Aimia Inc.

Good morning, ladies and gentlemen, and welcome to the EMEA Inc. First Quarter 2023 Results Conference Call. At this time, all lines are in the listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, May 12, 2023. I would now like to turn the conference over to Albert Matusak, Head Investor, relations, and communication. Please go ahead.

Thank you, Brian, and welcome everyone to this morning's call. Today's presentation is available on CDAR and on our website. Before we get underway, I would like to remind everyone to review our forward-looking statements and the cautions and risk factors pertaining to the statement. My name is Albert Matusak, Head of IR and Communications. With me on the call today are speakers Phil Middleman, EMEA's CEO, Michael Lehman, our President, and Steve Leonard, our CFO. Phil will begin with our strategic highlights, followed by Michael, who will cover the performance of our investments, before handing the call over to Steve to take you through the results of the quarter. We will have time for your questions at the end. With that, let me hand it over to Phil.

Thanks, Albert, and good morning to everyone on the phone and webcast today. We are pleased to announce the successful closing of the Bizetto and Tough Ropes transactions, as well as the Bizetto debt financing, two cash-generating businesses with significant value creation potential for our stakeholders. Furthermore, we are very excited by the strength being exhibited by all of our current portfolio holdings. On May 9th, AMIA closed the Bozzetto transaction and the associated debt financing at the subsidiary level. AMIA invested $206.3 million for an equity stake of 94% in Bozzetto, investing alongside the management team, who purchased 6% of the company at the same valuation as AMIA. We look forward to working with this remarkable management team as they continue to grow this business organically and through strategic acquisitions, and it is in advanced discussions with a potential target in the Americas. On March 17th, we closed the Tough Ropes transaction and acquired 100% of the company for $239.2 million. Following this acquisition, the leadership team has actively engaged with customers, suppliers, and employees, and the response has been overwhelmingly positive. The team is exploring new opportunities for potential strategic partnerships and is actively pursuing an accretive acquisition target in the U.S. Suffrop expects adjusted EBITDA margins to grow above 20% within the next two years based on reasonable assumptions such as operational improvement initiatives as well as the optimization of product mix. Turning to our financial results, we ended the first quarter of 2023 in a strong financial position with over $318 million of investable cash and liquid securities, a diversified portfolio of holdings that we believe are poised to deliver strong results in 2023. In addition, the company has tax losses of approximately $660 million that will help shield a sizable portion of our taxable income and capital gains for years to come. As a reminder, at the end of 2022, AMIA utilized $130 million of capital losses to repatriate a portion of the PLM gains. Turning to our holdings. ClearMedia is seeing a sharp recovery in demand beginning in its second quarter of 2023 as China emerged from its COVID lockdown, and we expect ClearMedia to accelerate the digitization of its panel portfolio. Tradex's enhanced asset-light model is achieving some of the highest gross margins to date. Tradex projects a return to EBITDA profitability by the third quarter of this year. Eric Gosselin, currently the COO, will be named CEO on June 1st as founder Ryan Davidson focused on business development. Cognitive's new CEO, Tim Sullivan, is overseeing the launch of its new AI-powered product, Cognitive Pulse, which has been met with industry-wide praise and excitement. Cognitive continues to undertake a series of initiatives to reduce costs and increase efficiency, which is expected to drive the company towards EBITDA positivity by the end of the year in 2023. In addition, Cognitive is securing additional sources of financing through divestitures of non-core assets. Capital A is experiencing a strong rebound in its airline business, generating its first profitable quarter since the pandemic began amidst soaring demand. With that, let me turn the floor over to Mike to provide you some further color on our investment portfolio. Mike?

