City Wide Locks Acquisition
Avante Logixx Inc. (“Avante”) is pleased to announce that it has acquired a 70% equity interest in City Wide Locksmiths Ltd. (“City Wide Locks”) pursuant to share purchase agreements dated April 1, 2016 between Avante and certain departing shareholders for an aggregate purchase price of approximately $2.6 million.
Based in the Greater Toronto Area and founded in 1973, City Wide Locks provides residential and commercial locksmith services and is a distributor of decorative door hardware while operating its show room and retail outlet under the brand ‘Antique Door Hardware’. Avante’s security operations and City Wide Locks operate with significant client overlap that makes this acquisition quite compelling. As George Rossolatos, CEO of Avante, stated, “Avante anticipates numerous cross selling opportunities with City Wide Locks that are expected to significantly enhance our own product offerings. City Wide Locks hold the keyways to many thousands of Toronto homes and businesses that can only be duplicated and serviced by their locksmiths and furthermore, the majority of these clients are purchasers of security services. We think this combination is a tremendous fit. In addition, City Wide Locks’ decorative hardware business is recognized as the highest value-added provider in the GTA. Our clients all have secure lock and hardware requirements that we will now be able to address. This is consistent with our strategy of making acquisitions that are a logical extension of our own core business in the security space. This investment was made at under five times Adjusted EBITDA which we believe is a prudent deployment of Avante’s capital.”
Danny Shearer, City Wide Locks’ President and the driving force behind the business and its growth will remain with the company as its President in charge of day to day operations and as holder of a 25% equity interest. The remaining equity interests are held by family members of Mr. Shearer who will remain active in the company’s operations. Effective today, Avante entered into a shareholders’ agreement with Mr. Shearer and the other family member equity interest holders relating to the business and affairs of City Wide Locks.
Mr. Shearer who will continue spearheading City Wide Locks strategy and direction in collaboration with Avante and its management team commented on the acquisition as follows: “On behalf of City Wide Locksmiths, we are very excited to be joining the Avante group of companies. Our business was founded over 40 years ago by my late father Harold Shearer to ensure families and businesses had the ultimate level of protection in their choice of locks, keys and door hardware. He would be very proud to know that with this transaction, the brand he created is poised to grow and become further entrenched as Canada’s preeminent lock and decorative hardware business. City Wide Locksmiths shares many customers with Avante in the high end residential and commercial markets and we intend to create cross selling programs so clients can obtain security systems, services, response, monitoring and locksmith services seamlessly only dealing with one provider. Through our decorative door hardware division, Antique Door & Hardware, we (like Avante in its high end security offerings) cater to preeminent architects, designers and builders in the high end home markets, many of which we have in common. We believe there is a great opportunity to provide better and more convenient service to these shared customers and to many new ones as a result of transaction. We look forward to this very exciting next stage in our brand’s development and growth.”
City Wide Locks generated over $5 million of revenue profitably for the calendar year ended December 31, 2015 and is immediately accretive to Avante. A dividend policy has been instituted by City Wide Locks pursuant to which it is intended that the board declare dividends quarterly to its shareholders.
Effective immediately, all Avante Security rapid response and monitored clients will become part of City Wide Locks ‘Exclusive Client Program’ and be entitled to priority service and preferential pricing on locksmith and door hardware offerings.
There are no finders’ fees payable in connection with the transaction, the transaction was negotiated on an arm’s length basis and does not result in a change of control for Avante. City Wide Locks has available to it a line of credit with a Canadian chartered bank for up to $300,000 which at present is undrawn. Avante’s acquired equity interest in City Wide Locks represents approximately 15% of Avante’s assets post-acquisition.
Internal Corporate Reorganization
Avante is pleased to announce that, further to its press release issued November 17, 2015, the amalgamation of two of its wholly-owned subsidiaries, LVS Inc. and Avante Security Inc., into one wholly-owned subsidiary has been consummated pursuant to articles of amalgamation effective today. The newly amalgamated company, is known as Avante Security Inc., and with the implementation of the internal reorganization, Avante can begin to realize on synergies among its group of companies as its corporate structure has been simplified and its administrative costs reduced.
About Avante Logixx
Avante Logixx Inc. (TSXV: XX) is a Toronto based security, monitoring, system integration and technology company. Its subsidiaries, Avante Security Inc. (www.avantesecurity.com), INTO Electronics Inc., (www.intoelectronics.com), LVS Inc. (www.lvssecurity.com), and the recently acquired City Wide Locksmiths Ltd. (www.citywidelocksmith.ca) together provide best in class security systems and services for residential and commercial clients, and high-rise condominium applications, with industry leadership in designing and installing complex security systems, access control, intelligent video analytics, high-end lock services and smart home automation. Avante’s group of companies strives to be best in class in each of its verticals including an industry leading rapid alarm response offering combined with alarm system and live video analytics monitoring. Avante’s Executive Services team provides unparalleled end-to-end security solutions for high profile and high net worth families to ensure their safety in a comprehensive yet discrete manner, including an executive transportation option. Avante’s International Travel Security team helps corporations protect traveling employees working abroad in medium/high risk jurisdictions and has executed travel details in over 60 countries. Avante continuously develops innovative products and applications within its core competencies. Please visit our website at www.avantelogixx.com and consider joining our investor email list.
FORWARD LOOKING STATEMENTS
All statements in this press release, other than statements of historical fact, are “forward looking information” with respect to Avante within the meaning of applicable securities laws. Forward-looking information is often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “planned”, “expect”, “project”, “predict”, “potential”, “targeting”, “intends”, “believe”, “potential”, and similar expressions, or describes a “goal”, or a variation of such words and phrases or state that certain actions, events or results “may”, “should”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking information, including, without limitation, the list of risk factors identified in Avante’s Management Discussion & Analysis (MD&A) and other continuous disclosure, which list is not exhaustive of the factors that may affect any of Avante’s forward-looking information. In connection with the forward-looking statements contained in this and subsequent press releases, Avante has made certain assumptions about its business and the industry in which it operates and has also assumed that no significant events occur outside of Avante’s normal course of business. Although management believes that the assumptions inherent in the forward-looking statements are reasonable as of the date the statements are made, forward-looking statements are not guarantees of future performance and, accordingly, undue reliance should not be put on such statements due to the inherent uncertainty therein. Avante’s forward-looking information is based on the beliefs, expectations and opinions of management on the date the statements are made, and Avante does not assume any obligation to update forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law. For the reasons set forth above, readers should not place undue reliance on forward-looking information.
References to EBITDA are to net income from continuing operations before interest, taxes, amortization and impairment charges. References to Adjusted EBITDA are to net income from continuing operations plus interest, taxes, amortization and impairment charges and charges for share-based payments and acquisition costs. Neither EBITDA nor Adjusted EBITDA is an earnings measure recognized by International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS. Management believes that Adjusted EBITDA is an appropriate measure in evaluating Avante’s performance. Readers are cautioned that neither EBITDA nor Adjusted EBITDA should not be construed as an alternative to net income (as determined under IFRS), as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) or as a measure of liquidity and cash flow. Avante’s method of calculating Adjusted EBITDA may differ from methods used by other issuers and, accordingly, Avante’s Adjusted EBITDA may not be comparable to similar measures used by other issuers.
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Avante Logixx Inc.
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