Good morning, ladies and gentlemen, welcome to the Aimia Inc. first quarter 2023 results conference call. At this time, all lines are in a 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 12th, 2023. I would now like to turn the conference over to Albert Matousek, Head Investor Relations and Communications. Please go ahead.
Thank you, Brian, and welcome everyone to this morning's call. Today's presentation is available on SEDAR 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 Matousek, Head of IR and Communications. With me on the call today are speakers Phil Mittleman, Aimia's CEO, Michael Lehmann, 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. Good morning to everyone on the phone and webcast today. We are pleased to announce the successful closing of the Bozzetto and Tufropes transactions, as well as the Bozzetto 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 ninth, Aimia closed the Bozzetto transaction and the associated debt financing at the subsidiary level. Aimia invested CAD 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 Aimia.
We look forward to working with this remarkable management team as they continue to grow this business organically and through strategic acquisitions. It is in advanced discussions with a potential target in the Americas. On March 17th, we closed the Tufropes transaction and acquired 100% of the company for CAD 239.2 million. Following this acquisition, the leadership team has actively engaged with customers, suppliers, and employees. 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. Tufropes 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 CAD 318 million of investable cash and liquid securities, a diversified portfolio of holdings that we believe are poised to deliver strong results in 2023. The company has tax losses of approximately CAD 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, Aimia utilized CAD 130 million of capital losses to repatriate a portion of the PLM gains. Turning to our holdings. Clear Channel is seeing a sharp recovery in demand beginning in its second quarter of 2023 as China emerged from its COVID lockdowns, we expect Clear Channel to accelerate the digitization of its panel portfolio.
TRADE X's enhanced asset-light model is achieving some of the highest gross margins to date. TRADE X projects a return to EBITDA profitability by the third quarter of this year. Eric Gosselin, currently the COO, will be named CEO on June first as founder Ryan Davidson focus on business development. Kognitiv's new CEO, Tim Sullivan, is overseeing the launch of its new AI-powered product, Kognitiv Pulse, which has been met with industry-wide praise and excitement. Kognitiv 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, Kognitiv 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, Phil, and good morning to everyone. As announced earlier this week, we closed the Bozzetto transaction and the associated debt financing. Aimia invested CAD 206.3 million for an equity stake of 94% of the company. We're very pleased to have Bozzetto's executive management team invest CAD 13.3 million of their proceeds alongside Aimia into this new investment venture, which represents a minority position of 6%. This investment provides for further alignment with Aimia and our shareholders. Concurrent with the closing, we secured debt financing of CAD 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 CAD 19.1 million.
Excluding the transaction cost of CAD 12.3 million and accounting for cash on hand of CAD 14.2 million, the enterprise value at closing was CAD 333 million, representing approximately 7x fiscal 2022 pro forma adjusted EBITDA. For the fiscal year 2022, Bozzetto reported revenue of CAD 320.6 million and adjusted EBITDA of CAD 45 million. Including the recent Lovaco transaction that closed at the end of 2022, pro forma annual revenue was CAD 335.3 million, and adjusted EBITDA was approximately CAD 47 million. Given the Bozzetto acquisition closed after this quarter ended, the results of Bozzetto have not been recorded in Aimia's financial statements for the quarter. Bozzetto 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 Bozzetto'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 accretive acquisitions. On March seventeenth, we closed the Tufropes transaction for CAD 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 client. In addition, Tufropes 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, Tufropes reported adjusted EBITDA of $5 million on revenues of $25 million. As previously disclosed, Tufropes 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 31st, 2023, Tufropes achieved revenue of approximately CAD 114.3 million and adjusted EBITDA of CAD 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-close 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 Tufropes in line with our general strategy of reasonable leverage on our operating assets. Moving on to Clear Media.
Clear Media 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. We expect Clear Media to rapidly accelerate their digital panel conversions in 2023. Moving on to TRADE X. TRADE X 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.
TRADE X 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 Kognitiv. In the first quarter, revenues from continuing operations were CAD 11.5 million. Adjusted EBITDA from continuing operations was a loss of CAD 5.6 million, a significant improvement of CAD 4 million from a loss of CAD 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 towards positive EBITDA by year-end 2023. We would also like to welcome Jon Ott, an executive with deep experience in enterprise sales, who has recently joined as Chief Revenue Officer at Kognitiv. Next up is Capital A.
