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Good morning, ladies and gentlemen. Welcome to Crown Capital's Q2 2021 Results Conference Call. Please note that today's call contains forward-looking statements within the meaning of the applicable Canadian securities legislation. Forward-looking statements involve known and unknown risk and uncertainties as well as other factors that may cause actual financial results, performance or achievements to be materially different from estimated future results, performance or achievements expressed or implied by those forward-looking statements. For a description of the risks associated with Crown's business, please refer to the company's filings for Q2 2021 at sedar.com. Following the call, we'll conduct a question-and-answer session. I would now like to turn the conference over to Mr. Chris Johnson. Please go ahead, sir.
Well, thank you, operator, and good morning. Thank you, everybody, for attending, and welcome to today's call. I'm joined as usual by Mike Overvelde, our Chief Financial Officer. Given the changes that happened last quarter and the progression of the business, we thought we'd use a slide deck. So for today's presentation, we'll have a webcast presentation. The materials are available on our website at www.crowncapital.ca to log into or download the presentation.It's been an active period for the business, and we felt that it was important to look at how we're performing against strategic priorities and build on the disclosure pieces we reported this morning and our call from last quarter. So for those of you who've been following Crown for many years, you'll understand the transition of the business has undergone since the IPO.Building on our deep history of mid-market lending, beginning in 2018, we began the process of diversifying the new financing platform such as power, where we could own a portion of the operating businesses and earn new fee streams acting as a multi-asset manager. In doing so, we increased our addressable market and added new diversified sources of recurring revenue. This has been an investment characteristics that's familiar to us in our lending business for nearly 2 decades.Fast forward to early 2020, last year, we introduced a revised direction we've been hard at work at since that time. As you'll recall, the changes in response to a number of factors, including the economic uncertainty we were operating in and like many companies, publicly traded companies, with large investment portfolios, we were trading at a significant and persistent discount to our underlying net asset value. At that time, our trading value was much less than 50% of our book value.In particular, it was clear that our alternative corporate finance investments, while they were performing loans and generate healthy income for us, we're not being properly valued by the public markets. So we set out 2 main priorities that you'll see here. First, reposition the balance sheet. We are shifting to a capital-light business model, reducing our exposure to loans-based investments and improving the efficiency of our capital. Freed up capital is being redirected to growth initiatives, paying down debt and being returned to shareholders. Second, we continue to expand and diversify our platform to focus on recurring revenue assets and asset-light businesses. We want a much greater proportion of our total earnings coming from operating businesses. A simple objective is growth of earnings per share. We believe that over time, earnings per share growth, a diversified set of operating businesses is the best path to long-term value creation. It's not an easy transition nor a quick one, but we'll be moving consistently towards these objectives over the last year. We anticipate 2021 would be a year of accelerated progress, and this has been the case.In terms of the balance sheet repositioning, a lot has been accomplished in recent quarters. The progress can be seen in 3 main areas. One, we are reducing our exposure to alternative lending, building on the sale, our investment in Crown Partners Fund in Q1.We previously announced the divestment of the majority stake of our fund management business, along with a portion of our investment in the fund. We've worked alongside the new ownership group for many years. I believe that this new structure will provide a superior platform for the benefits of our corporate clients, institutional investors and investment professionals. For Crown, this transaction provides meaningful liquidity to support strategic initiatives. With the Q1 sale, we generated proceeds of more than $20 million and reduced our ownership interest in the fund by 11% to 28%. As we disclosed, with the transaction, Crown has retained 100% of the performance fees earned from this fund, which, as of the end of Q1, had an accrued value of $7.2 million. In addition, as Mike will expand on, this has allowed us to significantly reduce our operating expenditures.The second area we made headway is returning capital to shareholders. We've used the NCIB for several years now. And in the second quarter, we initiated a substantial issuer bid, which closed in late July. Over the past year, we repurchased approximately $5 million worth of shares and reduced our shares outstanding by 10%.The third way we've improved the balance sheet is by reducing debt. Again, since last year's Q2, we've reduced debt in the 2 credit facilities meaningfully. The balance of the fund facility is now down to roughly $15 million and the core facility is down by -- more than $15 million in the core facility, down by more than $20 million over the same period.As we look to our remaining investments in alternative lending, the