All amounts in U.S. dollars unless otherwise stated
Onex Corporation ("Onex") (TSX:OCX) today reports on activities for the second
quarter and six months ended June 30, 2013 and provides an update on matters
following quarter-end. Onex has not filed its Consolidated Financial Statements
on SEDAR today as Spirit AeroSystems Holdings, Inc. ("Spirit AeroSystems"), an
Onex subsidiary, has not yet filed its quarterly results.
Highlights
-- Onex acquired Emerald Expositions, one of the largest operators of
business-to-business tradeshows in the U.S., in a transaction valued at
$950 million.
-- Carestream Health distributed $750 million to shareholders, of which
approximately $300 million was Onex' share.
-- ONCAP sold BSN SPORTS, resulting in a multiple of capital invested of
4.2 times and proceeds to Onex of $103 million.
-- Including realizations and distributions of approximately $500 million,
the value of Onex' interest in Onex Partners' and ONCAP's private
investments grew by 20% and 16%, respectively, in the six months ended
June 30, 2013.
-- Onex' capital per share grew by 9% and 18% in the six and twelve months
ended June 30, 2013, respectively, to $45.27.
-- Year-to-date through July 31, 2013, Onex repurchased 1,113,500 shares
for approximately C$50 million at an average cost per share of C$44.75.
-- Onex launched the fundraising for Onex Partners IV, targeting a fund
size of $4.5 billion, of which Onex will be the largest limited partner
with a commitment of $1.2 billion.
Building our Businesses
"Over our 29-year history, we've developed a successful approach to private
equity investing," said Gerry Schwartz, Chairman and Chief Executive Officer of
Onex. "We pursue businesses with world-class core capabilities and strong free
cash flow where we've identified an opportunity, in partnership with company
management, to effect change and build market leaders. Our acquisition and
ownership of both Carestream Health and BSN SPORTS embody this approach."
"From the time we carved out Carestream from Kodak in 2007, we've worked closely
with the company's talented management team to develop a stand-alone
infrastructure, optimize corporate costs, grow the medical and dental digital
businesses, all while continuing to maximize the cash flow generated by the film
business," continued Mr. Schwartz. "Over the years, Carestream's significant
free cash flow generation has allowed the company to make several distributions,
with this most recent refinancing allowing us to further crystallize value
created under our ownership."
During the second quarter, Carestream raised approximately $2.4 billion of
funded debt, primarily to refinance existing debt and to fund a $750 million
distribution, of which Onex' share was about $300 million. Including prior
distributions, Onex has received 265% of its initial equity investment and still
owns its entire original equity stake in a business generating almost $200
million of free cash flow.
In June, ONCAP sold its investment in BSN SPORTS. Over the course of our
three-year ownership, ONCAP and its partners grew the business through accretive
acquisitions, a re-branding initiative and the expansion of sales resources, all
while improving efficiencies throughout the organization. The successful
execution of ONCAP's investment thesis resulted in a return of approximately 4.2
times capital invested and net proceeds of $103 million to Onex. ONCAP
thoroughly enjoyed the partnership with BSN's CEO, Adam Blumenfeld, and his
team, who have accomplished so much during the last three years. We wish them
ongoing success as they continue to grow this great company.
Following quarter-end, Allison Transmission priced a secondary offering to the
public of 19.1 million shares of common stock at $22.00 per share and
repurchased 4.7 million shares directly from Onex and its partner, The Carlyle
Group, resulting in a total sale of 23.8 million shares. Net proceeds from the
offering to the Onex Partners II Group will be approximately $252 million, of
which Onex' share will be about $84 million, including carried interest. Pro
forma for the offering, Onex and Carlyle will collectively own 70% of Allison
Transmission.
By transforming good businesses into industry leaders, Onex has generated a
29-year gross IRR of 28% and an average multiple of 2.9 times capital invested
from realized, substantially realized and publicly traded investments.
