A&W Revenue adds 46 new restau­rants to roy­alty pool

Stockwatch Daily - - CONSUMER SERVICES & CURRENT EVENTS - Ms. Su­san Senecal re­ports

A&W REVENUE Roy­al­ties In­come Fund and A&W Food Ser­vices of Canada Inc. have con­firmed that, ef­fec­tive Jan. 5, 2019, the num­ber of A&W restau­rants for which roy­al­ties are paid to A&W Trade Marks LP will be in­creased by 46 new restau­rants that were opened across Canada be­tween Sept. 8, 2017, and Sept. 6, 2018, less ei ght res tau rants that were per­ma­nently closed dur­ing this pe­riod. The ad­di­tion of these 38 net new restau­rants brings the to­tal num­ber of A&W restau­rants in the roy­alty pool to 934. Since the in­cep­tion of the fund in 2002, the num­ber of restau­rants for which roy­al­ties are paid to the fund (through the part­ner­ship) has in­creased by 349 restau­rants (from 585 to 934). “We are very pleased to be adding 38 net new A&W restau­rants to the roy­alty pool,” com­mented Su­san Senecal, pres­i­dent and chief ex­ec­u­tive of­fi­cer of A&W Food Ser­vices. “A&W Food Ser­vices has opened over 115 new A&W restau­rants across Canada in the last three years. We are de­lighted with this pace of growth, par­tic­u­lar in On­tario and Que­bec, which are our most im­por­tant growth mar­kets.”

The es­ti­mated an­nu­al­ized sales of the 46 new A&W restau­rants be­ing added to the roy­alty pool on Jan. 5, 2019, are $62,283,000 and an­nual sales for the eight per­ma­nently closed restau­rants were $4,795,000. The net es­ti­mated an­nu­al­ized sales of $57,487,000 from the 38 net new restau­rants trans­late into es­ti­mated net ad­di­tional an­nual roy­alty pay­ments to the fund of $1,725,000 on the ba­sis of the roy­alty of 3 per cent of sales. The con­sid­er­a­tion for the es­ti­mated net ad­di­tional roy­alty revenue is $21,844,000, rep­re­sent­ing 80 per cent of the con­sid­er­a­tion payable for such net ad­di­tional roy­alty pay­ments, cal­cu­lated by dis­count­ing the es­ti­mated ad­di­tional roy­al­ties by 7.5 per cent and di­vid­ing the re­sult by the yield on units of the fund. This con­sid­er­a­tion will be paid on Jan. 5, 2019, by is­suance of 627,514 lim­ited part­ner­ship units of the part­ner­ship, which will im­me­di­ately be ex­changed for 1,255,028 non-vot­ing com­mon shares of A&W Trade Marks. These ad di tional shares of A&W Trade Marks are ex­change­able at the op­tion of A&W Food Ser­vices for 627,514 lim­ited vot­ing units of the fund, sub­ject to the ap­proval of the Toronto Stock Ex­change.

The fund and A&W Food Ser­vices also an­nounced to­day that the ac­tual sales of the new restau­rants added to the roy­alty pool on Jan. 5, 2018, have now been de­ter­mined. The ac­tual an­nual sales for the 42 new restau­rants added on Jan. 5, 2018, were $63,783,000, com­pared with the orig­i­nal es­ti­mate of $55,642,000. As a re­sult, the re­main­ing 20 per cent of the ini­tial con­sid­er­a­tion, or $5,198,000, has now been paid to A&W Food Ser­vices by is­suance of 149,063 LP units at a price of $34.87 per unit. Ad­di­tional con­sid­er­a­tion of $3,989,000 has also been paid to A&W Food Ser­vices in the form of 114,409 LP units also at a price of $34.87 per unit, as the ac­tual sales ex­ceeded the orig­i­nal es­ti­mate. The 149,063 LP units and ad­di­tional 114,409 LP units have been ex­changed for an ag­gre­gate of 526,944 non-vot­ing com­mon shares of A&W Trade Marks. These ad­di­tional non-vot­ing com­mon shares of A&W Trade Marks are ex­change­able at the op­tion of A&W Food Ser­vices for 263,472 lim­ited vot­ing units of the fund, sub­ject to the ap­proval of the TSX.

The growth of the roy­alty pool re­flects the con­tin­u­ing strength and suc­cess of the A&W brand. The fund’s cur­rent an­nu­al­ized dis­tri­bu­tion rate is $1.716 per unit.

We seek Safe Har­bor.

Mike Caswell con­densed this news re­lease ([email protected]­watch.com).

Richard Neil McKer­racher, John Ross McLer­non, Hugh R Smythe

(AW) Shares: 12,504,673

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