Yeah, thanks, Bill, and good morning to everyone. As announced earlier this week, we closed the Bizetto transaction and the associated debt financing. Amy invested $206.3 million for an equity stake of 94% of the company. We're very pleased to have Bozzetto's executive management team invest $13.3 million of their proceeds alongside AMIA into this new investment venture, which represents a minority position of 6%. This investment provides for further alignment with AMIA and our shareholders. Concurrent with the closing, we secured debt financing of $139.5 million with a weighted average coupon of 8.1%, and total leverage will be roughly three times as we previously targeted. Transaction costs and debt financing fees totaled $19.1 million, excluding the transaction costs of $12.3 million and accounting for cash on hand of $14.2 million. The enterprise value at closing was $333 million, representing approximately seven times fiscal 2022 pro forma adjusted EBITDA. For the fiscal year 2022, Rosetta reported revenue of $320.6 million. and adjusted EBITDA of $45 million, including the recent Lavaco transaction that closed at the end of 2022, pro forma annual revenue was $335.3 million, and adjusted EBITDA was approximately $47 million. Given the Bozzetto acquisition closed after this quarter ended, the results of Bozzetto have not been recorded in AMEA's financial statements for the quarter. Bizetto is one of the world's largest ESG-focused providers of specialty chemicals. Through its innovative technologies, it is deeply interconnected with its clients' production process and allows for efficiencies and superior final product quality. Their focus on ESG formulations allows for a lower environmental impact on the entire value chain. We're currently in advanced discussions with a potential target in the Americas, which would significantly increase and diversify Bizetto's geographical and end-market footprint, as well as give greater exposure to different trends, drivers, and structural long-term growth. We see significant opportunities to grow this business, both organically and through a creative acquisition. On March 17th, we closed the Toughropes transaction for $239.2 million. Since the acquisition, the leadership team has met with two-thirds of its top customers, spanning across Europe, North America, and Asia, and the feedback has been exceptional. During these discussions, the management team has uncovered many opportunities for further collaboration, both by gaining client wallet share, as well as evaluating new business opportunities, one of which is already underway. These opportunities are within general maritime and aquaculture and are both through our distribution channel, as well as direct to client. In addition, Tuff Ropes is in discussions for a potential acquisition in the U.S. within the high-performance ropes industry. We'll report back at the proper time. For the first quarter, on a pro forma basis, Tuff Ropes reported adjusted EBITDA of $5 million on revenues of $25 million. As previously disclosed, Tuff Ropes expects adjusted EBITDA margins to grow to above 20% within the next two years. based on its reasonable assumptions on operational improvement initiatives, as well as on the optimization of product mix. In the near term, with operational initiatives underway, we expect EBITDA margins to be in the range of 18% on a full year basis. For the full fiscal year ending March 31, 2023, Puffer Oaks achieved revenue of approximately $114.3 million and adjusted EBITDA of $20.7 million on a pro forma basis. Fiscal 2023 revenues came in slightly below expectations due to a delay in shipments associated with the post-closing transaction, as well as the timing of customer orders, which are expected to be reversed over the next two quarters. As we previously discussed, we continue to explore debt financing for tough ropes in line with our general strategy of reasonable leverage on our operating assets. Moving on to clear media. ClearMedia is seeing a sharp recovery in demand for its outdoor advertising displays beginning in March and has continued into the second quarter as China has ended its mobility restrictions. And we expect ClearMedia to rapidly accelerate their digital panel conversions in 2023. Moving on to Tradex. Tradex generated gross vehicle sales of 156.7 million in the quarter, down from 248.3 million recorded in the same period last year, mainly the result of focusing its business away from being primarily volume-focused and embracing its enhanced, higher-margin, asset-light business model. The company will continue to benefit as the number of global car dealers utilizing its online trading platform grows. Tradex continues to streamline and innovate the process of cross-border used car trading, by announcing a strategic partnership with PAVE, allowing dealers globally to perform reliable vehicle inspections, which ensures a trustworthy purchasing process and protects sellers from any condition disputes upon delivery. Moving on to cognitive. In the first quarter, revenues from continuing operations were $11.5 million. Adjusted EBITDA from continuing operations was a loss of $5.6 million, a significant improvement of $4 million from a loss of $9.6 million in the prior year's quarter. We expect to see a continued reduction in losses as the year progresses and is expected to drive the company for its positive EBITDA by year-end 2023. We would also like to welcome John Ott, an executive with deep experience in enterprise sales who has recently joined as Chief Revenue Officer at Cognitive. Next up is Capital A. Capital A, formerly AirAsia, continues to experience a strong rebound in all four of its businesses. In Q4 2022, Capital A recorded its first positive net profit since COVID began. While revenue has grown substantially, it remains only 77% of the level it reached during Q4 2019. However, EBITDA is 108% of Q4 2019 revenue. due to better seat pricing and expense management. This was accomplished while only operating 56% of the 2019 fleet. The group operated 14.8 million seats in the first quarter of 2023, which is 71% of first quarter 2019 levels, with a load factor of 89%, at par with pre-pandemic levels. And with that, let me turn it over to Steve to take you through some of the financial results.

