Pizza Pizza Royalty Income Fund adds 45 restaurants to Royalty Pool



    TORONTO, Jan. 24 /CNW/ - Pizza Pizza Royalty Income Fund (the "Fund") and
Pizza Pizza Limited ("PPL") today announced that effective January 1, 2008,
the pool of restaurants (the "Royalty Pool") on which royalties are paid to
the Fund by PPL will be increased to include the royalties from 36 new
Pizza Pizza restaurants and nine new Pizza 73 restaurants. The Royalty Pool
will decrease by eight non-traditional Pizza Pizza restaurants which were
closed during the year. Of the 36 new Pizza Pizza restaurants opened between
January 1, 2007 and December 31, 2007, 12 are traditional restaurants and
24 are non-traditional locations. The nine Pizza 73 restaurants are comprised
of eight traditional restaurants and one non-traditional location opened on or
before September 1, 2007. With the addition of the 37 net, new restaurants,
royalties are now paid to the Fund on 609 restaurants in the Royalty Pool.
    The Fund owns the Pizza Pizza and Pizza 73 trademarks and trade names
used by PPL in its restaurants. In 2005, the Pizza Pizza trademarks and trade
names were licensed to PPL for 99 years, and in return PPL pays the Fund a
6% royalty on the Pizza Pizza Royalty Pool system sales. In 2007, the Fund
licensed the Pizza 73 trademarks and trade names to PPL for 99 years, and in
return PPL pays the Fund a 9% royalty on the Pizza 73 Royalty Pool system
sales.
    Annually, on January 1 (the "Adjustment Date"), the Royalty Pool is
adjusted to include the forecasted system sales from new Pizza Pizza
restaurants opened on or before December 31 of the prior year, less system
sales from any Pizza Pizza restaurants that have been permanently closed
during the year. Similarly, on the Adjustment Date, the Royalty Pool is
adjusted to include the forecasted system sales from new Pizza 73 restaurants
opened on or before September 1 of the prior year, less any Pizza 73
restaurants permanently closed during the calendar year.
    At each annual Adjustment Date the number of equivalent, Class B and
Class D Units held by PPL is adjusted in accordance with a formula which
determines the Class B and Class D Exchange Multipliers for the upcoming year.
The formula and terms are defined in the Pizza Pizza Royalty Limited
Partnership Agreement ("Partnership Agreement"). The formula, designed to be
accretive to current Unitholders, is based on the forecasted sales from new
restaurants less sales from any closed restaurants, multiplied by the royalty
rate, divided by the yield of the Fund's units, discounted 7.5%. On January 1,
PPL is entitled to receive 80% of the calculated, equivalent units and
distributions thereon, with the balance of equivalent units to be determined
when the full year's sales of the new restaurants have been verified by an
independent sales audit.
    On the current Adjustment Date, January 1, 2008, the Class B Exchange
Multiplier is adjusted based on the 2008 forecasted, system sales for the 28,
net, new Pizza Pizza restaurants, estimated to be $7,987,000. The Class D
Exchange Multiplier is adjusted based on 2008 forecasted, system sales for the
nine new Pizza 73 restaurants, estimated to be $7,450,000.
    In exchange for adding the 37 net, new restaurants to the Royalty Pool,
PPL has received 399,357 additional Class B equivalent units and 558,750 Class
D equivalent units. These units represent 80% of the full Class B and Class D
entitlements (499,196 and 698,437 units, respectively, represent 100%), with
the balance to be received when the 2008 sales performance is known with
certainty.
    Including the 958,107 exchangeable units described above, PPL owns
equivalent, exchangeable units equal to 21.5% of the Fund's fully diluted
units.

    
    Table 1 - Summary of Pizza Pizza Royalty Income Fund Outstanding and Fully
Diluted Units:

                                                                    Issued &
                                                                 Outstanding
                                                                       units,
                                                                Exchangeable
                                                  Issued &        Equivalent
                                               Outstanding           units &
                                                units, and       Holdback of
                                              Exchangeable      Exchangeable
    Units outstanding & issuable on             Equivalent        Equivalent
     December 31, 2007                               units             units
    -------------------------------------------------------------------------
    Public float                                21,818,392     21,818,392
    Class B units held by PPL                    4,908,915      4,908,915
    PPL Additional Class B units -
     Holdback as of December 31, 2007                  N/A        122,427 (1)
                                              -------------------------------
    Fully diluted units                         26,727,307     26,849,734
                                              -------------------------------
                                              -------------------------------

    Units outstanding & issuable on
     January 1, 2008
    -------------------------------------------------------------------------
    Public float                                21,818,392     21,818,392
    Class B units held by PPL                    4,908,915      4,908,915
    PPL Additional Class B units -
     Holdback as of December 31, 2007              122,427        122,427 (1)
    Additional PPL Class B equivalent
     units as of January 1, 2008  (80%)            399,357        399,357 (2)
    Additional PPL Class B equivalent
     units - Holdback as of
     January 1, 2008 (20%)                             N/A         99,839 (3)
    Additional Class D units issued to
     PPL on January 1, 2008 (80%)                  558,750        558,750 (2)
    PPL Additional Class D units -
    Holdback as of January 1, 2008 (20%)               N/A        139,687 (4)
                                              -------------------------------
    Number of fully diluted units               27,807,841     28,047,367
                                              -------------------------------
                                              -------------------------------

    Proportion of all units outstanding
     available for exchange by PPL                    21.5%          22.2%

    (1) 20% holdback of Exchangeable Units from net 30 restaurants added to
        the Royalty Pool on January 1, 2007. Actual number of Exchangeable
        Units will be determined in early 2008 effective January 1, 2007,
        once audited sales of net 30 restaurants are known.

    (2) Exchangeable Units available January 1, 2008

    (3) 20% holdback of Exchangeable Units from 28 net Pizza Pizza
        restaurants added to the Royalty Pool on January 1, 2008. Actual
        number of Exchangeable Units will be determined in early 2009,
        effective January 1, 2008, once audited sales of the net
        28 restaurants are known.

    (4) Holdback of Exchangeable Units from 9 net Pizza 73 restaurants added
        to the Royalty Pool on January 1, 2008. Actual number of Exchangeable
        Units will be determined in early 2009, effective January 1, 2008,
        once audited sales of the 9 restaurants are known.
    

    %SEDAR: 00022262EF




For further information:

For further information: Curtis Feltner, Chief Financial Officer, Pizza
Pizza Limited, Telephone: (416) 967-1010, cfeltner@pizzapizza.ca; Christine
D'Sylva, Investor Relations, Pizza Pizza Limited, Telephone: (416) 967-1010,
cdsylva@pizzapizza.ca; Web: www.pizzapizzaroyaltyincomefund.com and
www.pizzapizza.ca

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PIZZA PIZZA ROYALTY INCOME FUND

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