Crown Power Fund -- sorry, correction, the Crown Partner Fund, which is where a meaningful amount of our capital is, it's at around $218 million in the quarter with 10 investments in it. Our remaining investment is approximately $52 million compared to $75 million a year ago. We managed this fund through a challenging cycle, specific issues, yet the all-weather nature we have always touted has been able to generate and maintain a gross IRR of over 13% to date.The specifics are in our MD&A, but as a general statement, the portfolio is in good condition. We have some strong performance in the fund, and our expectation will see material prepayments in the next 12 months. Consistent with our strategy, the unwinding and divestment of these investments will result in repatriate a significant amount of capital. Regardless of the prepayments, there's a natural runoff as these loans mature, shown here on this schedule, the schedule maturities that illustrate the point.The second key priority is to expand and diversify our platform. Today, we have 2 primary platforms that our network services distribute power, which we entered into 2019 and 2018, respectively. Both have the attributes we are looking for, including recurring revenue through long-term contracts with high-quality counterparties as well as good long-term industry fundamentals. While our near-term focus on these 2, we will also look to other markets that exhibit similar characteristics.I'll review the network services business first. As a quick recap, we entered this market in 2019 through the acquisition of WireIE and expand our footprint in 2020 with the acquisition of Galaxy Broadband. In 2021, we leveraged the collective teams of Galaxy and WireIE to and create a third company called Community Network Partners.What we saw then and this has been reinforced over the last 12 months, is the long-term opportunity to better connect private enterprise customers, government entities and communities in underserved areas. The majority of incumbents are generally not focused in these smaller markets.While still early days, this business has had an encouraging start. Network services revenue increased to $6.9 million in Q2, or 52% of total revenue, up from $1.9 million in Q2 2020 and $6.4 million in Q1 2021. The year-over-year increase reflects recognition of 2 full quarters of revenue from Galaxy on our acquisition in September of last year as well as organic growth.We also have a growing pipeline of more than $80 million of new projects and which includes 100 -- greater than 100 community network partnership opportunities. The end customers here are generally government agencies, resource companies and remote communities. The group is focused on converting more of these opportunities and continue to scale. As our investments grow, we will continue to raise commitments from third-party investors to fund the future growth of this asset class.Just to give you a couple of examples of the type of work our partners are involved in. We have 3 examples on this page here, ranging from remote camp work through 2 mines and some First Nations communities, which are all examples of growth areas. We have multiple customers in these, but we're also seeing a number of our pipeline customers in these asset classes as well. See the slide is frozen on my screen. I'm not sure others have seen that. But someone can maybe go past that one to get to distributed power. Okay, I'll go, you'll see me advancing.So turning to distributed power, we talked about the market opportunity a fair bit in the past and thesis remains largely intact, and many businesses are not getting reliable or affordable power supply and distributed generation addresses this need. It's proven technology and has attractive investment characteristics, including the long-term contracts that generate recurring revenue with significant downside protection.We've created a new business line here and that's probably -- we had some challenges and headwinds along the way. We do have live products that are serving as reference customers, and we believe that will help accelerate future sales. Today, we have 5 projects in operation and another 600 in development. We also have a significant pipeline of over $125 million.On the next page here, we have a few examples of actual projects in the fund, including multi-residential buildings, energy gas plants -- and sorry, I can't see the last one here right now, and a commercial operation. In all cases, we have long-term power purchase agreements. And as I've mentioned, with the network services, considerable opportunity to grow in each of these verticals.So if we can progress to the Slide 12, we're in the process of winding down our -- through the process wind down our PenEquity Mill Street loans. We've acquired pieces of those businesses and are working those through to liquidity. So during 2021, we acquired the 3 residence developments comprising essentially the principal remaining properties of PenEquity. These included 2 commercial retail developments, one being Stoney Creek and one being in London and one high-density multiresidential development in Barrie.Also during the quarter, we acquired Lumbermens Credit Group, it's an Ontario-based construction credit reporting company, in exchange for some cash and some debt assumption from Mill Street. These are assets we believe can generate significant value for our shareholders. We've taken them on at fairly low points of their valuation, reflecting the environment we took them over in. And we think by some time to stabilize the assets nurture and grow them, we'll create significant value for our shareholders.So with that, I'll turn the call over to Mike.
