Diversified Royalty Corp. completes royalty transaction with Mr. Lube and related financings

On August 18, 2015, Diversified Royalty Corp. (DIV) completed an offering of subscription receipts.

The offering raised gross proceeds of approximately $115.0 million through the issuance of 42,595,000 subscription receipts, which included 1,854,000 subscription receipts issued as a result of the underwriters electing to exercise the over-allotment option in part. The offering was conducted by a syndicate of underwriters led by Cormark Securities Inc. and including GMP Securities L.P., CIBC World Markets Inc., PI Financial Corp., Beacon Securities Limited and Paradigm Capital Inc.

On August 19, 2015, DIV completed its royalty transaction with Mr. Lube Canada Limited Partnership (Mr. Lube) to indirectly acquire the trademarks and certain intellectual property rights utilized by Mr. Lube in its business (the Mr. Lube Marks) and to license the use of such intellectual property back to Mr. Lube for an initial royalty of approximately $12.5 million per annum. The total purchase price for the Mr. Lube Marks was approximately $138.9 million and was satisfied by a combination of approximately $34.3 million in net proceeds from a new senior debt facility provided by BMO Corporate Finance and approximately $104.5 million from the net proceeds of the offering of subscription receipts.

For the acquisition, offering and senior debt, DIV was represented by Farris, Vaughan, Wills & Murphy LLP, with a team led by Bradley Newby that included David Selley (banking), James Hatton (intellectual property), Thom Ciz (tax), Robert Veitch, Arik Broadbent and Nikki Alvarez.

The underwriters were represented by Stikeman Elliott LLP, with a team led by Simon Romano that included Amanda Linett, John Lorito (tax), Paul Rakowski and Brandon Leitch.

For the acquisition, Mr. Lube was represented by McCarthy Tétrault LLP, with a team led by Robin Mahood and Cam Belsher that included Fleur Heck (corporate), Vincent Yip (intellectual property) and TJ Kang (tax).

BMO Corporate Finance was represented by Dentons Canada LLP, with a team led by Tim Bezeredi that included Shoshanah Webber and Taylor Buckley. Daniel Miller of Dorsey & Whitney LLP acted as US counsel to DIV for the offering.

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