Diversified Royalty Corp. Announces Closing of $60 Million Bought Deal Offering of 5.75% Convertible Unsecured Subordinated Debentures
MWN-AI** Summary
Diversified Royalty Corp. (TSX: DIV, DIV.DB.A, DIV.DB.B) has successfully completed a bought deal public offering of $60 million in 5.75% convertible unsecured subordinated debentures, priced at $1,000 each. The procurement was led by a syndicate of underwriters, including CIBC Capital Markets and Desjardins Securities. The underwriting group also holds an over-allotment option to purchase an additional $9 million in debentures to cater to excess demand or for market stabilization.
The net proceeds from this offering will primarily be utilized to repay debt linked to the corporation’s acquisition facility, allowing more liquidity for future acquisitions as well as funding growth in its royalty pools with partners. The debentures, which mature on March 31, 2031, provide an annual interest of 5.75%, payable semi-annually starting September 30, 2026. These debentures can be converted into common shares at a conversion price of $5.35, with certain conditions for adjustment.
After the fifth anniversary of the issue, the corporation can redeem the debentures under specific trading price conditions. The first interest payment will cover the period from the offering close to September 30, 2026, amounting to approximately $36.74 per $1,000 principal.
Diversified Royalty Corp. is focused on acquiring royalty streams from multi-location businesses across North America, including brands like Mr. Lube + Tires and AIR MILES®. The corporation aims to continue enhancing cash flow per share and maintaining a stable dividend for shareholders, emphasizing predictable growth through its royalty acquisitions.
This announcement is subject to normal risks and uncertainties and does not constitute an offering of securities in the U.S.
MWN-AI** Analysis
Diversified Royalty Corp. (TSX: DIV) has successfully closed a significant funding round, raising $60 million through a bought deal offering of 5.75% convertible unsecured subordinated debentures. This capital infusion is strategically aimed at strengthening the company's balance sheet by repaying outstanding amounts under its acquisition facility, thereby enhancing its capacity for future acquisitions.
With a conversion price of $5.35, the Debentures present an interesting opportunity for investors, particularly if DIV’s stock performance exceeds this threshold in the coming years. As the maturity date approaches in 2031, the fixed interest rate is relatively attractive, especially in today's environment of fluctuating yields. Furthermore, the semi-annual interest payments beginning in September 2026 can provide a predictable income stream for investors prior to any potential conversion to equity.
Investors should watch how the capital will be allocated, particularly concerning acquisitions that could bolster DIV's royalty streams from established brands like Mr. Lube, Sutton, and Nurse Next Door. The company's diversified royalty portfolio has the potential to generate stable cash flows, given the steady demand in the markets these franchises serve. Moreover, DIV has reiterated its commitment to paying predictable monthly dividends, adding another layer of appeal for income-focused investors.
Monitoring macroeconomic conditions and the competitive landscape will also be crucial. As interest rates fluctuate, DIV's ability to maintain its dividend and service its debt will come into focus. Given these dynamics, the offering may attract yield-seeking investors while also setting the stage for future equity growth as the company executes its acquisition strategy. Overall, keeping an eye on execution against its growth objectives will be key for potential investors in assessing the long-term viability of their investment in Diversified Royalty Corp.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
VANCOUVER, British Columbia, Feb. 09, 2026 (GLOBE NEWSWIRE) -- Diversified Royalty Corp. (TSX: DIV, DIV.DB.A and DIV.DB.B) (the “Corporation” or “DIV”) is pleased to announce that it has closed its previously announced bought deal public offering (the “Offering”) of $60,000,000 aggregate principal amount of 5.75% convertible unsecured subordinated debentures (the “Debentures”) at a price of $1,000 per Debenture (the “Offering Price”).
The Offering was conducted by a syndicate of underwriters co-led by CIBC Capital Markets, as sole bookrunner, and Desjardins Securities Inc., together with Canaccord Genuity Corp., National Bank Financial Inc., Scotia Capital Inc., ATB Capital Markets Corp., BMO Nesbitt Burns Inc., iA Private Wealth Inc. and Raymond James Ltd. (collectively, the “Underwriters”). DIV also granted the Underwriters an option (the “Over-Allotment Option”) to purchase up to an additional $9,000,000 aggregate principal amount of Debentures at the Offering Price to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option is exercisable in whole or in part by the Underwriters at any time up to 30 days following closing of the Offering.
The net proceeds of the Offering are intended to be used to repay outstanding amounts under the Corporation’s acquisition facility, to fund expected additions to the royalty pools of certain of the Corporation’s royalty partners, and for working capital and general corporate purposes. The repayment of indebtedness under the Corporation’s acquisition facility will thereby increase the amount available to be drawn under the acquisition facility to fund future acquisitions.
The Debentures mature on March 31, 2031 and bear interest at an annual rate of 5.75% payable semi-annually in arrears on the last day of March and September in each year, commencing September 30, 2026. At the holder’s option, the Debentures may be converted into common shares of the Corporation (“Common Shares”) at any time prior to the close of business on the earlier of the last business day immediately preceding March 31, 2031 and the date fixed for redemption. The conversion price will be $5.35 per Common Share (the “Conversion Price”), subject to adjustment in certain circumstances in accordance with the terms of the trust indenture governing the Debentures dated November 7, 2017, as amended by the first supplemental indenture dated March 30, 2022 and the second supplemental indenture dated February 9, 2026, copies of which will be available on SEDAR+ at www.sedarplus.ca.