Capital A, formerly AirAsia, continues to experience a strong rebound in all four of its businesses. In Q4 of 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 of 2019. However, EBITDA is 108% of Q4 2019, 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. 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 Bozzetto and Tufropes. 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 CAD 14.1 million, compared to a loss of CAD 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 CAD 10.8 million, interest, dividend, and other investment income of CAD 7.2 million, and revenue of CAD 2 million, mainly associated with the 14-day stub holding period of Tufropes. Our total expenses were CAD 33.2 million for the quarter, which included a number of non-recurring expenses. These included transaction costs of CAD 11.6 million, non-cash costs of CAD 10.8 million related to the Paladin carried interest and option rights, activism related costs of CAD 1 million, and accelerated amortization of an intangible asset for CAD 1.1 million.
Excluding these items, total expenses were CAD 7.3 million, of which CAD 3.4 million were related to the Tufropes business for the 14-day period held since acquisition, where we have no comparables versus the prior year. Accounting for all these items, total expenses were approximately CAD 4 million, which is in line with the prior year's quarter. For the holding segment, corporate operating expenses were CAD 5.4 million in the quarter, up by CAD 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 CAD 505 million. The main movements in the quarter were CAD 256 million used to fund the Tufropes acquisition.
This funding was offset by working capital adjustment to derive our CAD 239 million net consideration. It's been funded by the sellers by having liquid mutual fund securities of CAD 17 million, which are being converted to cash in the second quarter. CAD 8.9 million of transaction costs were related to the Tufropes acquisition and CAD 4.7 million of holdco costs. We also had the CAD 3 million of dividends and the CAD 1.3 million of Part VI.1 tax. Moving on to the pro forma unrestricted cash and liquid securities to reflect the Bozzetto acquisition as of March 31st, 2023.
We had CAD 318.6 million prior to the Bozzetto acquisition of cash and liquid securities, we ended up funding CAD 206 million to acquire the 94% stake in Bozzetto. In turn, Bozzetto had CAD 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 CAD 126 million post-closing. This liquidity position provides sufficient cash and liquid resources to support the funding of our holdco as well as opportunities to support our businesses or renew the NCIB. Should we conclude financing on Tufropes, we would expect up to CAD 100 million in additional liquidity. 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 Tufropes and Bozzetto. We are very excited to have completed the purchase of these two businesses that 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 Bozzetto and Tufropes investments will form the foundation of the quote unquote new Aimia, 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 upside. 2023 is off to a strong start for our entire portfolio, 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 1 on your touch tone phone. You will hear a 3-tone prompt acknowledging your request. If you would like to withdraw your request, please press the star followed by 2. First question, we have Surinder Thind with Jefferies. Please go ahead.
Thank you. A few questions here related to the portfolio holdings. I'd like to start with Tufropes. Can you provide any additional color on kind of what impacted the timing of customer orders? It sounded like it was a combination of, you know, customers waiting to, you know, feel the deal close. Was there other things here that we should consider, in terms of what is the general outlook for the remainder of the year?
Hey, Surinder. How are you? Yeah, there were registration and licensing issues that we could only take care of after closing. 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. Those are the primary reasons for those issues.
At this point, should we assume that things are operating on a fully normalized basis?
Yes. Yes, we're fully normalized now.
Got it. 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. 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, many of them, you know, validated our thesis, which was that this company had not really been actively marketing their products around the world. You know, one of the customers said, "Well, we hadn't heard from you in two years. So glad you're here because we wanna expand our relationship." We're very excited about what we're seeing there.
Overall, we're seeing the kind of demand that we expected, we're finding opportunities to grow this materially outside of just organic growth. We're also pursuing, as we mentioned, an acquisition in the U.S., which would provide a whole another platform for us here and would also potentially allow us to utilize some of our U.S. NOLs. We're pursuing that as well.
Surinder.
Got it.
Hi, it's Michael Lehmann. It's Mike Lehmann, if I could just jump in a second. 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're 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. The largest of which is maritime and shipping customers. It's really across the board.
We're seeing opportunities that through the due diligence process we highlighted, 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. As Phil said, one of the opportunities is already ongoing and in the works, which is really exciting. Our research and development within the company is examining other ways to continue to participate with new clients as well as develop the new markets that we discussed.
That's helpful. 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 or before that?
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 to get through testing and certification, et cetera. But expanding current wallet share within customers, either direct to customer or distribution channels, we're looking to increase those relationships immediately.
That's great.
That could be over the next several quarters.
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." That couldn't be further from the truth. What you learn about this business is, which is pretty incredible, is that one net will hold up to $20 million worth of fish. You can imagine how important that net is to the person dragging it. If a fish comes and bites a piece of the net off, $20 million worth of fish can fly out your window.
The, the quality of these nets is critical, and when we were diligencing this, what we heard from anonymous professionals, even the competitors were saying, "Look, you know, Tufropes 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. You know, we, when 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'd automate that." And they said, "No, you don't understand. This is a skill set that is so valuable.