Steve? Thanks, Mike. Before I begin covering the consolidated financial results for the quarter, starting in the second quarter, we will be presenting our consolidated income statement as well as our segment reporting with a focus on the operating results of our new holdings in Bizetto and Tuff Roads. Our goal is to provide additional clarity and insight into each of our holdings. Let me now cover the consolidated results before we move to the segment performance and cash movements in the quarter. Starting with our consolidated results. In the first quarter, income from investments was $14.1 million compared to a loss of $14.3 million last year. The income from investments in the quarter was mainly due to an increase in fair value of investments in equity instruments of $10.8 million, interest, dividend, and other investment income of $7.2 million, and revenue of $2 million, mainly associated with the 14-day stub holding period of tough roles. Our total expenses were $33.2 million for the quarter, which included a number of non-recurring expenses. These included transaction costs of $11.6 million, non-cash costs of $10.8 million related to Paladin carried interest and option rights, activism-related costs of $1 million, and accelerated amortization of a MIM intangible asset for $1.1 million. Excluding these items, total expenses were $7.3 million, of which $3.4 million were related to the Tough Ropes business for the 14-day period held since acquisition, where we had no comparables versus the prior year. Accounting for all of these items, total expenses were approximately $4 million, which is in line with the prior year's quarter. For the holding segment, corporate operating expenses were $5.4 million in the quarter, up by $1.3 million, mainly due to the expenses incurred related to the shareholder activism. Moving on to cover the major cash movements for the quarter. We started the quarter with cash and cash equivalents of $505 million. The main movements in the quarter were $256 million used to fund the Tough Ropes acquisition. As a note, this funding was offset by working capital adjustment to derive our $239 million net consideration. And it's been funded by the sellers by having liquid mutual fund securities of 17 million, which are being converted to cash in the second quarter. 8.9 million of transaction costs were related to the Tough Ropes acquisition and 4.7 million of hold code costs. We also had the 3 million of dividends and the 1.3 million of part six tax. Moving on to the pro forma unrestricted cash and liquid securities to reflect the Buzzetto acquisition as of March 31st, 2023. We had $318.6 million prior to the Buzzetto acquisition of cash and liquid securities. And we ended up funding $206 million to acquire the 94% stake in Buzzetto. In turn, Buzzetto had $14 million in cash on hand at closing. Taking these two cash movements into consideration, we estimate the pro forma cash and liquid investments of $126 million post-closing. This liquidity position provides sufficient cash and liquid resources to support the funding of our whole coal as well as opportunities to support our businesses or renew the NCIB. Should we conclude financing on tough ropes, we would expect up to $100 million in additional liquidity. And with that, let me turn it back over to Phil to wrap up with a few concluding remarks. Phil?

Thanks, Steve. Since the close of the PLM transaction last summer, we have been carefully planning to redeploy the proceeds to create value for our shareholders. We said at the time that we would return a portion of our capital directly to shareholders. as well as seeking opportunities to acquire established businesses with long track records of growth and free cash flow generation. We reviewed a robust pipeline of potential targets around the world and narrowed our focus to the most compelling candidates. We knew we could act swiftly when presented with the right opportunities, and we did so with the recent acquisitions of Toughropes and Bizetto. We are very excited to have completed the purchase of these two businesses to check all of our boxes. Both companies are global players in growing markets, with solid financial track records, sustainable competitive advantages, serving diverse customer bases, geographies, and revenue streams with proven management teams. The Bizetto and Tough Ropes investments will form the foundation of the quote-unquote new EMEA, with plans to grow both organically and through carefully planned accretive acquisitions. We will continue to execute our strategy of maximizing the value of our current portfolio holdings while redeploying our capital into new investments with significant upsides. 2023 is off to a strong start for our entire portfolio, and we look forward to providing you further updates as soon as we can. We look forward to a very exciting 2023.

Operator, that concludes today's prepared remarks. Please go ahead and prompt for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchstone phone. you will hear a three-tone prompt acknowledging your request. If you would like to withdraw your request, please press the star followed by the number two. First question, we have Surrender Tind with Jefferies. Please go ahead.

Thank you. A few questions here related to the portfolio holdings. I'd like to start with TuffRoad. Can you provide any additional color on kind of what impacted the timing of customer orders It sounded like it was a combination of customers waiting to deal with the deal closed, but was there other things here that we should consider in terms of what is the general outlook for the remainder of the year?