As we build value at our existing businesses, we continue to look for new
acquisition opportunities. In June, we completed the acquisition of Nielsen
Expositions, now operating as Emerald Expositions, investing approximately $350
million, of which Onex' share was about $85 million as a limited partner in Onex
Partners III.
In addition to Onex' commitment to every investment, the team is heavily
invested in everything we own. At June 30, 2013, the value of the team's
investment in Onex shares and its businesses was approximately $1.7 billion.
Managing and Growing Other Investors' Capital
Onex earns recurring management fees and/or carried interest on $9.5 billion of
capital managed for limited partners and other investors. In 2012, combined
management fees and carried interest received offset ongoing operating expenses.
At June 30, 2013, the value of Onex' unrealized carried interest was
approximately $56 million based on the traded market values of Onex Partners'
public companies and a further $88 million based on the quarter-end valuations
of the private businesses. The amount of carried interest ultimately realized by
Onex depends on the overall performance of each Fund.
With Onex Partners III almost 90% invested, Onex recently launched the
fundraising for Onex Partners IV, targeting $4.5 billion of total capital
commitments, of which Onex will commit $1.2 billion. A new fund would contribute
to Onex' stream of annual management fees and the potential to earn carried
interest on invested limited partner capital. Onex' limited partnership
agreements typically have a 10-year term and provide predictable management fees
from assets under management.
We continue to grow our credit investing platform and are accumulating assets in
a warehouse in anticipation of a fourth CLO offering. Our credit team and
platform give us the capability to place a number of offerings each year should
market conditions remain attractive. Recurring management fees from CLOs and
other credit products create additional value for Onex shareholders.
Creating Value for Shareholders
Including realizations and distributions of approximately $500 million, the
value of Onex' interest in Onex Partners' and ONCAP's private investments grew
by 20% and 16%, respectively, in the six months ended June 30, 2013. Overall,
Onex' capital per sharegrew by 9% and 18% in the six and twelve months ended
June 30, 2013, respectively, to $45.27 or C$47.61.
Over time, we hope that the value of Onex' shares reflects both growth in the
value of our assets and the intrinsic value of our asset management
capabilities. At June 28, 2013, Onex' Subordinate Voting Shares ("SVS") closed
at C$47.72, a 14% increase from December 31, 2012. This compares to a 13%
increase in the S&P 500 and a 2% decrease in the S&P/TSX Composite Index.
In the first seven months of 2013, Onex repurchased 1,113,500 SVS under its
Normal Course Issuer Bids for a total cost of approximately C$50 million or an
average cost per share of C$44.75. Over the last 17 years, Onex has repurchased
over 75 million SVS for a total cost of approximately C$1.2 billion.
Attached is the "How We Are Invested" schedule, which details Onex' $5.4 billion
of capital and provides private company performance information.
Consolidated Results
The Company will provide Unaudited Interim Consolidated Balance Sheets,
Statements of Earnings, Statements of Cash Flows and information by industry
segment for the quarter ended June 30, 2013 and 2012 as prepared under
International Financial Reporting Standards once Spirit AeroSystems has reported
its second-quarter results. The complete financial statements, including
Management's Discussion and Analysis of the results, will be posted on Onex'
website (www.onex.com) and will be available on SEDAR (www.sedar.com) at that
time.
Webcast
Onex management will host a conference call to review Onex' second-quarter 2013
activities on Thursday, August 8 at 11:00 a.m. ET. A live webcast of this
conference call will be available in listen-only mode on its website,
www.onex.com.
About Onex
With offices in Toronto, New York and London, Onex is one of the oldest and most
successful private equity firms. Onex acquires and builds high-quality
businesses in partnership with talented management teams. The Company has
approximately $16 billion of assets under management, including $5 billion of
Onex capital, in private equity, credit securities and real estate. Onex invests
its capital directly and as a substantial limited partner in its Funds.
Onex' businesses have assets of $45 billion, generate annual revenues of $36
billion and employ approximately 236,000 people worldwide. Onex shares trade on
the Toronto Stock Exchange under the stock symbol OCX. For more information on
Onex, visit its website at www.onex.com. The Company's security filings can also
be accessed at www.sedar.com.
