Park Lawn Announces Agreement to Divest Certain Legacy Assets to Continue its Long-Term Growth Strategy

TORONTO, ON / ACCESSWIRE / October 17, 2023 / Park Lawn Corporation (TSX:PLC, PLC.U) ("Park Lawn" or "PLC") announced today that it has entered into a definitive agreement to divest substantially all of the assets of The Park Lawn Cemetery Company (USA), Inc., PLC Saber Ltd. and PLC Citadel Ltd. to Everstory Acquisition Portfolio, LLC ("EAP"), an affiliate of Everstory Partners ("Everstory Partners"). Everstory Partners is a deathcare company that owns and operates cemetery, funeral and crematory locations throughout the United States and Puerto Rico. The divestiture includes 72 cemeteries in Kentucky, Michigan, North Carolina and South Carolina and 11 funeral homes in Kentucky and North Carolina. The transaction is valued at approximately US$70 million consisting of US$55 million in cash and the remaining US$15 million in deferred compensation, bearing interest at 10% per annum, to be received by PLC within 5 years following the closing of the transaction.

"This transaction represents the divestiture of a portfolio of legacy businesses which, by their nature, do not fit within Park Lawn's long-term growth strategy," said J. Bradley Green, Chief Executive Officer of PLC. Mr. Green continued, "The teams operating these businesses are completely aligned with our vision and mission, and they have been successful in maintaining a level of profitability consistent with the type, size and location of these businesses. Nonetheless, we determined that refining our portfolio in this manner will assist us in improving our margin mix to better align with our long-term strategy. Also, this will allow us to redeploy our capital resources to acquire businesses that offer stronger long-term profit potential. Park Lawn has identified a purchaser who can continue to support and grow these businesses outside of the pressures of the public markets."

The purchase price represents an approximate 8.0x Adjusted EBITDA multiple based on trailing twelve month results, however, Park Lawn expects the divestiture to be slightly dilutive to its adjusted earnings per share in the near term reflecting the foregone revenue related to the divested businesses and before factoring in any benefits from the redeployment of transaction proceeds.

In the near term, the cash portion of the proceeds is expected to reduce Park Lawn's leverage ratio to approximately 1.9x and 2.7x, including Park Lawn's outstanding debentures. Park Lawn anticipates replacing the divested earnings through the deployment of transaction proceeds into high-growth markets and new business opportunities which align with its long-term growth strategy.