MONCTON, NB, March 6 /CNW/ - PDM Royalties Income Fund (the "Fund") (TSX:
PDM.UN) announced that as of January 1, 2007 six new restaurants comprised of
four Scores and two Pizza Delight restaurants, opened during the period
October 3, 2005 through October 2, 2006, will be added to the royalty pool on
which the Fund earns royalty revenue. The sales from these six new restaurants
will generate an estimated $12.3 million in sales. The pool of restaurants
will decrease from 267 locations to 261, reflecting the closure of 12
underperforming restaurants with annual sales of $7.5 million.
The net increase in sales of approximately $4.8 million will generate an
estimated additional $400,000 in annual royalties for the Fund. The Fund will
compensate Pizza Delight Corporation Ltd. (PDC) for this increased revenue
stream based on a formula set out in the Licence agreement. There is a 7.5%
discount applied to the value of the revenues which provides added value to
the existing unitholders. The consideration to PDC will represent the
equivalent of 259,366 units increasing the retained interest by 3.2%. This
amount will be adjusted at December 31, 2007 once the actual sales for the new
restaurants are determined.
In addition, the adjustment to the January 2006 addition of restaurants
to the royalty pool has now been finalized. The actual annual sales for 2006
for the nine new restaurants added on January 1, 2006 were $5.8 million
compared to the original estimate of $6.1 million. Due to the sales shortfall,
the estimated unit entitlement decreased from 166,287 to 157,627.
The net impact of these changes increases the retained interest held by
PDC to approximately 1.2 million units which is 14.8% of the Fund, excluding
units purchased recently by PDC as disclosed in the Normal Course Issuer bid.
In the last 4 months, two Scores, one Pizza Delight, and two Baton Rouge
restaurants have opened and several more are currently under construction.
Although new restaurant growth was slower than expected in the last two years,
management is anticipating a significantly improved situation in 2007.
PDM Royalties Income Fund (the "Fund") is a limited purpose open-ended
trust established under the laws of Ontario. The Fund makes monthly
distributions of its available cash to holders of units. The Fund indirectly
owns the trade marks and intellectual property for the Pizza Delight(R),
Mikes(R), Scores(R) and Baton Rouge(R) brands and has licensed them to PDC in
consideration for a royalty equal to 4% of system sales for Pizza Delight and
Mikes, and in the case of Scores and Baton Rouge, the royalty rate is 6%.
PDC is a privately owned corporation, headquartered in Moncton, New
Brunswick. It operates franchised and corporate restaurants under the brand
names Pizza Delight, Mikes, Scores, and Baton Rouge restaurants. Pizza Delight
operates primarily in Atlantic Canada, where it dominates the family/mid-scale
segment. Mikes and Scores restaurants operate primarily in Quebec in the
family and casual dining segments and the take-out and delivery segments.
Baton Rouge has operations in Quebec and Ontario in the high end casual
For further information:
For further information: PDM Royalties Income Fund: William Lane, CMA,
Chief Financial Officer, (506) 853-0990, firstname.lastname@example.org; Or visit our
web sites: www.pdmfund.ca, www.pizzadelight.ca, www.mikes.ca, www.scores.ca or