How are you? Yeah, there were registration and licensing issues that we could only take care of after closing, so there was a lot of red tape involved. We also were re-domiciling the company to Canada, which added a little additional complexity. That caused shipment delays, which we expect to be pushed into the next two quarters. So those are the primary reasons for those issues.

So at this point, should we assume that things are operating on a fully normalized basis? Yes, we're fully normalized now. Got it. And in this environment, any color on what demand looks like?

You know, we're seeing signs of strengthening demand. We're also, more importantly, seeing signs of opportunities that could have dramatic impacts on our EBITDA. So we're seeing – we immediately were met with a potential – joint venture opportunity with one of the largest distributors, which would be very meaningful. We're pursuing that. We, as we mentioned, we met with all the top, you know, most of the top customers. And many of them, you know, validated our thesis, which was that this company had not really been actively marketing their products around the world. So, you know, one of the customers said, well, we hadn't heard from you in two years. So glad you're here because we want to expand our relationship. So we're very excited about what we're seeing there. So overall, we're seeing the kind of demand that we expected, but we're finding opportunities to grow this materially outside of just organic growth. We're also pursuing, as you mentioned, an acquisition in the U.S., which would provide a whole other platform for us here and would also potentially allow us to utilize some of our U.S. NOLs, so we're pursuing that as well.

Hi, it's Mike Lehman. It's Mike. If I could just jump in a second. So just to expand on a little bit what Phil said, The discussions with both existing and new customers have been going extraordinarily well. The future collaboration that we've been discussing has not only been on growing existing client wallet share, increasing business with existing clients, but also it's multifaceted, creating new opportunities and new products for those existing clients and through distributors. creating products for new markets. All right. So the largest of which is maritime and shipping customers. But it's really across the board. We're seeing opportunities that through the due diligence process, we highlighted. And now that we're out there seeing 20, 30, 40 of the top customers, we are recognizing that not only are those opportunities that we highlighted in due diligence there, but there's a lot more as well. And as Phil said, one of the opportunities is already ongoing and in the works, which is really exciting. And the research and development within the company is is examining other ways to continue to participate with new clients as well as develop the new markets that we discussed.

That's helpful. And then just related to that in terms of as you've identified these opportunities as you have these discussions with the existing clientele for new opportunities, can you talk about the harvesting of that? Is the idea that we'll see the impact in 2024 or should we begin to see the impact on growth before that?

No, we're anticipating you'll be able to see growth before 2024. New products that will take a while to get through R&D and get to get through testing and certification, et cetera. But expanding current wallet share within customers, either direct-to-custom or distribution channels, we're looking to increase those relationships immediately. So that could be over the next several quarters.

Now, Surinder, when we first announced this deal and our stock went down, one of the main things we were hearing was, oh, this is a commodity business. You guys bought a commodity business. And that couldn't be further from the truth. What you learn about this business, which is pretty incredible, is that one net will hold up to $20 million worth of fish. So you can imagine how important that net is to the person dragging it. So if a fish comes and bites a piece of the net off, $20 million worth of fish can fly out your window. So the quality of these nets is critical. And when we were diligencing this, what we heard from anonymous people professionals, even their competitors were saying, look, you know, Tough Ropes has some of the best product out there. You know, there are competitors that white label it because their product is just better than theirs. These are leaders in the industry. So, you know, we went and visited every one of their factories. You know, we saw women sitting on the floor with the nets. And my first reaction was, wow, you know, you're so automated, you know, you automate that. And they said, no, you don't understand. This is This is a skill set that is so valuable. Tying these nets at the end of these nets and the quality of these nets is the reason that they don't break, and it's the reason that our quality is so high. These are some of the highest paid women in India, highly skilled. This is not like some simple thing where you're just making nets. Some of the technological advances Mike was referring to is putting sensors on the nets that alert the boat when there's a rip in the net or a tear or any type of damage to it. That allows you to Maybe you save $14 million worth of the 20 that's going to escape. I mean, these are huge numbers. So this is a very important part of the business, and we're expanding it, and it's very high margin, and we're very excited about the future of that business.

Got it. And then moving on to clear media here, we've now kind of had a quarter to two quarters where the Chinese economy has started to open up. any color in how we should think about the revenue trajectory here in a return to normal now that the conditions themselves or the factors influencing them have normalized?