All right. Thanks, Chris. Good morning, everyone. Our press release and full financials for the quarter were filed yesterday evening. So my remarks here will be fairly brief. As usual, I'll start by talking about revenues. We reported a total revenue of $13.1 million in Q2, that's compared with $13.3 million a year ago.So a similar level, but a much different composition of revenue, much less driven by investment gains this year and supported by a much higher contribution for more recurring network services revenues. Interest income was lower year-over-year, consistent with trend and consistent with the theme of our strategic shift away from capital-intensive investment activity.Interest income earned by Crown Partners Fund declined in line with the reduction in average interest yielding investments in that fund. We no longer earn interest through Crown Private Credit Fund as it no longer holds any interest-generating assets. And interest income from Crown Power Fund, while still fairly small, the mix was up almost threefold year-over-year to $750,000 in the quarter.A key highlight, which Chris called out, was the continued growth of the network services platform in terms of both revenue stream and operating profit. The segment represented more than 50% of total revenue in the quarter and generated $2.6 million and $4.7 million of income before income tax, financing charges and depreciation and amortization in Q2 and year-to-date, respectively. So put it another way, this relatively new operating segment of Crown generated EBITDA at an annualized rate of $9.4 million in the first half of 2021.And as mentioned earlier, the net investment gains represented less of a contribution to Q2 earnings this year or revenues, I should say. In fact, it was a net investment loss of $0.8 million in Q2 of 2021 compared with a net investment gain of $3.4 million in Q2 of 2020.Moving on to Slide 14 and turning to our bottom line results. We did have a net loss of $0.3 million in Q2. It's mainly due to the $0.8 million net investment loss I just mentioned and to a provision for credit losses of $1.8 million. Overall, our net loss this quarter was an improvement year-over-year, and our year-to-date net income of $1 million is better than the $2.8 million loss recorded in the first half of last year.In addition to our IFRS earnings, just as a reminder, we do also disclose, as always, adjusted funds from operations, or AFFO, which make several adjustments to reported earnings to exclude things like financing costs, amortization, unrealized gains and provisions for credit losses.A full description and reconciliation to earnings can be found at the end of our MD&A. And in Q2 of 2021, we earned AFFO of $3.2 million, at $0.36 per basic share compared with $3.6 million or $0.38 per basic share in Q2 of 2020. And in the first half of this year, we earned AFFO of $7.7 million comparable to 2020.Total assets increased to $332.5 million at quarter end, that compares with $326.2 million at the end of December. As Chris mentioned, during the quarter, we acquired 100% of the equity of PRC Barrie Corp and 100% of Lumbermens credit group. Both transactions were primarily in exchange for portions of the remaining balances outstanding on our loans to PenEquity and Mill Street, respectively. And you'll find full details on how these impacted our financial results in Notes 13 and 14 of our Q2 financial statements.I'd note that the net impact of the acquisition of the net assets of PRC Berrie in particular was to increase each of our total assets and total liabilities, mainly due to the addition of the full $13.6 million value of the Berrie property to property under development and the addition of $9.2 million of related mortgage loans to liabilities.So to be clear, the fact that our total assets increased in Q2 is not contrary to our intention to become more asset-light rather it reflects a grossing up of assets and of liabilities as we continue to restructure our PenEquity investment, resulting in the conversion of portions of that loan investment into the full consolidation of asset heavy real estate entities.Total equity at quarter end was $81.5 million. It's $9.05 per basic share. That's up from $81.2 million or $8.98 per share at the end of 2020. As Chris mentioned, our SIB closed in early July, resulted in the repurchase of approximately 560,000 shares at $5.50 per share, which in itself has already been accretive to our book value per share coming into Q3.And finally, I'll just make a quick comment to reiterate that our liquidity and leverage have both improved significantly, including the impacts of the carve-out transaction involving the credit fund management business in July that Chris discussed. That transaction raised proceeds of $16.3 million, which was used to partially repay our corporate level credit facility, which, as of today, now is $8.4 million outstanding on a total commitment of $20 million.We were also able to use cash to settle the SIB transaction in July, leaving us with a still comfortable level of cash in the bank today. And as prepayments and repayments of loans are received in Crown Partners Fund, which is our near-term expectation. And once the fund level credit facility has been fully repaid, any excess proceeds will be distributed to limited partners of the fund, including Crown, and that will only further improve our leverage and liquidity.With that, I'm going to turn it back to Chris for some closing remarks.
