(WebFG News) - Alternative capital solutions provider Duke Royalty has entered into a royalty financing agreement of up to £7.5m, with £6.5m drawn down immediately, with Brownhills Investments.
The AIM-traded firm said Brownhills is the holding company for a UK-based group, which represents "one of the UK's leading" independent glass merchants and processors, established in the 1970s, Brownhills Glass.

It said that, as Duke's fourth European royalty partner, the deal broadened its revenue base and demonstrated its value proposition as a viable alternative finance solution for well established, profitable businesses in the UK and Europe.

Initial cash-on-cash yield would be more than 13% per annum, via monthly payments immediately post investment.

The deal consisted of a 30 year term of secured financing, with distributions to be adjusted annually to reflect Brownhills' revenue growth.

Duke closed on an initial commitment of £6.5m, with a further option for up to £1m until 31 December 2019.

Brownhills had already drawn down the funds and used the proceeds to refinance most of its outstanding debt, and to complete the buyout of the remaining 70% equity stake, from its current 30% stake, of an operating subsidiary, Tufwell Glass.

That transaction was said to have been "immediately earnings accretive" for Brownhills.

Brownhills has 130 employees across three UK plants, and remained majority owned and managed by the same family for a number of years.

"We are delighted that yet another private, successful industrial company, also based in the UK, has chosen Duke to be a capital partner over other options," said CEO Neil Johnson.

"This underpins our plan to bring an alternative finance solution, which represents a £50bn sector in North America and does not carry refinancing risk and is non-dilutive for owners, to UK and European businesses."

Johnson said that, in terms of Duke's investors, the deal provided access to a well-run private company.

"Mark and Nick Harrison's proven business acumen and increased equity ownership means that they are aligned with us to deliver continued growth over the long term.

"With four royalty agreements now in place, and more in the pipeline via our relationship with our Fortune 500 partner, Oliver Wyman, investors stand to benefit from the robust, predictable, long term returns and a strong associated yield, delivered by Duke Royalty."

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