You know, tying these nets at the end of these nets. 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 save CAD 14 million worth of the 20 that's gonna escape. I mean, these are huge numbers.
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. 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 on 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 Clear Media 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 went and you could go and cancel bad co-contracts. You could improve terms. It's actually been a very healthy process for them for the launching point they're at now. I think, you know, the same thing happened with Capital A. When they were, you know, going through their period in COVID, they, you know, basically went to people and said, "Look, you know, we're gonna file bankruptcy unless you do A, B, and C." They restructured their whole, you know, cost structure.
Now Capital A is triply as profitable as it was, at the same time, at the same load size they were back in 2019. Clear Media has been by no means impaired. In fact, the business is in the structure, and their deals have been enhanced over this period of time. In terms of how quickly that launch proceeds, first of all, you know, 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. Remember, this new consortium, you know, includes the Chinese government, so licensing becomes, you would imagine, more favorable and the ability to get things lined up for the digitization rollout. 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. The day we bought it for CAD 75, we thought it was worth CAD 150. Today, it's on our books for CAD 50, because we've, you know, just been prudent, taking write-downs, there's been currency over time. We think that when you saw the last from the first time we bought 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. We can't predict, you know, with precise timing, how fast it recovers, except to say that right now they're seeing the strongest demand recovery that, you know, to date.
I think, you're gonna see a rapid recovery, and you're gonna see a focus, an accelerated focus on digitizing the panels, which obviously increases revenue and profitability dramatically. Very excited about that going forward. The right partners, company's in a perfect position in the economy, and that business has now got a, you know, 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. That kind of led people to kind of, you know, hunker down and to get through that period. It was really only in March where we started to see normal activity, normal mobility, people getting back out, people getting back to work. You know, the marketing dollars will clearly follow that, and they have been. There are current active marketing plans that are getting put back in place.
Clearly, that Clear Media is a huge beneficiary to that. You know, the timing is, I would say uncertain to get back to normal, but we're certainly on a very strong trajectory, starting in March and flowing through into the second quarter.
Thank you. One or two more quick ones. Moving on to TRADE X 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 else equal 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. You know, TRADE X started last year on a, you know, 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 a, of an exciting tech play. They raised twelve and a half million at more than double the valuation we paid, and they were targeting a raise there of, you know, additional money, and they were using all that money to load up on inventory, anticipating sales into these new corridors. 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 TRADE X 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 that are not reliant on the price moves up or down. Where we are today, after all of that change, you know, we obviously, and we mentioned we have a new CEO starting, who's been, you know, we have a COO who's been fantastic, who's migrating to the CEO position on the first, and Ryan is focusing on business development.
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. In terms of normalization, we're much more we stopped focusing on volume. We focused on profitability. We got the right credit facility in place. We've got we cut costs where necessary. It's a very asset-light model now. We 100% funded by the credit facility. Transactions are only done when there's a buyer and seller and it's riskless for TRADE X. That resulted in us getting to this kind of launching pattern and launching point, I think, from a we see from a revenue standpoint.
The company's projecting, you know, dramatic increase in those revenues, but we're much more concerned or focused on just maintaining profitability and growing it. We see a clear path there. I would say definitely stabilized, now focusing on growth again and the right type of growth. We're very excited, and I think that they're on the right path now.
Any color on the new margin profile versus the old in terms of the differences in the business model?
You know, We wanna give a lot more color on these, on these subsidiaries. I think it's. 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, 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 significant increase from the type of margins we were seeing, in just kind of like Canada, U.S., for example. I think what's evolving here is a very specialized market that they've opened up that nobody else is transacting in. You know, for example, Nigeria is a great example. Nigeria, the people are paying as much as CAD 450,000 for a G-Wagon over in Nigeria.
The process of getting a G-Wagon into Nigeria is impossible almost for most people. TRADE X spends a lot of time and money, partnering with the right people in Nigeria, getting the proper government approvals and getting that window open to where they can now do significant volume there. You know, there was a cost to get there. There were some missteps, but they've righted that. I think the, you know, the margins for us, you know, Steve didn't believe them at first. He, we were pretty stunned to see what they're doing. Hopefully, if they maintain that, we're gonna have a very profitable company.
Thank you. That's it for me.
Thanks, Hunter.
Thank you. Next question, we have Brian Morrison with TD Securities. Please go ahead.
Yeah, 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 Tufropes and Bozzetto, 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?
Yeah. 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 investment we're making to grow these businesses. In the meantime, we plan on keeping the cash in the subs. Some of them are also restricted by debt covenants, as you know. There's sometimes there's periods of time where you can't take dividends even if you wanted to, but we're not planning to.