Okay. Well, great. Thanks, Mike. So clearly, it's been a fairly active quarter and first half of the year as we've advanced our strategic priorities. We've made particularly significant steps to bring capital back from the fund as well as positioning and growing our network services business.As we look ahead to the rest of 2021, we have fairly clear sight to additional catalysts and developments that are in line with strategic plan and confident that this is the right path for the company. We certainly appreciate your support as we navigate this transition period.Our entire teams and Board and management guided by the belief that actually in the strategy will emerge a more capital-efficient diversified business to larger market opportunity and higher earnings. So we look forward to update you in time months, and so we'll turn the call up for questions at this time.
[Operator Instructions] Your first question comes from Chris Murray from ATB Capital Markets.
Just I guess my first question is around the Partners Fund. And so Chris, just looking at this. So I know you guys have sold the fund and you no longer control it. But is it your expectation that there'll be no more new loans generated in the fund. Is that the best way to understand it? So it is a pure run-off type situation?
Correct. Spirit is fully -- we've -- even before being sold, we notified the LPs, we're in progressing the harvest mode. So we're not making any new investments.
No. Okay. So that just cleans that idea up. And then I'm just trying to think about what the company looks like when we see the Q3 report. And just kind of an understanding about how to think about this. So -- and Mike, maybe this is maybe a question more for you.So you're going to have, I guess, a carried interest in the Partners Fund. You've got the telecom business, which you have, as you said, kind of -- you've always shown that as an operating company. And then I guess you have the power fund, which might be showing some interest income.So just help me understand, because it's always been kind of complicated because there's always been consolidations and things like that to understand. What does the company look like on a go-forward basis in terms of being functional? And I think my real -- the end goal of this question is to understand how do we judge or how should we be thinking about financial performance on a go-forward basis, given your comment about wanting to focus on growing EPS?
Okay. So a few, I guess, things to touch on there. First of all, we've yet to really nail this down, frankly, with our auditors. But our expectation is that we'll be able to begin deconsolidating the Crown Partners Fund going forward, which, if that happens, will certainly clean up the amount of disclosure and the level of disclosure to make it a lot easier for readers such as yourself to sort of see what's happening there.Because as we go forward, no longer being managers of the funds, we're participating in this as an investment, and that's an investment that will have a declining balance, and we would much prefer to be able to present it as such and have you track it accordingly.In terms of the businesses themselves, outside of that, you're right, we -- it will look a lot the same as what we have now, except that's where the capital will be reallocated to the extent that it is reallocated. So on the network services side, we have -- there are -- there is management in place in the operating businesses there.Lumbermens, there is management in place in the operating business, and that's consolidated. And PenEquity, while we now have full ownership of the entities that own these projects. That's a fairly sizable and well-functioning organization with its long-standing management.So gradually, what you're seeing is Crown as an entity morphing a little bit more into, I guess, for lack of a better phrasing, almost a holding company in structure with its various kind of divisions. Power Fund, of course, is still managed by us, and we are very close to each of these operating companies on a go-forward basis.From a disclosure point of view, as power -- as the Partners Fund, I should say, and lending activities in general, diminish and ultimately, to the point of not even being in our mix, we will be increasing the level of segmented information that we'll be providing on each of these various lines of businesses.Not yet sure how extensive that will be in Q3 versus Q2. But that's definitely our goal, and it's inevitable as we continue down this path. So I'm not sure if I answered your questions in full there, Chris, or not. But if not, just feel free to follow up.
