CVW signs royalty deal with Relocalize

Executive Summary

• CVW Sustainable Royalties Inc. entered into a royalty agreement and strategic partnership with Relocalize Inc., providing $4.0 million in upfront capital in exchange for royalties on Relocalize's microfactory ice production facilities.
• The transaction includes an initial $2.5 million investment for a 25% gross revenue royalty on the first commercial facility in Plant City, Florida, and a contingent $1.5 million investment for a second facility in Montreal, Quebec, subject to operational and commercial milestones.
• CVW Royalties holds an option to invest up to $22.5 million in 13 additional facilities and retains a right of first refusal for future royalty financing on all Relocalize facilities for 20 years.

Key Details

• Total Upfront Capital: $4.0 million provided by CVW Sustainable Royalties to Relocalize Inc.
• Royalty Structure (Initial Investment):
  • CVW receives a 25.0% gross revenue royalty on the first commercial facility (Plant City, Florida).
  • CVW receives a 1.25% revenue royalty on Relocalize's next eight commercial facilities beyond the first two.
• Royalty Structure (Second Investment):
  • Conditional upon meeting operational thresholds and a Final Investment Decision (FID) for the second facility, CVW provides an additional $1.5 million.
  • CVW receives a 25.0% revenue royalty on the second facility (Montreal, Quebec).
  • CVW receives an additional 0.75% revenue royalty on the next eight commercial facilities beyond the first two.
• Step-Down Provision: Once CVW receives aggregate payments equal to 1.25 times the investment amount ($5.0 million total), the royalties on the Plant City and second facilities step down to 15.0% for the life of the respective facilities.
• Expansion Option: CVW has the option to invest up to $22.5 million to finance up to 13 additional Relocalize facilities.
• Security: Future royalties are expected to have pari-passu senior security on each physical asset financed.
• Right of First Refusal: CVW holds a right of first refusal for future royalty financing on all Relocalize facilities for a period of 20 years.
• Facility Details:
  • Plant City, Florida: Co-located at Winn-Dixie’s distribution centre; produces packaged ice for over 100 stores; key customer is Winn-Dixie.
  • Montreal, Quebec: Located at Relocalize’s headquarters; produces cold packs for meal kit delivery and ready-to-eat markets.
• Strategic Context: Relocalize utilizes proprietary modular microfactory technology to decentralize ice production, reducing transportation emissions and logistics costs. A two-year pilot facility has been successfully deployed.

Notable Quotes

• Akshay Dubey, CEO of CVW Royalties: "Our strategy is to utilize the royalty model to provide investors with a unique and attractive risk-adjusted way to invest in companies that produce commodities and commodity-like products driving both environmental and economic sustainability... With a pipeline of approximately $900-million of potential royalty opportunities and several transactions at an advanced stage, we believe we are well positioned to support our continued growth..."
• Wayne McIntyre, Founder and CEO of Relocalize: "This transaction with CVW Royalties has the potential to be transformational for Relocalize. The immediate funding will accelerate our commercialization efforts by speeding deployment of our microfactories in Florida and Quebec, while creating a pathway to finance accelerated growth in 2027 and 2028."