This news release may contain forward-looking statements that are based on
management's current expectations and are subject to known and unknown
uncertainties and risks, which could cause actual results to differ materially
from those contemplated or implied by such forward-looking statements. Onex is
under no obligation to update any forward-looking statements contained herein
should material facts change due to new information, future events or otherwise.
The proposed fourth CLO offering or any other future CLO offering will not be
registered under the U.S. Securities Act of 1933, as amended, or any state
securities laws. CLO offers and sales will be made in transactions that do not
require (or are otherwise exempt from) such registration. Those securities may
not be reoffered or resold in the United States absent registration or an
exemption from registration under that Act and state securities laws.
ONEX
How We Are Invested
Unless otherwise noted, all amounts are in millions of U.S. dollars except
per share data.
Onex Capital
As at June 30, 2013 December 31, 2012
----------------------------------------------------------------------------
Private Equity
Onex Partners
Private Companies(1) $ 1,843 $ 1,862
Public Companies(2) 812 704
Unrealized Carried Interest on Onex
Partners Investments(3) 144 140
ONCAP(4) 375 409
Direct Investments
Private Companies(5) 154 148
Public Companies(2) 168 145
----------------------------------------------------------------------------
3,496 3,408
----------------------------------------------------------------------------
Onex Real Estate Partners(6) 127 192
Onex Credit Partners(7) 234 171
----------------------------------------------------------------------------
361 363
----------------------------------------------------------------------------
Other Investments 107 108
Cash and Near-Cash(8) 1,443 1,141
Onex Corporation Debt - -
----------------------------------------------------------------------------
$ 5,407 $ 5,020
----------------------------------------------------------------------------
Onex Capital per Share (June 30,
2013 - C$47.61; December 31, 2012 -
C$41.21)(9) $ 45.27 $ 41.42
----------------------------------------------------------------------------
Public Companies
Shares
Subject
to Shares Closing Market
Carried Held Price Value
Interest by Onex per of Onex'
As at June 30, 2013 (millions) (millions) Share(10) Investment
----------------------------------------------------------------------------
Onex Partners
Skilled Healthcare
Group(11) 10.7 3.5 $ 6.68 $ 23
Spirit
AeroSystems(11) 11.9 6.5 $ 21.48 139
TMS
International(11) 13.2 9.3 $ 14.83 138
Allison
Transmission(11) 33.5 23.4 $ 23.08 541
----------------------------------------------------------------------------
841
Estimated Management
Investment Plan
Liability (29)
----------------------------------------------------------------------------
812
----------------------------------------------------------------------------
Direct Investments -
Celestica - 17.8(12) $ 9.45 168
----------------------------------------------------------------------------
$ 980
----------------------------------------------------------------------------
Significant Private Companies
Onex'
and its
Limited
Partners' LTM Net
As at June 30, 2013 Ownership EBITDA(13) Debt
----------------------------------------------------------------------------
Onex Partners
The Warranty Group 91% $ 114(14) $ 248(14)
Carestream Health 92% 436 2,157
Tropicana Las
Vegas 82% (11) 45
Tomkins 56% 507(15) 1,516
ResCare 98% 147 324
JELD-WEN 71%(17) 175(18) 734(18)
SGS International 94% 105(20) 596
USI 92% 258(20) 1,584
BBAM 50% 74 -
KraussMaffei 97% EUR 96 EUR 255
Emerald
Expositions 100% 97 623
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Direct Investments -
Sitel Worldwide 70% $ 127 $ 714
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Significant Private Companies
Original
Onex' Cost of
Cumulative Economic Onex'
As at June 30, 2013 Distributions Ownership Investment
----------------------------------------------------------------------------
Onex Partners
The Warranty Group $ 338 29% $ 154
Carestream Health 1,161 34%(12) 186
Tropicana Las
Vegas - 18% 70
Tomkins 1,180(16) 14% 315
ResCare - 20% 41
JELD-WEN - 17%(17) 200(19)
SGS International - 24% 66
USI - 26% 170(21)
BBAM - 13% 55(22)
KraussMaffei - 25% 90
Emerald
Expositions - 24% 85
----------------------------------------------------------------------------
1,432
----------------------------------------------------------------------------
Direct Investments -
Sitel Worldwide $ - 70% 251
----------------------------------------------------------------------------
$ 1,683
----------------------------------------------------------------------------
Notes to Tables
(1) Based on the US$fair value of the investments in Onex Partners'
financial statements net of the estimated Management Investment Plan
("MIP") liability on these investments of $65 million (2012 - $39
million). RSI, which was sold in February 2013, was included in private
companies of Onex Partners at December 31, 2012.