Yes. No, I think what I'm trying to understand, Mike, and I appreciate the fact that it's still early days and there's a lot of moving parts here because in a lot of ways, I agree with you. It's sort of like you're going to be ending up as a holding company of a number of different items.And whether it's -- we're looking at EBITDA in the telecom business or the -- or it's the valuation of the book value of the fund, which is going to be challenging to see. But I guess the other part of the question was about why focus on kind of like the driving of the EPS number as opposed to something like a cash flow number or something like that? Or is it just kind of -- it's just a way to anchor to a metric and move from there?
Honestly, like we would prefer -- and I think I can speak on behalf of Chris as well as myself, we would prefer to increasingly be measured on more of a cash flow EBITDA type metric. I mean the fact of the matter is we're not -- if you look at the mix of our assets and businesses, we're not fully in a place where you can look at us holistically that way.The network services businesses, really, that's the only way, I think, to look at them. Something like Lumbermens, It's very asset-light in nature, small in the mix. But that is an EBITDA contributor out of the gate and will continue to be. I guess as we go through this period of strategic transition, we do have things like these real estate assets that, as Chris pointed out, we think there's an awful lot of potential to add value from the point we're at.And so you shouldn't be considering these to be things that we would be looking to liquidate at first opportunity, they're going to be with us for some time as we work through these, Those are not necessarily EBITDA generative. So you're going -- so it gets you back to a position where you probably have to look at us as a collection of various assets. But increasingly, we're trying to get to the point where those assets will be EBITDA generative, at least the ones that are growing in the mix.
Chris, just to your question, EPS versus EBITDA, for example, given our near-term objectives and recent history of buying back shares, we expect that number to continue to decline. So therefore, we're getting -- it's not just what's happening on the top line, the numerator -- the denominator that's changed.
All right. That's fair. And then just the other question I got for you is in terms of the real estate holdings and your comment about just the development of those. Is it fair to think that those things will be subject to most of the normal real estate rules where we'll see -- you'll get an appraisal valuation and just write up or down the value of the assets just on a regular basis, even if we're not seeing kind of earnings come off of them? Is that a way to think about it?
I think this is a -- that's -- yes, we'll get appraisals, Mike, I think you need to -- I don't have the answer in terms of how it's going to grow through our financing.
In terms of how the -- well, so the -- because we consolidate these entities and their assets are not held at fair value, we'll be capitalizing I guess, any incremental investment to the balance. I don't know to what extent we'll be able to or position to present, call it, fair value updates. on those real estate assets since they're not carried at fair value. So I think we'll have to do our best to communicate where we think that value sits relative to the carrying value. But again, these are -- these will be carried at book value.
[Operator Instructions] Your next question comes from Trevor Reynolds from Acumen Capital Partners.
Just wondering about the deployment runway for the network services division, where that kind of fits?
Well, we have, as I mentioned, there's dozens of projects we're working on right now, and we have a pipeline that, like an active work in pipeline of $80 million. And then there's also acquisitions we're targeting working towards maybe bring that up over $40 million. So it's -- now that's total project value.So that would be not all equity, so wouldn't be all Crown's money for starters. And then secondly, it's eventually over time, that's not all spent in 2021. It's committing the project, it might get built over the next -- maybe as much as 2 years. So that would -- we would see that transition to a fund type of structure as well.
What could we be looking for then, I guess, in 2021 in terms of a reasonable deployment number?
Well, I think right now, with projects that are late stages. We're well into the $20 million, $25 million of projects that are actually committed right now. And then it's just the function of what else gets signed up. So I don't -- can't really give you a more specific answer. It's still early days in some of these communities.
That's fair. That's fair. And then when would you expect to start seeing revenue generated from those projects?
Well, revenue -- given that we own developers is generated right when we start working on the projects. So there's development fees that get earned. So that -- we'll see some of that in 2021. And then like if you kind of break it down there, that's the first thing to hit you and then you end up getting some we'll learn some -- as an investor, we do capitalize some interest that goes through the build process and then ultimately get paid a recurring revenue for our own in the network.So that's -- those all kind of happen as the project gets built and then turned on and then ultimately what's on then we earn network manager fees, like service fees for that as well. So it's sort of steadily able to build an amount of fee income we generate all of that.
