CALGARY, AB, Nov. 12, 2024 /CNW/ - Crown Capital Partners Inc. ("Crown" or the "Corporation") (TSX: CRWN) today announced its financial results for the three and nine months ended September 30, 2024. Crown's complete financial statements and management's discussion and analysis are available on SEDAR at www.sedarplus.ca.

Q3 2024 Financial & Operating Overview

Crown recognized a net loss of $(2.7) million ($0.49 loss per basic share) in Q3 2024 compared to a net loss of $(1.8) million ($0.32 loss per basic share) in Q3 2023.Adjusted EBITDA1 was $0.8 million in Q3 2024 compared to $0.4 million in Q3 2023 due primarily to improved earnings from the Distribution Services and Network Services segments, partially offset by decreased earnings from the Real Estate, Specialty Finance and Distributed Power segments. For the nine months ended September 30, 2024, Adjusted EBITDA was $4.1 million compared with $3.3 million in the comparable 2023 period, with increased contributions from each of the Distribution Services and Real Estate segments and a reduced Corporate and Other segment loss more than offsetting reduced contributions from the Specialty Finance and Distributed Power segments.Distribution services revenue was $9.1 million in Q3 2024 compared to $8.9 million in Q3 2023. This segment reported a net loss before income taxes of $(0.1) million (Q3 2023 – $(0.4) million) and Adjusted EBITDA of $0.5 million (Q3 2023 - $0.3 million), with the year-over-year improvement attributable to the impact of operational efficiencies implemented throughout 2023 and 2024 and to increased capacity utilization across the warehouses. Capacity utilization was 62% at September 30, 2024, compared with 58% at June 30, 2024, 52% at March 31, 2024 and 42% at December 31, 2023.Network services revenue was $7.0 million in Q3 2024 compared to $7.8 million in Q3 2023, with the decrease due primarily to the continued runoff of customer contracts from WireIE and the conclusion of a large construction-sector contract in mid-Q2 2023, partially offset by modest growth in revenues from Community Network Partners's customers located in Brooks, Alberta. This segment reported a net loss before income taxes of $(0.5) million (Q3 2023 – $(1.1) million) and Adjusted EBITDA of $0.4 million (Q3 2023 - $(0.5) million).Real Estate segment revenue was $1.1 million in Q3 2024 compared to $1.3 million in Q3 2023, with the decrease over the prior-year quarter attributable primarily to the timing of fee recognition. This segment recorded net income before income taxes of $0.02 million (Q3 2023 - net income before income taxes of $0.3 million) and Adjusted EBITDA of $0.1 million (Q3 2023 - $0.4 million).Distributed Power revenue was $0.3 million in Q3 2024 compared to $0.8 million in Q3 2023, with the decrease primarily related to the reclassification of certain power assets as held for sale at the end of 2023 and to the consolidation of the Wilson Creek assets. In addition to softer power prices in the Alberta market, merchant power revenues were lower than expected in the third quarter of 2024 due to the delayed repair of engine coolers, which reduced both available output and runtimes during the period. This segment reported a net loss before income taxes of $(0.3) million (Q3 2023 – net income before income taxes of $0.4 million) and Adjusted EBITDA of $(0.02) million (Q3 2023 - $0.3 million).The Specialty Finance segment recorded net income before income taxes of $0.2 million (Q3 2023 –$0.2 million), representing Crown's share of (losses) earnings of Crown Partners Fund, and Adjusted EBITDA of $nil (Q3 2023 - $0.1 million), representing income distributions received from Crown Partners Fund.Total equity at quarter-end decreased to $19.7 million from $38.2 million at the end of 2023 due to a net loss attributable to shareholders of $(18.5) million, which was driven primarily by Crown's share of the loss of Crown Partners Fund of $(15.1) million with the loss attributable to an unrealized loss recognized by the fund during the period in respect of a loan investment carried at fair value through profit or loss. Total equity per share decreased to $3.52 per basic share from $6.84 per basic share as at December 31, 2023.Since September 30, 2023, Crown has not satisfied certain financial covenant clauses of its credit agreement with its bank. Accordingly, the bank is contractually entitled to request immediate repayment of the outstanding loan in the amount of $14.4 million as of November 12, 2024 and the outstanding balance of $23.9 million as at September 30, 2024 is presented as a current liability. On October 11, 2024, the credit agreement was amended to terminate the $5 million operating loan portion of the credit facility on full repayment on or before October 15, 2024 and to revise the maturity date of the term loan portion of the credit facility to December 31, 2024. The operating loan portion of the credit facility was repaid in full on October 11, 2024. Management is currently in discussions with lenders regarding replacing its current credit facility, however, there is no assurance that such arrangements will become available.As of November 12, 2024, the Corporation had not paid the scheduled interest payment of $1.0 million due on June 30, 2024 in respect of the 10% unsecured subordinated debentures ("Debentures"). Since July 31, 2024, this has constituted an event of default under the terms of the trust indenture that governs the Debentures. On October 18, 2024, the holders of the Debentures approved amendments to the terms of the Debentures to extend the maturity date to December 31, 2026, to amend the interest rates and timing of interest payments and to grant security interest to the trustee for the Debentures. The holders of the Debentures also agreed to waive the default of the Corporation for failure to make the June 30, 2024 interest payment, subject to the Corporation paying such interest by December 17, 2024.As of November 12, 2024, the Corporation had not paid the scheduled interest payment of $0.04 million due on June 30, 2024 in respect of the 10% redeemable secured subordinated debentures ("Subordinated Debentures"). This constitutes an event of default, but the holders of the Subordinated Debentures have not requested immediate repayment.In Q3 2024, Crown's subsidiary, Community Network Partners, received a grant funding payment of $20.3 million for the completion of the second sublot related to its fibre network under the Province of Ontario's Accelerated High-Speed Internet Program.