14 June 2018

Duke Royalty Limited

("Duke Royalty", "Duke" or the "Company")

LOI signed for fifth Royalty Investment and £3.5m secured loan

Duke Royalty Limited (AIM: DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce that it has signed an exclusive Letter of Intent ("LOI") for a fifth royalty investment. The total planned consideration for this near-term investment opportunity is US$3.5 million.

The target Royalty Partner ("PartnerCo") was founded in the 1950s and represents the largest US provider of legal information that is solely focussed on serving the law enforcement market.

PartnerCo's publications include enforcement manuals, code books and field guides that highlight legislative changes and guidelines.

PartnerCo's mission is to help the law enforcement community be more efficient by providing them easy access to the latest laws, rules, and regulations and by equipping them with the tools to educate and train officers, management, the courts and the citizens.

The investment opportunity meets all of Duke's stated criteria:

·     Long-standing, profitable operating history

·     Experienced senior management team with high equity ownership

·     Initial cash-on-cash yield of more than 13 per cent. per annum via monthly payments immediately post investment

·     40 year secured financing - distributions to be adjusted annually to reflect PartnerCo's revenue growth

This investment opportunity is well advanced but still subject to final due diligence and definitive documentation. It is expected that this transaction will be completed in the coming weeks, with a possible initial tranche of capital being provided during June 2018. 

The LOI also includes the terms to scale up Duke's investment up to U$7.0 million. PartnerCo has additional acquisition targets which Duke has agreed to finance through subsequent tranches on the same terms, subject to PartnerCo maintaining Duke's investment criteria post-acquisition.

In order to position itself to finance the planned investment into PartnerCo, Duke has secured a loan of £3.5m from a non-related third party.  The summary terms of this loan are:

·     £3.5m secured loan with expiry date of 30 June 2019

·     9% per annum interest rate until 31 December 2018, rising to 12% per annum for the final six-month period ending June 30th 2019

·     2% drawdown fee

·     Automatic repayment in the event of the closure of an equity issue of more than £3.5m and/or in the event that the £3.5m loan becomes greater than 20% of the NAV of Duke

Neil Johnson, CEO of Duke Royalty, said:

"Duke's near term goal is to diversify its portfolio through the addition of new Royalty Partners and this accretive LOI has allowed us to maintain momentum towards achieving this.

"Therefore, we are pleased to have gained exclusivity over our fifth Royalty Partner, a unique business with compelling long term prospects and an impressive management team, by securing a modest amount of leverage to demonstrate that Duke has the capital on its balance sheet.

"We are accumulating a royalty portfolio which provides robust, predictable, long term returns to shareholders, targeting a high single-digit yield in 2018. With this in mind, I am pleased to report that Duke's royalty pipeline continues to grow and we look forward to updating the market in due course."

***ENDS***

For further information, please contact www.dukeroyalty.com, or contact:

About Duke Royalty

Duke Royalty Limited provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team and exclusive partnership provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.