Okay. And then on the distributed power side, maybe just kind of where that fits that. I know you got 11 kind of total projects in total with what you have on stream and in construction, is that steadily growing today? Or is that flat lined for now? I know there was some changes in the market activity, just curious where that sits today.
Yes. So I think it's taken a bit of a pause. The -- like I think we mentioned in previous call, like the Canadian federal government's carbon tax certainly made doing natural gas-fired generators in certain markets more difficult, being Ontario, in particular. It hasn't impacted in Alberta as much. But we had a number of projects that were late stage or even close to underway, and those are not proceeds. It goes directly into the price of natural gas and that affects fuel costs. And if we were bearing it and it was our customers bearing, and they pulled the pin on those ones.We have signed up since then a number of multiunit residential buildings. That's one where we're able to get a very high efficiency of the project and use the natural gas -- we're basically displacing natural gas with natural gas. So we're not really in the same carbon tax situation. And Alberta is -- it's from what we're doing is displacing grid sales that are primarily produced by more carbon-intensive generation than what we're putting on.So we would have a very limited impact on certain of those projects. So we're still seeing that market being pretty viable and a number of larger projects that I think are going to be closed this fall. That will put us kind of right back to where we want to be with this thing. But in terms of the general commercial growth that we were contemplating and working towards in Ontario, that's not happening anytime soon.
Got it. Okay. And I know that the U.S. was also, I hope they are in terms of expanding, is that still on the table?
Yes, for sure. We -- it's -- you got -- I guess, a lot of work has been done on that. It's not like we're in a position to sign up deals right away. You've got -- our developers that have been building relationships with the, call it, the hands and feet part of the business that turn righteous and install stuff and keep it running. So those relationships are being established in the markets we're moving into. But the U.S. is a much more viable market policy-wise than Canada is for this type of generation.
Got it. And then pro forma, the sale of lending business, what is your kind of total deployable capital today? I understand there's additional available through the fund on the power side, but just curious for the network side and just Crown as a whole, what do you think you have as deployable capital today?
Well, just maybe working backwards is we have identified that we're earmarking $25 million, the same number for power. We've kind of placed held debt now for network for a little bit. We don't intend to deploy a lot more of corporate capital into those assets. And we may use some of the capital to do more of the M&A side of things where we're buying the developers as opposed to funding projects.So that's one where we think we can get very good returns on equity doing that. We don't really have a budget for that. We know we have a lot of capital coming back. We feel that we have more capital coming back than we can deploy. So we've said we're still looking at additional buybacks and additional deleveraging where it makes sense.But yes, we have -- I don't know if the exact number matters as much anymore because we have enough to fill up our commitments we've made to the 2 platforms we have, and we feel we have more than enough to contribute to the growth. And just a question of timing and how much of the money coming back, we'll look to have further returns of capital to shareholders.
Got it. And then are you guys able to provide kind of a run rate, either revenue or a fund, a number right now?
Yes. I think Mike gave you a bit of that. Mike, do you want to just repeat some of the numbers you kind of -- if you annualize?
Yes. And I apologize, I couldn't hear the last word that you said, referring to run rate on the network services?
Well, yes, just as the business as a whole, as you see it with interest coming from the funds alternative lending still. Just kind of where are your run rate? Like is Q2 a good drop to moving forward or obviously counting to what you've changed in the working interest, right?
