31 March 2021

Duke Royalty Limited

("Duke Royalty", "Duke" or the "Company")

Duke Royalty Exits Investment in River Cruising Vessels

Duke Royalty Limited (AIM: DUKE), a provider of capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce that it has exited its investment in three river cruising vessels through the sale of its wholly-owned subsidiary, Duke Royalty Switzerland Gmbh ("Duke Switzerland"), to Starling Fleet Holding AG ("Starling").

Overview

·     Headline cash consideration of €11.6 million plus interest, providing Duke with additional liquidity for new deployments of typical royalty investments into long-established, profitable businesses;

·     Payment to be made in three tranches, ending 30 June 2023;

·     Starling has a large fleet of 22 modern river cruise ships operating on major European inland waterways.

Transaction Overview

The Purchase Price will be structured as a secured loan (the "Vendor Loan Note") which will be paid out in three separate instalments as follows: (i) €5.0 million to be paid on 30 September 2021 (the "Initial Payment"), (ii) €4.0 million to be paid on 30 September 2022, and (iii) the final €2.6 million payment to be made on 30 June 2023. As of 30 September 2021, the Vendor Loan Note will bear interest at a rate of 3 per cent per annum until 30 September 2022, with the interest rate increasing to 6 per cent per annum thereafter. The headline cash consideration of €11.6 million plus €300,000 of interest will lead to an expected total cash consideration of €11.9 million. The Vendor Loan Note will also be secured by a first ranking mortgage on each of the three vessels, namely the Carmen, the Verdi and the Rigoletto. Upon the Initial Payment, the first ranking mortgages on the Carmen and Verdi will be replaced with second ranking mortgages behind a maximum of €5.5 million of secured debt, with the first ranking mortgage on the Rigoletto remaining in place.

Background

Temarca B.V. ("Temarca"), a Duke Royalty Partner since 2017, operated multi day riverboat cruises along the Rhine and Danube rivers since 1997. In April 2020 virtually all European river cruising voyages were cancelled in the wake of the first wave of the Covid-19 pandemic. Duke immediately worked with the owners of Temarca from April 2020 to evaluate the unprecedented set of circumstances facing the European river cruise industry. By the end of summer 2020, with the knowledge that the pandemic could disrupt the river cruise industry for the foreseeable future, it became clear that the best solution for Duke was to take direct ownership of Temarca's three wholly owned river cruise vessels where Duke held first ranking mortgages. In November 2020, Duke, through Duke Switzerland, took ownership of the vessels through asset purchase agreements entered into with Temarca.

Post-ownership transfer, the Company assessed all options to preserve long-term investment value for Duke shareholders. The sale of the vessels allows Duke to redeploy the cash consideration in its core corporate royalty investment model and is preferable to direct ownership of assets with uncertain short term cash flow prospects. The sale results in Duke generating a -2.0% IRR based on a total investment of €15.0 million into Temarca.

About Starling Fleet Holding AG

As a "white label provider", Starling offers their fleet of river cruise ships for charter under transportation contracts or bareboat charter contracts to national and international tour operators. Depending on the preferred contract model, the company provides not only the ship itself but also the management services required for operation, including nautical and technical support as well as the hotel and catering management. Starling also acts as a financing partner for new ship construction projects or brokerage of second-hand purchases of river cruise ships.

Neil Johnson, CEO of Duke Royalty, said:

"While trading across the majority of our investments stabilised less than a year after the start of the Covid-19 pandemic, the unprecedented impact of the pandemic has had an ongoing impact on the river cruising industry. We are, therefore, pleased to be able to exit this investment with a cash sale. This transaction draws a line under our exposure to the European river cruise industry and allows the Company to redeploy the proceeds from the vessel sale into future royalty opportunities."

This announcement contains inside information.

***ENDS***

For further information, please contact www.dukeroyalty.com, or contact:

About Duke Royalty

Duke Royalty Limited provides capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team provides financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long-term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.