The Debentures are not redeemable on or before March 31, 2029. After March 31, 2029 and prior to March 31, 2030, the Debentures may be redeemed in whole or in part from time to time at DIV’s option, provided that the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”) during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is not less than 125% of the Conversion Price. On or after March 31, 2030 and prior to the maturity date, DIV may, at its option, redeem the Debentures, in whole or in part, from time to time at par plus accrued and unpaid interest. The first interest payment will include interest accrued from and including the closing date to, but excluding, September 30, 2026, and will be approximately $36.74 per $1,000 principal amount of Debentures.
The Debentures sold pursuant to the Offering will commence trading today on the Toronto Stock Exchange under the trading symbol “DIV.DB.B”.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or compliance with an applicable exemption from such U.S. registration requirements.
About Diversified Royalty Corp.
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors.
DIV currently owns the Mr. Lube + Tires, Sutton, Mr. Mikes, Nurse Next Door, Oxford Learning Centres, Stratus Building Solutions, BarBurrito, Cheba Hut and AIR MILES® trademarks. Mr. Lube + Tires is the leading quick lube service business in Canada, with locations across Canada. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada. Mr. Mikes operates casual steakhouse restaurants primarily in western Canadian communities. Nurse Next Door is a home care provider with locations across Canada and the United States as well as in Australia. Oxford Learning Centres is one of Canada’s leading franchisee supplemental education services. Stratus Building Solutions is a leading commercial cleaning service franchise company providing comprehensive janitorial, building cleaning, and office cleaning services primarily in the United States. BarBurrito is the largest quick service Mexican restaurant food chain in Canada. Cheba Hut is a fast casual toasted sub sandwich franchise with locations in the United States. AIR MILES® is a Canadian loyalty program.
DIV’s objective is to increase cash flow per share by making accretive royalty purchases and through the growth of purchased royalties. DIV intends to continue to pay a predictable and stable monthly dividend to shareholders and increase the dividend over time, in each case as cash flow per share allows.
Forward Looking Statements
Certain statements contained in this news release may constitute “forward-looking information" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “intend”, “may”, “will”, ”project”, “should”, “believe”, “confident”, “plan” and “intends” and similar expressions are intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Specifically, forward-looking information in this news release includes, but is not limited to, statements made in relation to: the intended use of proceeds from the Offering; the Over-Allotment Option; DIV’s objective to continue to pay predictable and stable monthly dividends to shareholders; and DIV’s corporate objectives. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events, performance, or achievements of DIV to differ materially from those anticipated or implied by such forward-looking information.
DIV believes that the expectations reflected in the forward-looking information included in this news release are reasonable but no assurance can be given that these expectations will prove to be correct. In particular there can be no assurance that: the actual use of proceeds will be consistent with current expectations; DIV will be able to make required interest payments to the holders of its debentures and monthly dividend payments to the holders of its Common Shares; or DIV will achieve any of its corporate objectives. Given these uncertainties, readers are cautioned that forward-looking information included in this news release is not a guarantee of future performance, and such forward-looking information should not be unduly relied upon. More information about the risks and uncertainties affecting DIV’s business and the businesses of its royalty partners can be found in the “Risk Factors” section of its Annual Information Form dated March 24, 2025 and in its most recent Management’s Discussion and Analysis, copies of each of which are available under DIV’s profile on SEDAR+ at www.sedarplus.ca. In formulating the forward-looking information contained herein, management has assumed that, among other things, all necessary consents and approvals for the Offering will be obtained and the Offering will be completed in accordance with the timing currently expected and on the currently contemplated terms; DIV will generate sufficient cash flows from its royalties to service its debt and pay dividends to shareholders; and the business and economic conditions affecting DIV and its royalty partners will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, general levels of economic activity and regulations. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect.
All of the forward-looking information in this news release is qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, DIV. The forward-looking information included in this news release is presented as of the date of this news release and DIV assumes no obligation to publicly update or revise such information to reflect new events or circumstances, except as may be required by applicable law.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
Additional Information
Additional information relating to the Corporation and other public filings, is available on SEDAR+ at www.sedarplus.ca.
Contact:
Sean Morrison, Chief Executive Officer
Diversified Royalty Corp.
(236) 521-8470
Greg Gutmanis, President and Chief Financial Officer
Diversified Royalty Corp.
(236) 521-8471
FAQ**
How does Diversified Royalty Corp BEVFF plan to utilize the proceeds from the $60 million offering of 5.75% convertible debentures to enhance its royalty pool?
What are the potential risks associated with the forward-looking statements made by Diversified Royalty Corp BEVFF regarding its ability to maintain dividend payments?
In what ways does Diversified Royalty Corp BEVFF expect the planned repayment of its acquisition facility to impact future acquisition capabilities?
Can you elaborate on the significance of the Over-Allotment Option provided to the Underwriters in the context of Diversified Royalty Corp BEVFF's strategy for market stabilization?
**MWN-AI FAQ is based on asking OpenAI questions about Diversified Royalty Corp. (TSXC: DIV:CC).
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