K-Bro Announces relocation to new Toronto facility

(TSX: KBL)

EDMONTON, Feb. 3, 2016 /CNW/ - K-Bro Linen Inc. (the "Company") today announced that it will be relocating to a new state-of-the-art facility in Toronto.  K-Bro has made a long-term commitment for its new expanded Toronto facility with a lease term, including extensions, of up to 30 years.

K-Bro is Toronto's largest hospitality and second largest healthcare linen processor.  Given the scalability of the new facility this will enable K-Bro to more than double its current capacity.  K-Bro's strategy includes significant growth in its healthcare and hospitality volumes, and the additional capacity and the long-term lease enables K-Bro to grow into the excess capacity as opportunities emerge. 

The total investment in the new facility is projected to be up to $35 million, and K-Bro plans to finance the entire amount from its existing $50 million credit facility.  The Company believes it will achieve significant operating efficiencies at its new plant, which management expects will enable it to compete on an even more cost-effective basis for new healthcare and hospitality volume.  The plant will be located in Mississauga, and the Company expects to complete its transition to the new facility before the end of 2016.

"We are very pleased to have the opportunity to make this long-term investment in Toronto," said Linda McCurdy, President & Chief Executive Officer. "We believe that there are significant opportunities in Toronto for growth in our healthcare and hospitality volumes.  Our new state-of-the-art plant will provide us with operating efficiencies that will enable us to become even more cost effective, and the additional capacity will give us the ability to grow for years into the future.  We look forward to moving by the end of this year and to serving the many healthcare and hospitality customers in the Greater Toronto area".

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 under three distinctive brands, including K-Bro Linen Systems Inc., Buanderie HMR and Les Buanderies Dextraze, in eight Canadian cities: Québec City, Montréal, Toronto, Regina, 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 sous trois marques distinctives, incluant K-Bro Linen Systems Inc., Buanderie HMR et Les Buanderies Dextraze, dans huit villes canadiennes: Québec, Montréal, Toronto, Regina, 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, le site Web du 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 inherent 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 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; and (vii) 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) utility costs; (iii) expected impact of labour cost initiatives; 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.

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.

SOURCE K-Bro Linen Inc.

Linda McCurdy, President & Chief Executive Officer, K-Bro Linen Inc. (TSX: KBL), Phone: [phone], Email: [email protected], Web: www.k-brolinen.com