We're budgeting ourselves so that we can, you know, 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 wanna get your buyback in a minute, but can I just ask a question on Tufropes with respect to the status of the financing? Is it in process? Was it delayed because of the underperformance of Tufropes, the demographics, geographics, where it's located? Maybe just update us on the status of the financing.
Yeah. You know, there's no real underperformance of Tufropes. There was, you know, the delays that were associated with the closing. You know, 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. There's no concern about underperformance there. We're in very advanced discussions on a debt deal for Tufropes. I wouldn't be concerned about it. I would just say that, you know, these companies and banks are committing to us, and it's like a marriage. You know, and they wanna know who they're marrying. The activism stuff that came out was not helpful. It definitely delayed things a little bit.
we've rectified that, and we're very confident that we'll close a transaction for Tufropes that is on our terms and the proper terms. we're not in a rush. We wanna do it right. we anticipate that being in the $100 million range, and we're definitely confident that that will take place.
Yeah. Phil, I'm actually using the wording out of your, out of your slide deck. In terms of the Tufropes and Bozzetto, can you just expand upon what your relationship is with Paladin?
Sure. You know, this has been... You know, 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. 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're looking for, but they had a non-compete until the time was April first, and so they couldn't raise any funds to finance these transactions. They were left with 2 deals that they were likely gonna 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 of and track record of success in private equity deals. In fact, their two most successful deals happen to be in India and in the chemical business in Europe. It was, it was really, their expertise was very valuable in those, 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. We think we made a great deal for Aimia, 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 job is to scour the world for M&A opportunities for these acquisitions, which they've been doing.
They've brought us, I would say, at least five potential targets for each of these entities. They brought us Tufropes, which had never been in the market. Like, these are deals that, you know, we're not, we're not out competing with Blackstone. We're not going out into auctions. We had to find opportunities that Aimia could take advantage of that preferably other people didn't have access to. Tufropes, you know, they had spent almost three years courting the management of Tufropes to get them to sell. 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 Bozzetto, for example, you know, Bozzetto was going to auction themselves. You saw, you know, the debt markets in Europe, you know, froze. You saw raw materials skyrocket. You saw fuel prices skyrocket. It was pulled. 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. You know, even by the time we closed, things had stabilized. We had, you know, a competitive debt situation. We got a great deal there. Raw material prices have been dropping. Fuel prices have been dropping. The supply chain has stabilized. 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. The fee that they get is nominal. Their fee, the fee is a few hundred thousand CAD a year per deal. They have a long list of duties to help us with on those deals, and we're a small team. For example, we're not spending our time scouring 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 Tufropes. Their chemical expertise has helped us with Bozzetto. They're doing a lot of servicing. For such a small team at Aimia, we're 3 people, basically.
It's almost like an extension of 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. You know, that's important that we're aligned that way. 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. They receive a carried interest of 20%, but only after we've received an 8% compounded annual return. It's a very productive relationship. It's very helpful to us.
The value add they bring is very much worth the money we spend and would spend. We're very excited about the relationship and it's. Going forward, I think they're gonna 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 CAD 50 million on hand pre your Tufropes financing, pre-liquid assets. Should we expect to see some monetizations of your liquid assets near term? Your NCIB, it's not gonna get you to your CAD 100 million target. Just your thoughts on other potential return of capital to shareholders.
Sure. Sure. Once we close the Tufropes debt transaction, we'll have, we'll be in the range of kind of CAD 250 million of available kind of... When you talk about liquid investments, these are readily salable securities, including Capital A. You know, we're at CAD 200 million without reaching into some of those pockets. We're confident that we're gonna have plenty of cash to execute what we need to execute. Yes, we will monetize those when the time is right. I think AirAsia, for example, Capital A has a lot of upside. We wanna let that run. You know, we're not looking to be long-term investors in airlines either. You know, that's...
Those are at the top of the list of liquidations. We shut down one of our SPVs. I mean, you should expect us over time to be liquefying those type 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, the market has told us clearly that they don't wanna value these minority investments. It's hard to, because they don't have enough information. I don't blame them. You know, we don't need to focus our resources on opaque investments that people can't value. Going forward, you're gonna 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.
It will share the same characteristics and cash flow type of free cash flow generation that you're gonna 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, I think, you know, as long as the stock price is anywhere near where it is now, buybacks are, you know, far more preferable for us than dividends and to our stakeholders.
We're gonna utilize this mechanism as quickly as we can, and then we will focus on other mechanisms such as SIVs or or a direct issuer bid.
Appreciate the color.
Thanks, Brian.
Thank you. 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.
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