I think, first of all, let me just say that the period that ClearMedia went through over the past couple of years, I would almost look at it like you had the ability to do a prepackaged bankruptcy without a prepackaged bankruptcy. You could go and cancel bad contracts. You could improve terms. So it's actually been a very healthy process for them for the launching point they're at now. So I think the same thing happened with Capital A. When they were going through their period in COVID, they basically went to people and said, look, we're going to file bankruptcy unless you do A, B, and C. And they restructured their whole cost structure. And now Capital A is triply as profitable as it was at the same time, at the same load size they were back in 2019. So clear media... has been by no means impaired. And in fact, the businesses and the structure and their deals have been enhanced over this period of time. So in terms of how quickly that launch proceeds, first of all, it will be more profitable quicker because of the deals they had in place and because of unprofitable leases that were jettisoned and others that were signed up. And remember, this new consortium includes the Chinese government, so licensing becomes, you would imagine, more favorable and the ability to get things lined up for the digitization rollout. So when we first invested, you know, we invested $75 million. We thought it was the perfect timing. It was the depths of COVID. We paid five times normalized EBITDA. So the day we bought it for $75, we thought it was worth $150. Today it's on our books for $50 because we've, you know, just been prudent taking write-downs. There's been currency over time. So we think that when you saw the last from the first time we bought it, It was a very, very quick snapback. It was recovering very quickly. And then the second wave of COVID hit, and then the zero COVID policy was enacted, so it shut everything down. So we can't predict with precise timing how fast it recovers, except to say that right now they're seeing the strongest demand recovery to date. I think you're going to see a rapid recovery, and you're going to see a focus, an accelerated focus on digitizing the panels, which obviously increases revenue and profitability dramatically. So very excited about that going forward. Right partners, companies in a perfect position in the economy, and that business has now got a hurricane at its back, and we're very excited about it going forward.

Just with regarding to timing, Surinder, You have to remember, when the mobility restrictions were lifted, it was December and January. As those lifted, you know, it's been widely reported that the COVID outbreak substantially increased for the early part of the first quarter. And that kind of led people to kind of, you know, hunker down and to get through that period. So it was really only in March. where we started to see normal activity, normal mobility, people getting back out, people getting back to work. And the marketing dollars will clearly follow that, and they have been. So there are current active marketing plans that are getting put back in place. And clearly, Clear Media is a huge beneficiary to that. So, you know, the timing is, I would say, uncertain to get back to normal, but we're certainly on a very, very strong trajectory starting in March and flowing through into the second quarter.

Thank you. And then one or two more quick ones. Moving on to Tradex here. When I think about the revenue profile and the transformation that the business has been going through, would you say that on a run-rate basis that all SQL platform sales have stabilized at this point?

I think just so everyone has a little background, and I know we've touched on it, but just to kind of remind everybody, Tradex started last year on a full speed ahead, buy as much inventory as you can, limitless supply, limitless financing available. You know, ramp up revenues as fast as you can. You know, it was following the exact trajectory of an exciting tech play. They raised $12.5 million at more than double the valuation we paid, and they were targeting a raise there, you know, additional money, and they were using all that money to load up on inventory, anticipating sales into these new corridors. So suddenly the music stopped in the middle of the year. The tech funding just shut off for everybody. The used car market went through a pullback. Everything kind of froze, and Tradex was forced to adjust their model. They had to go through a period of liquidating inventory, just refocusing their model on no longer speculating. They wanted to get to a point where we had the proper credit facility in place, which we now do, and focus on riskless transactions, transactions that are not reliant on price moves up or down. So where we are today, after all of that change, and we mentioned we have a new CEO starting. We have a COO who's been fantastic, who's migrated to the CEO position on the first, and Ryan is focusing on business development. And as such, we're seeing some very strong traction in Nigeria, for example, where we're seeing the highest margins we've ever seen there and significant volume. So in terms of normalization, we stop focusing on volume. We focus on profitability. We got the right credit facility in place. We cut costs where necessary. It's a very asset-light model now. We're 100% funded by the credit facility. Transactions are only done when there's a buyer and seller, and it's riskless for Tradex. So that resulted in us getting to this kind of launching pattern and launching point, I think, from a revenue standpoint. The company's projecting a dramatic increase in those revenues, but we're much more concerned to focus on just maintaining profitability and growing it, and we see a clear path there. So I would say definitely stabilized, now focusing on growth again and the right type of growth, and we're very excited, and I think that they're on the right path now.

