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Farris LLP: Vancouver's Law Firm


03 September 2015


On August 18, 2015, Diversified Royalty Corp. (“DIV”) completed a public 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.

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 and approximately $104.5 million from the net proceeds of the offering of subscription receipts.

Mr. Lube is the leading quick service oil change firm in Canada, with 170 locations across the country and approximately $200 million in annual system sales.

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. In addition to the Mr. Lube Marks, DIV currently owns the trademarks used by Franworks Franchise Corp. (“Franworks”) and Sutton Group Realty Services Ltd. (“Sutton”) in their businesses. Franworks operates mid-tier casual neighborhood pub restaurants under the Original Joe’s, State & Main, and Elephant & Castle brands across Canada and in select U.S. markets and generates over approximately $225 million of gross sales annually. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada with approximately 8,000 agents and 200 offices across Canada.

DIV was represented on the Mr. Lube transactions by a Farris transaction team led by Bradley A. Newby that included David J. Selley (banking), James P. Hatton (intellectual property), Thom Ciz (tax), Robert Veitch (securities), Arik Broadbent (corporate, securities) and Nikki Alvarez (banking).

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