Duke Royalty invests another £3.1m in Miriad Products

Alternative capital provider Duke Royalty announced a follow-on investment of £3.1m into its existing royalty partner MRDB Holdings, trading as Miriad Products, on Tuesday.

The AIM-traded firm described Miriad as the largest privately-owned recreational vehicle parts wholesaler in the UK.

It said the funds would enable Miriad to buy out and cancel all of its subordinated vendor loan notes) at a material discount to their current face value plus accrued interest, which stood at £4.9m.

The notes were due to begin amortising in 2021, and carried a 15% compound interest rate, and therefore an upsize of Duke's long-dated and low amortisation product would be “accretive and beneficial” to Miriad both from an interest and capital repayment perspective.

As part of the deal, Duke would also increase its equity interest in Miriad to 30%, before the effect of any dilution from the company's share option scheme.

As the UK's leading RV and caravan parts distributor, Miriad had reportedly benefitted from the changing behaviour of UK consumers who had, in increasing numbers, decided or been required to stay in the UK for their holidays.

After an initial drop in business volumes in April and May, both revenue and EBITDA had recovered “strongly” since June.

Duke's monthly royalty payments had been unaffected during the 2021 financial year thus far, and Miriad's underlying liquidity position remained strong.

The company’s original investment into Miriad in April 2019 totalled £10m.

Duke said the new investment increased its invested capital to £13.1m, making Miriad one of Duke's largest investments.

Monthly payments starting in January 2021 would total about £0.15m.

“We are delighted to be making this follow-on investment into Miriad, as the company's preferred long-term capital partner,” said chief executive officer Neil Johnson.

“Using Duke's capital to refinance this subordinated debt prior to its amortising start date will allow Miriad's executive team to focus on growing the company rather than the distraction of the 'refinancing treadmill'.”

Johnson said Duke's ability to support the company was “welcomed”, as management did not want the uncertainty that could arise by seeking financing during a pandemic.

“Miriad's business continues to expand and it has been one of the beneficiaries of the Covid-19 pandemic as UK residents make the decision to holiday at home rather than travel abroad.”

At 0854 GMT, shares in Duke Royalty were up 6.43% at 29.8p.