K-Bro Announces $30 Million Equity Offering

EDMONTON, ALBERTA–(Marketwired – Nov. 21, 2017) –

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

K-Bro Linen Inc. (TSX:KBL) (“K-Bro” or the “Corporation“) is pleased to announce that it has entered into an agreement to sell 804,000 common shares (“Shares“) on a bought deal basis at a price of .35 per Share to a syndicate of underwriters led by TD Securities Inc. for gross proceeds of ,029,400 (the “Offering“). In addition, K-Bro has granted the syndicate an over-allotment option, exercisable for a period of 30 days following the closing of the Offering, to purchase up to an additional 120,600 Shares which, if exercised, would increase the gross Offering size to ,533,810, to cover over-allotments, if any, and for market stabilization purposes.

The net proceeds from the Offering will be used to partially pay down indebtedness that will be incurred under K-Bro’s amended 0 million senior secured revolving credit facility to fund the previously announced acquisition of Fishers Topco Ltd. (the “Acquisition“).

Pro forma for both the offering and anticipated build-outs of the Toronto and Vancouver facilities, K-Bro’s total leverage will be below 2.5x. The amended 0 million senior secured revolving credit facility will continue to remain in place to accommodate the Corporation’s working capital requirements and for general corporate purposes, including acquisitions.

The Offering is being made in all provinces and territories of Canada and a preliminary short form prospectus will be filed no later than November 27, 2017 with the securities regulatory authorities in all provinces and territories of Canada. The Offering is expected to close on or about December 12, 2017, and is subject to the closing of the Acquisition and the approval of securities regulatory authorities. No securities regulatory authority has either approved or disapproved of the contents of this press release.

This press release is not an offer of securities for sale in the United States. The Shares being offered have not been and will not be registered under the United States Securities Act of 1933 and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of that Act.

CORPORATE PROFILE

K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently operates nine processing facilities and two distribution centres under three distinctive brands, including K-Bro Linen Systems Inc., Buanderie HMR and Les Buanderies Dextraze, in ten Canadian cities: Québec City, Montréal, Toronto, Regina, Saskatoon, Prince Albert, Edmonton, Calgary, Vancouver and Victoria.

Additional information regarding the Corporation including required securities filings are available on our website at www.k-brolinen.com and on the Canadian Securities Administrators’ website at www.sedar.com; the System for Electronic Document Analysis and Retrieval (“SEDAR”).

K-Bro est le plus important propriétaire et exploitant de buanderies au Canada. K-Bro fournit une gamme étendue de services de buanderie aux établissements de soins de santé, hôtels et autres clients commerciaux. K-Bro exploite actuellement neuf usines et deux centres de distribution sous trois entités distinctes, incluant K-Bro Linen Systems Inc., Buanderie HMR et Les Buanderies Dextraze, dans dix villes canadiennes: Québec, Montréal, Toronto, Regina, Saskatoon, Prince Albert, Edmonton, Calgary, Vancouver et Victoria.

Vous pouvez obtenir des renseignements supplémentaires sur la Société, y compris les documents déposés auprès des autorités de réglementation, sur notre site Web, au www.k-brolinen.com et sur le site Web des autorités canadiennes en valeurs mobilières au www.sedar.com, via le Système électronique de données, d’analyse et de recherche (« SEDAR »).

FORWARD LOOKING STATEMENTS

This news release contains forward-looking information that represents internal expectations, estimates or beliefs concerning, among other things, future activities or future operating results and various components thereof. The use of any of the words “anticipate”, “continue”, “expect”, “may”, “will”, “project”, “should”, “believe”, and similar expressions suggesting future outcomes or events are intended to identify forward-looking information. Statements regarding such forward-looking information reflect management’s current beliefs and are based on information currently available to management.

These statements are not guarantees of future performance and are based on management’s estimates and assumptions that are subject to risks and uncertainties, which could cause K-Bro’s actual performance and financial results in future periods to differ materially from the forward-looking information contained in this news release. These risks and uncertainties include, among other things: (i) risks associated with acquisitions, including the possibility of undisclosed material liabilities; (ii) K-Bro’s competitive environment; (iii) utility costs, minimum wage legislation and labour costs; (iv) K-Bro’s dependence on long-term contracts with the associated renewal risk; (v) increased capital expenditure requirements; (vi) reliance on key personnel; (vii) changing trends in government outsourcing; (viii) changes or proposed changes to minimum wage laws in Ontario, British Columbia, Alberta, and the United Kingdom, which could have an adverse effect on expenses in respect of employees situated in those jurisdictions. While a portion of such expenses may be passed on to or be recoverable from customers, there can be no assurances that that will occur and (viii) the availability of future financing. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: (i) volumes and pricing assumptions; (ii) expected impact of labour cost initiatives; and (iii) frequency of one-time costs impacting quarterly and annual financial results; and (iv) the level of capital expenditures. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements regarding forward-looking information included in this news release may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this news release. Forward looking information included in this news release includes, without limitation, the terms, conditions, timing and completion of the Acquisition and the Amended Credit Facility and the expected revenues, earnings, growth opportunities following the closing of the Acquisition and statements with respect to future expectations on margins and volume growth.

All forward-looking information in this news release is qualified by these cautionary statements. Forward-looking information in this news release is presented only as of the date made. Except as required by law, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.