REGINA, SK,
March 30, 2022 /CNW/ -
SSC Security Services Corp. ("SSC") (TSXV: SECU) (OTCQX:
SECUF), is pleased to announce that it has entered into a
definitive share purchase agreement ("Share Purchase
Agreement") to acquire Logixx Security Inc. ("Logixx"),
a Toronto-based provider of
premium security protection for leading enterprise and commercial
clients across Canada, from its
corporate owner, Avante Logixx Inc. ("Avante") (TSXV: XX)
(OTC: ALXXF).
The arrangement agreement (the "Arrangement") between SSC
and Avante previously announced on February
9, 2022 has been terminated by mutual agreement (the
"Termination Agreement") of both parties in order to enter
into the Share Purchase Agreement. In lieu of the expense
reimbursement fee payable to SSC on termination of the Arrangement,
the parties have agreed to apply an amount equal to $750,000 (the "Arrangement Expense
Reimbursement") to payment of the purchase price under the
Share Purchase Agreement.
Pursuant to the terms of the Share Purchase Agreement, SSC has
agreed to acquire all of the issued and outstanding common shares
of Logixx ("Logixx Shares") by way of a share purchase
agreement ("Transaction"). Under the terms of the
Transaction, SSC will pay Avante $23.95
million in cash for the Logixx Shares, less the Arrangment
Expense Reimbursement, and subject to standard working capital,
debt and other closing adjustments standard for transactions of
this nature. On closing, SSC will take ownership of Logixx on a
debt-free basis and with $7.5 million
of net working capital. Completion of the
Transaction is subject to the
satisfaction of certain conditions
precedent, including, but not limited to, receipt of all necessary
regulatory approvals, including approval of the TSX Venture
Exchange. Avante and SSC have provided representations, warranties
and indemnities customary for a transaction of this nature, as well
as customary interim period covenants regarding the operation of
the Logixx businesses in the ordinary course. The parties have also
made customary non-competition and non-soliciation
arrangements.
Copies of the Termination Agreement and the Share Purchase
Agreement will be filed with the securities regulators and
available on the SEDAR profile of Avante at
www.sedar.com.
On closing of the Transaction, SSC will be the largest
publicly-traded security company in Canada, be debt-free, and have approximately
2,100 employees from coast to coast. As a result of the
transaction, SSC will approximately quadruple its pro forma annual
revenue and Adjusted EBITDA*. The Transaction is expected to close
within the next 60 days and will be funded by SSC with cash on hand
and without any dilution to SSC shareholders.
SSC plans to maintain its quarterly dividend at the current
level of $0.03 per SSC Share (which
equates to $0.12 annualized). On a
pro forma basis, SSC's dividend payout ratio as a percentage of
estimated annual Adjusted EBITDA* will improve from approximately
80% to under 35%.
CHIEF EXECUTIVE OFFICER COMMENTS ON THE TRANSACTION
Doug Emsley, Chairman,
President & Chief Executive Officer of SSC, commented: "We
believe this is a better deal for SSC and its shareholders than the
one we announced on February 9. It
allows us to acquire the part of Avante's business that is the most
similar to our existing business, do it at a lower EV/EBITDA
multiple than we would have had to pay for all of Avante's
business, do it with cash on hand and no dilution to shareholders,
and end up with a debt-free well-funded national physical and cyber
security company."