(2) Based on the closing market values and net of the estimated MIP
liability on these investments.
(3) Represents Onex' share of the unrealized carried interest on public and
private companies in the Onex Partners Funds.
(4) Based on the C$fair value of the investments in ONCAP's financial
statements net of management incentive programs on these investments of
$23 million (2012 - $25 million) and a US$/C$exchange rate of 1.0518
(2012 - 0.9949). BSN SPORTS, which was sold in June 2013, was included
in ONCAP at December 31, 2012.
(5) Based on the fair value.
(6) Based on the fair value of Onex Real Estate Partners' investments.
(7) Based on the market values of investments in Onex Credit Partners'
Funds and Onex Credit Partners Collateralized Loan Obligations.
Excludes $335 million (2012 - $328 million) invested in a segregated
Onex Credit Partners' unleveraged senior secured loan strategy fund,
which is included with cash and near-cash items.
(8) Includes $335 million (2012 - $328 million) invested in a segregated
Onex Credit Partners' unleveraged senior secured loan strategy fund.
(9) Calculated on a fully diluted basis.
(10) Closing prices on June 30, 2013.
(11) Excludes Onex' potential participation in the carried interest and
includes shares related to the MIP.
(12) Excludes shares held in connection with the MIP.
(13) EBITDA is a non-GAAP measure and is based on the local GAAP of the
individual operating companies. These adjustments may include non-cash
costs of stock-based compensation and retention plans, transition and
restructuring expenses including severance payments, the impact of
derivative instruments that no longer qualify for hedge accounting, the
impacts of purchase accounting and other similar amounts.
(14) Amount presented for The Warranty Group is net earnings rather than
EBITDA and total debt rather than net debt.
(15) LTM EBITDA excludes EBITDA from businesses divested as of June 30,
2013.
(16) Onex, Onex Partners III, Onex management, certain limited partners and
others received distributions of $663 million from Tomkins.
(17) Onex' and its limited partners' investment is in convertible preferred
shares. The ownership percentage is presented on an as-converted basis.
In April 2013, JELD-WEN's remaining convertible promissory notes and
accrued interest, all of which were held by Onex, Onex Partners III,
Onex management, certain limited partners and others, were converted
into additional Series A Convertible Preferred Stock of JELD-WEN.
(18) LTM EBITDA and net debt are presented for JELD-WEN Holding, inc.
(19) Net of $83 million of the amount originally invested in JELD-WEN that
was sold by Onex to certain limited partners and others as a co-
investment in February 2012 and $27 million return of capital on the
convertible promissory notes prior to the conversion into additional
Series A Convertible Preferred Stock of JELD-WEN in April 2013.
(20) LTM EBITDA for SGS International and USI are presented on a pro-forma
basis to reflect the impact of acquired businesses.
(21) Net of $84 million of the amount originally invested in USI that was
sold by Onex to certain limited partners and others as a co-investment
in March 2013.
(22) Included in Onex' cost is $5 million that was invested in FLY Leasing
Limited (NYSE:FLY) and $8 million that was invested in Meridian
Aviation Partners Limited. These investments were made in conjunction
with the investment in BBAM.
FOR FURTHER INFORMATION PLEASE CONTACT:
Onex Corporation
Emma Thompson
Vice President, Investor Relations
416.362.7711
www.onex.com
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