And any color on the new margin profile versus the old in terms of the differences in the business model?

You know, we want to give a lot more color on these subsidiaries. I think we're trying to be prudent and let these kind of mature for a couple quarters before we start to give numbers. But I'll say that, for example, in some of the territories we've opened, we're seeing margins as high as 20%. And that's a significant increase from the type of margins we're seeing in just kind of like Canada, U.S., for example. So I think what's evolving here is is a very specialized market that they've opened up that nobody else is transacting in. For example, Nigeria is a great example. Nigeria, people are paying as much as $450,000 for a G-Wagon over in Nigeria. The process of getting a G-Wagon into Nigeria is impossible almost for most people, but Tradex spends a lot of time and money partnering with the right people in Nigeria to getting the proper government approvals and getting that window open to where they can now do significant volume there. So there was a cost to get there. There were some missteps, but they righted that. And I think the margins for us, Steve didn't believe them at first. And so we were pretty stunned to see what they're doing. Hopefully, if they maintain that, we're going to have a very profitable company.

Thank you. That's it for me.

Thanks, Spencer. Thank you. Next question, we have Brian Morrison with TD Securities. Please go ahead.

Good morning. Maybe I can do a little bit higher-level questions here. Just in terms of the acquisition or, pardon me, the closing of the acquisitions of Tough Ropes and Bizetta, it sounds like all of your free cash flow from these acquisitions will go towards M&A. Will any of that be repatriated back to the parent company?

You know, we'll do that as needed or if we want to, but our current plans are to grow these businesses and use the cash flows to continue to grow them. We have, as we mentioned, a couple acquisitions, for example, that are underway. Both of those anticipate being 100% debt, but you never know. Going forward, there might be ones that require equity. There are some capital investments we're making to grow these businesses. So in the meantime, we plan on keeping the cash in the subs Some of them are also restricted by debt covenants, as you know. So there's some periods of time where you can't take dividends even if you wanted to, but we're not planning to. So we're budgeting ourselves so that we can spend a couple years growing these businesses, keeping their internal cash flow there, and at the same time have enough capital to aggressively buy back our stock and obviously maintain our other businesses and be available for other opportunities that may arise.

Okay. I want to get to your buyback in a minute, but Can I just ask a question on tough ropes with respect to the status of the financing? Is it in process? Is it delayed because of the underperformance of tough ropes, the demographics, geographics, where it's located? Maybe just update us on the status of the financing.

Well, there's no real underperformance of tough ropes. There was the delays that were associated with the There was a period, for example, of two weeks where we weren't allowed to transact or buy or sell any product because we didn't have the proper licenses. So there was no concern about underperformance there. We're in very advanced discussions on a debt deal for Tough Roast. I wouldn't be concerned about it. I would just say that these companies and banks are committing to us, and it's like a marriage, and they want to know who they're marrying. The activism stuff that came out was not helpful. It definitely delayed things a little bit. We rectify that, and we're very confident that we'll close a transaction for Tough Ropes that is on our terms and the proper terms. We're not in a rush. We want to do it right. We anticipate that being in the $100 million range, and we're definitely confident that that will take place.

Phil, I'm actually using the wording out of your slide deck. In terms of the Tough Ropes and Bizetto, can you just expand upon what your relationship is with Paladin?

