/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/
Toronto Stock Exchange: AW.UN
VANCOUVER, June 5, 2019 /CNW/ - A&W Revenue Royalties Income Fund (the "Fund") (TSX: AW.UN) and A&W Food Services of Canada Inc. ("Food Services") announced today that Food Services has completed a secondary bought deal offering of units of the Fund (the "Offering") under an agreement with a syndicate of underwriters led by CIBC Capital Markets and including BMO Nesbitt Burns Inc., National Bank Financial Inc., Scotia Capital Inc., TD Securities Inc., Laurentian Bank Securities Inc., Canaccord Genuity Corp., HSBC Securities (Canada) Inc., GMP Securities L.P. and Raymond James Ltd. (collectively the "Underwriters"). The Underwriters purchased 1,560,000 units of the Fund ("Units") from Food Services at a purchase price of $44.55 per Unit (the "Offering Price") for gross proceeds to Food Services of $69,498,000 (including 100,000 Units and gross proceeds of $4,455,000 as a result of the Underwriter's partial exercise of the over-allotment option at closing).
The Fund and its unitholders will not receive any proceeds from the Offering. Food Services will today distribute an aggregate amount of approximately $61 million of the net proceeds of the Offering to its long standing shareholders. Food Services paid the expenses of the Offering, other than the Underwriters' expenses.
Prior to the closing of the Offering, Food Services owned securities exchangeable for 4,997,603 Units (the "Exchangeable Securities"), representing approximately a 28.6% indirect interest in the Fund on a fully-diluted basis. Food Services only exchanged the number of Exchangeable Securities needed for the number of Units sold pursuant to the Offering. Following the closing of the Offering, Food Services now owns Exchangeable Securities indirectly exchangeable for 3,437,603 Units of the Fund, or approximately a 19.6% indirect interest in the Fund on a fully-diluted basis. Food Services will file an early warning report in connection with the Units it sold under the Offering.
The Offering was made pursuant to a short form prospectus dated May 29, 2019 and filed with securities regulators in each of the provinces of Canada (other than Québec), a copy of which is available under the Fund's profile at www.sedar.com.
There is no change in the total number of equivalent Units outstanding and no change in the amount of cash available to pay distributions as a result of the Offering. The first distribution that purchasers of the Units acquired under the Offering will be entitled to receive is the distribution expected to be paid on or about June 28, 2019 to unitholders of record on or about June 15, 2019.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of the prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state, province or jurisdiction. The Units have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or compliance with an applicable exemption from the registration requirement under U.S. securities laws.
About the Fund
The Fund is a limited purpose trust established to invest in A&W Trade Marks Inc. ("Trade Marks"), which through its interest in 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 A&W 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. A&W 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. Additional limited partnership units ("LP units") are issued to A&W Food Services to reflect the annual adjustment. A&W Food Services' additional LP units are exchanged for additional shares of Trade Marks which are exchangeable for units of the Fund. The 17th annual adjustment to the Royalty Pool took place on January 5, 2019 at which time the number of restaurants in the Royalty Pool increased from 896 to 934.
A&W Food Services owns 19.6% of the common shares of Trade Marks, and therefore owns the equivalent of 19.6% of the units of the Fund on a fully-diluted basis.
Trade Marks' dividends to A&W Food Services and the Fund, 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.
Forward Looking Information
Certain statements in this news release may contain forward-looking information within the meaning of applicable securities laws in Canada (forward-looking information). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Specific forward-looking information in this news release includes statements related to: the expected use of proceeds of the Offering; and the statement that Food Services will file an early warning report in respect of the Units sold in the Offering. The forward-looking information is based on assumptions that management considered reasonable at the time it was prepared. The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations include, without limitation, those factors described in the Fund's most recent Management Discussion and Analysis under the heading "Risks and Uncertainties" and the Fund's Annual Information Form under the heading "Risk Factors", available on SEDAR at www.sedar.com. The forward-looking information contained in this news release represents the Fund's and Food Services' expectations as of the date of this news release, and is subject to change after this date. The Fund and Food Services each assumes no obligation to update or revise any forward-looking information, except as required by applicable law.
SOURCE A&W Revenue Royalties Income Fund