VANCOUVER, Dec. 20 /CNW/ - A&W Revenue Royalties Income Fund (the Fund) (TSX symbol AW.UN) today announced the results of its previously announced substantial issuer bid (the Offer) to purchase from unitholders for cancellation 2,500,000 of its outstanding units (Units) at a price of $20.00 per Unit. The Offer expired at 11:59 pm (Vancouver time) on Friday, December 17, 2010.
Based on reports provided by the depositary, a total of 2,588,663 Units were validly deposited and not withdrawn under the Offer. As the aggregate number of Units deposited under the Offer exceeds 2,500,000 Units, a pro-rata factor will apply such that unitholders who deposited Units will have approximately 96.6% of the Units they deposited purchased.
The number of Units deposited to the Offer and the pro-rata factor may be subject to adjustment should unitholders who delivered notices of guaranteed delivery fail to deliver certificates for such Units within the required time period or should there be any other Units invalidly deposited. Units deposited but not purchased, including Units invalidly deposited, will be returned as soon as practicable by the depositary to the depositing unitholder.
Take-up and payment for the Units accepted for purchase will be made as soon as practicable in accordance with the Offer.
The Units to be purchased under the Offer represent approximately 17% of the Units outstanding on a fully diluted basis as at December 17, 2010. After giving effect to the purchase of the Units, approximately 8,254,373 Units, and securities exchangeable for a further 3,968,528 Units will remain outstanding. Of the Units to be purchased pursuant to the Offer, approximately 2,414,373 will be purchased from A&W Food Services of Canada Inc. (Food Services), resulting in Food Services' interest in the Fund decreasing from approximately 43% of the Units on a fully diluted basis to approximately 32%.
As a result of the purchase of the Units under the Offer, distributable cash available for distributions to unitholders is expected to increase by approximately 10.1 cents (8%) per Unit per annum. Therefore, subject to completion of the purchase of Units under the Offer, the Trustees of the Fund have approved an increase in monthly distributions to unitholders to 11.7 cents per Unit per month, from the current rate of 10.6 cents per Unit per month. The new monthly distribution rate will be effective January 1, 2011 and will be payable as and from February 28, 2011. A&W Trade Marks Inc. (Trade Marks) will pay dividends to Food Services on its investment in Trade Marks at the same rate.
The full details of the Offer are described in the Fund's offer to purchase and issuer bid circular dated November 12, 2010 as well as the related letter of transmittal and notice of guaranteed delivery, copies of which are available on SEDAR at www.sedar.com.
About A&W Revenue Royalties Income Fund
The Fund is a limited purpose trust established to invest in Trade Marks, which through its interest in the A&W Trade Marks Limited Partnership (the Partnership), owns the A&W trade-marks used in the A&W quick service restaurant business in Canada. The A&W trade-marks comprise some of the best-known brand names in the Canadian foodservice industry. In return for licensing Food Services to use its trade-marks, Trade Marks (through the Partnership) receives royalties equal to 3% of the sales of A&W restaurants in the Royalty Pool. Food Services is the second largest quick-service hamburger restaurant chain in Canada. Operating coast-to-coast, A&W restaurants feature famous trade-marked menu items such as The Burger Family, Chubby Chicken and A&W Root Beer.
The Royalty Pool is adjusted annually to reflect sales from new A&W restaurants, net of the sales of any A&W restaurants that have permanently closed. The limited partnership interest of Food Services is increased each year to reflect the annual adjustment. Food Services' limited partnership interest may be exchanged for additional shares of Trade Marks which shares are exchangeable for Units.
Trade Marks' distributions to the Fund and to Food Services, and the Fund's distributions to unitholders are based on top-line revenues of the A&W restaurants in the Royalty Pool, less interest, general and administrative expenses and current income taxes of Trade Marks, and are thereby isolated from many of the factors that impact an operating business.
Food Services today declared a dividend of $43.9 million on its common shares payable to its shareholders on or before January 1, 2011.
Certain statements in this report may be forward-looking in nature. Actual results may differ materially from those expressed or implied in these forward-looking statements. The forward-looking statements are based on assumptions that management considered reasonable at the time they were prepared. These forward-looking statements are subject to a number of risk factors, including general economic and business conditions, unemployment, harmonization of sales taxes, financial and political instability, changes in income tax laws or their application to the Fund and other factors disclosed previously and from time to time in the Fund's public filings Forward-looking information is provided as of the date hereof and, except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.
Additional information relating to the Fund is on SEDAR at www.sedar.com and on the Fund's website at www.awincomefund.ca.
SOURCE A&W Revenue Royalties Income Fund
For further information: For further information:
Don Leslie, Chief Financial Officer: (604) 988-2141 or firstname.lastname@example.org