HIGHLIGHTS & KEY BENEFITS OF THE
TRANSACTION
- By approximately quadrupling SSC's pro forma annual revenue and
adjusted EBITDA*, the Transaction creates the largest
publicly-traded security company in Canada
- Brings together two highly-experienced and complementary
management teams with minimal geographic overlap to leverage SSC's
large, liquid balance sheet and Logixx's well-established revenue
and EBITDA profile
- On closing, the combined company will be an extremely
well-capitalized and profitable, physical and cyber security
company with critical mass and over 2,100 employees across
Canada
- Together, the companies will serve some of the largest
corporate and public sector enterprises in Canada, and it is expected that the
combination will enable significant growth and cross-selling
opportunities for both SSC's cyber security platform, which is
housed in SRG Security Resource Group Inc. (acquired by SSC in
2021), as well as for Logixx's tech-enabled monitoring and security
platforms
- On a pro forma basis, the combined company would have generated
almost $100 million in annual revenue
and a substantial amount of EBITDA over the trailing twelve-month
period ended December 31, 2021
- SSC plans to maintain its quarterly dividend at the current
level of $0.03 per SSC Share (which
equates to $0.12 annualized). On a
pro forma basis, SSC's dividend payout ratio as a percentage of
estimated annual Adjusted EBITDA* will improve from approximately
80% to under 35%.
- The Transaction will be entirely funded by SSC's cash on hand
with no dilution to shareholders
- Cost synergies are expected to be realized by eliminating
duplicate overhead costs
- The board of directors of SSC unanimously approved the
Transaction
ADVISOR
McKercher LLP acted as legal advisor to SSC.
ABOUT SSC
SSC Security Services Corp. (TSXV: SECU) (OTCQX: SECUF) is a
leading provider of physical and cyber security services to
corporate and public sector clients across Canada. For more information, please visit
www.securityservicescorp.ca.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION
SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
Forward Looking Information
This press release contains forward looking statements and
forward-looking information within the meaning of applicable
Canadian securities legislation. Such forward-looking statements
are not representative of historical facts or information or
current condition, but instead represent only SSC's beliefs
regarding future events, plans or objectives, many of which, by
their nature, are inherently uncertain and outside of SSC's
control. Such statements are based on the current expectations and
views of future events of SSC's management. In some cases, the
forward-looking statements can be identified by words or phrases
such as "may", "will", "expect", "plan", "anticipate", "intend",
"potential", "estimate", "believe" or the negative of these terms,
or other similar expressions intended to identify forward-looking
statements. The forward-looking events and circumstances discussed
in this press release may not occur and could differ materially as
a result of known and unknown risk factors and uncertainties
affecting SSC, including risks regarding the security industry,
economic factors and the equity markets generally, risks relating
to the Transaction, including the ability of SSC and Logixx to
implement business strategies and combined synergies, timing of the
Transaction, the price of SSC Shares, the dividend payout ratio, as
well regulatory approvals, and many other factors beyond the
control of SSC. Additional risks are discussed under "Risk Factors"
in SSC's management's discussion and analysis filed on SEDAR. No
forward-looking statement can be guaranteed. Forward-looking
statements and information by their nature are based on assumptions
and involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or
achievements, or industry results, to be materially different from
any future results, performance or achievements expressed or
implied by such forward-looking statement or information.
Accordingly, readers should not place undue reliance on any
forward-looking statements or information. Except as required by
applicable securities laws, forward-looking statements speak only
as of the date on which they are made and SSC undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
*Non-IFRS Measures
SSC measures key performance metrics established by management
as being key indicators of the company's strength, using certain
non-IFRS performance measures, including: EBITDA, EBITDA per share,
Adjusted EBITDA, and Adjusted EBITDA per share.
SSC uses these non-IFRS measures for its own internal purposes.
These non-IFRS measures do not have any standardized meaning
prescribed by IFRS, and these measures may be calculated
differently by other companies. The presentation of these non-IFRS
measures is intended to provide additional information and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. SSC provides these
non-IFRS measures to enable investors and analysts to understand
the underlying operating and financial performance of the company
in the same way as it is frequently evaluated by SSC's management.
SSC's management will periodically assess these non-IFRS measures
and the components thereof to ensure continued use is beneficial to
the evaluation of the underlying operating and financial
performance of the company. For more detailed information, please
refer to page 20 and 21 of the the Company's Management
Discussion and Analysis dated February 16,
2022 available on the Company's website at
www.securityservicescorp.ca and on SEDAR at www.sedar.com.
SOURCE SSC Security Services Corp.