I see what you're saying. In terms of the -- okay, so if you take a step back, the interest -- and it sounds like you're talking about the company overall. Yes, so our working interest has fallen from -- to 28% in the fund, in Partners Funds.So if you -- if -- I don't have all the numbers handy, but if you go through that MD&A, we do break out each revenue type by contribution. And so anything that we -- that you saw come through to us this quarter, and in terms of interest revenue, right, from Crown Partners Fund, that you would just simply notch that back proportionately, right, from 36.5% to 28%, and say that's the run rate. That's the run rate now.As we get loans repaying, right, then that would proportionately come down because on balance, the loans are all similar level of interest contribution. You'll notice that -- looking at that -- the MD&A breakdowns, there were virtually no fees that have come from Crown Partners Fund this quarter. And I think in recent quarters, because we earn fees really in a few different ways, one of which is -- the primary way is when you make new loans.And of course, we're not making any new loans. You make them -- you can make fees when you're sort of restructuring and managing loans along the way. But things have been fairly static recently as conditions have improved in the portfolio. So we're not -- there's not a lot of fees there. But as you get repayments, there will be some potentially significant fees coming through there. So that one you can't really peg a run rate on, that will just happen as it happens with repayments.Network services, I think what you're seeing in the quarter is probably a better run rate than call it just year-to-date. Things are progressing quite well. We actually have some nice growth expectations, but we're I'm going to stop short of giving a growth forecast there, but that's representative of what we're earning today. And in terms of gains and losses, those are what they are. They tend to be choppy by nature, but we think we're in a pretty good place right now with the portfolio when it comes to that line going forward.
Got it. And then those remaining 6 projects on the power side, they'll start contributing at what point you expect?
It's fairly -- it's truly even, like there's not like there's a bunch of them all -- I think some of them are very, very close a month away and maybe in a week or 2 away and some might take another 6 months, but they're all progressing at different rates.
Your next question comes from [ Ashiv Lalani ], a private investor.
First of all, I just want to thank the management team and the Board for providing the liquidity to shareholders who clearly needed it. It's a great opportunity for us to create value for the rest of the shareholders. So thank you for that.And secondly, I just wanted to ask about the network services business and you saw the business, how would you describe the total ROIC over the lifespan of these contracts? Like how should I think about it? Should I think about it as an annuity or are there other end dates to these contracts that would have to be -- it has to be reinvested put it in at some point?
So we have a prepared number of different contracts. So it's not like there's one answer to that, like we would -- and I don't -- there's a range. I don't want to get into exactly that, given it's -- it is competitive out there. But I would just say like from an unleveraged standpoint, you're comfortably into the double digits category.So we're able to generate reasonably -- and these assets lend themselves to reasonably good leverage. So you're into the -- depending on where you put it, you might have some cost to run your high teens on the equity front to do them. We would have some contracts that are fairly fixed in life. Like that might be 2, 3, 4 years, 5 years kind of thing, and maybe supporting a commercial customer for limited life.In the satellite business, in fact, you might have some customers you're springing them on a very transitional basis, like a 3-month -- 2-, 3-month basis. But I can tell you in the satellite business, we've had some customers for almost 2 decades, some mines that are entirely dependent upon satellites for their communications.The community projects are geared to be sort of not less than 10 years and more likely 30-year contracts where you're putting in fiber to the home to the business. And that's expected to be the state of the art firm for many, many years. And so it's -- your question to amortization is, it really depends. Like you doing a microwave contract that might be there 3 years. You're trying to get all your money back plus return in that period if you're doing a fiber you're probably not using 30-year amortizations, we're using at least 15. And you're taking a much longer view of the cash flows.
Are there any public comps that we can look at for either of the businesses?
Not that really jumps to mind. Like in a way, it's somewhat the thesis we have that we're targeting markets through it as a gap, and there is a series of -- and the gap is when you got an industry that's generally being supplied by large incumbents, but you've had a change of technology or something, there's been some kind of disruption that's been occurring and then you have these smaller or private companies that are able to become players because of that change.And it's the power industry like we're going up against the local distribution companies, the regulated part of the marketplace and obviously, massive companies with massive balance sheets and I don't think it's a reasonable comp. And in the telecom, you going up against the traditional incumbent carriers. And there are smaller companies out there doing it, but they're not public.I don't really think there is -- I would just say you did fall under that. We have a fair bit of experience with just companies and what's going on with valuations. I would say that the recurring revenue companies tend to fall at the higher end of the valuation spectrum. So that's where our benchmark is. We won't find exactly a network services company, per se, as you comp.
There are no further questions at this time. I'll turn it back to Chris.
Okay. Well, I didn't have much else to add. So again, I appreciate the active Q&A today. And as always, please reach out to us if you want to talk further about these issues. Thank you, everyone.
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