update or revise any forward looking information, whether as a result of new information, future events or otherwise. Additionally, the Company does not undertake any obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.

Non-IFRS Financial Measures

EBITDA and EBITDA per share are not recognized measures under International Financial Reporting Standards ("IFRS"). Management believes that in addition to revenue, net income and cash flows, the supplemental measures of EBITDA and EBITDA per share are useful as they provide investors with an indication of earnings from operations before debt management and non-recurring and other adjustments. Investors should be cautioned, however, that EBITDA and EBITDA per share should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of the Company's performance. The Company's method of calculating these measures may differ from other public issuers and, accordingly, may not be comparable to similar measures used by other issuers. For a detailed explanation of how the Company's non-IFRS measures are calculated, please refer to the Company's

MD&A filing for the six months ended February 28, 2015, which can be accessed via the SEDAR Web site (www.sedar.com).

Neither the 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 press release.

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