Sure. I'm glad you asked because there's been a lot of misinformation out there about Paladin. I'd love to set the record straight. So Paladin was referred to us by one of our board members who has a long, successful track record in private equity. He told us that he knew a group that had two deals under exclusivity that were exactly what we were looking for, but they had a non-compete until the time was April 1st, and so they couldn't raise any funds to finance these transactions. So they were left with two deals that they were likely going to lose. And they fit the bill exactly. When we met with them, they were very like-minded, very smart guys, long track record, primarily at Castle Harlan, a great history and track record of success in private equity deals. And in fact, their two most successful deals happen to be in India and in the chemical business in Europe. So it was really, their expertise was very valuable in those respects. We went and did the diligence on these deals. We were very excited about them. We knew that these guys needed the capital. So the deal, we think we made a great deal for AMIA, and there's been a lot of value add from Paladin since. First of all, they had been scouring the world for part of their jobs to scout the world for M&A opportunities for these acquisitions, which they've been doing. They've brought us a I would say at least five potential targets for each of these entities. They brought us Tough Ropes, which had never been in the market. These are deals that we're not out competing with Blackstone. We're not going into auctions. We had to find opportunities that AMIA could take advantage of that preferably other people didn't have access to. So Tough Ropes, they spent almost three years courting the management of Tough Ropes to get them to sell. So this was a deal that wasn't available to the general market. They brought it to us. We jumped in in the seventh inning, and we took advantage. With Bezzetto, for example, Bezzetto was going to auction themselves, and then you saw the debt markets in Europe froze. You saw raw materials skyrocket. You saw fuel prices skyrocket, and it was pulled. And we saw that as an opportunity, swept right in, made a deal. I think we paid a lot less than they would have gotten otherwise. And even by the time we closed, things had stabilized. We had a competitive situation. debt situation. We got a great deal there. Raw material prices have been dropping. Fuel prices have been dropping. The supply chain is stabilized. So the Paladin relationship is one that provided us these opportunities. They had these deals. The deal that we made with them was and is different than I think a lot of people interpret. For starters, the fee that they get is nominal. They receive a fee, a few hundred thousand dollars a year per deal They have a long list of duties to help us with on those deals, and we're a small team. So, you know, for example, we're not spending our time scouring, you know, every orifice of the world for M&A opportunities. They are. They've helped us a lot on the ground in India, bringing the right personnel in to help us with tough ropes. They have their chemical expertise to help us with the Zetto. So they're doing a lot of service. And for such a small team that, Amy, we're three people, basically, it's almost like an extension of our, Our management team at these holdings, they live and breathe these deals. They have the right, as we've said, to buy up to 20% of each. They can't cherry pick. They can't do one or the other. They can't do 12% of one and 18% of the other. It's all or nothing on both. So, you know, that's important that we're aligned that way. They have to, if they do purchase that 20%, they pay us an 8% warehousing fee, and they only have a year to do that. So we get paid 8% on that. And then they receive a carried interest of 20%, but only after we've received an 8% compounded annual return. So it's a very productive relationship, very helpful to us. The value add they bring is very much worth the money we spend and would spend. And we're very excited about the relationship. And going forward, I think they're going to add a lot more value than they would cost us.

Okay. Thank you for clarifying that. If I can turn to your cash position. It looks like you have $50 million on hand pre-your tough ropes financing, pre-liquid assets. Should we expect to see some monetizations of your liquid assets in the near term? And then you're in CIB. It's not going to get you to your $100 million target. Just your thoughts on other potential return of capital to shareholders.

Sure. So once we close the tough ropes debt transaction, we'll be in the range of kind of $250 million. um, of, of, uh, available kind of, when you talk about liquid investments, um, these are readily saleable securities, including capital A. So, you know, we're, we're, uh, we're at 200 million, um, without reaching into some of those pockets. So we're confident that we're going to have plenty of cash to execute when we need to execute. Um, and yes, we, we, we will monetize those, um, when, when when the time is right. I think AirAsia, for example, capital A has a lot of upside. So we want to let that run. But, you know, we're not looking to be long-term investors in airlines either. So, you know, those are at the top of the list of liquidations. We shut down one of our SPVs. You should expect us over time to be liquefying those types of investments and to be selling the minority stakes we own when the time is right. and focusing on the cash flowing businesses and redeploying into that. I think we've learned and the market has told us clearly that they don't want to value these minority investments. It's hard to because they don't have enough information. We don't blame them. And we don't need to focus our resources on opaque investments that people can't value. So going forward, you're going to see us redeploying this capital into either deals that enhance and expand the current two businesses we just purchased, or you might see a third. But it will share the same characteristics and cash flow type of pre-cash flow generation that you're going to see from these two. In terms of the buyback, we obviously think our stock is extremely undervalued, and we would like to aggressively buy it back as rapidly and as sizably as we can. I think it's the NCIB, which you mentioned, renews in June. Beyond that, there are other buyback mechanisms we would employ. I think when you talk about return of capital, as long as the stock price is anywhere near where it is now, buybacks are far more preferable to us than dividends and to our stakeholders. So we're going to utilize this mechanism as quickly as we can, and then we will focus on other mechanisms such as SIBs or direct issuer bids. Appreciate the call.

Thanks, Brian. Thank you, and there are no further questions. I'll turn the call over for any closing remarks.

Thank you, everyone, for joining today's call and webcast. I wish you a great rest of the day. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.