A&W Revenue Royalties Income Fund

Press Releases

A&W Revenue Royalties Income Fund adds nine restaurants to Royalty Pool

    VANCOUVER, Dec. 15 /CNW/ - A&W Revenue Royalties Income Fund (the "Fund")
and A&W Food Services of Canada Inc. ("Food Services") announced today that,
effective January 5, 2009, the number of A&W restaurants for which royalties
are paid to A&W Trade Marks Inc. ("Trade Marks") will be increased by 17 new
restaurants opened across Canada between October 2007 and September 2008, less
eight restaurants that were permanently closed during this period. The
addition of these nine net new restaurants brings the total number of A&W
restaurants in the Royalty Pool to 685.
    This is the seventh increase in the number of restaurants in the Royalty
Pool since the launch of the Fund in February 2002. Since that time, the
number of restaurants for which royalties are paid to the Fund (through Trade
Marks) has increased by 100 restaurants, from 585 to 685. "We continue to be
pleased with the growth of new A&W restaurants across Canada" said Paul
Hollands, President and Chief Executive Officer of Food Services. "The growth
in both the number of restaurants and our overall sales is a testament to the
strength of the A&W brand."
    The estimated annualized sales of the 17 new A&W restaurants being added
to the Royalty Pool are $19,664,000 and annual sales for the eight permanently
closed restaurants were $4,415,000. The net sales of $15,249,000 from the nine
net new restaurants translate into estimated additional annual royalty
payments to the Fund of $457,000 on the basis of the royalty of 3% of sales.
The consideration paid by Trade Marks to Food Services for the additional
royalty revenue is $3,513,000, calculated by discounting the estimated
additional royalties by 7.5% and dividing the result by the yield on units of
the Fund. The yield is based on the weighted average trading price of the
units of the Fund for the 20 trading days ending October 27, 2008, or $11.39.
The consideration is paid by issuance to Food Services of 308,419 Class B and
308,419 common shares of Trade Marks which together can be exchanged at the
option of Food Services for units of the Fund. The ability of Food Services to
exchange these shares of Trade Marks for units of the Fund is subject to the
approval of the TSX.
    A final adjustment to the number of shares issued will be made in
December 2009 based upon the actual annual sales of the new restaurants. Until
then, twenty percent of the shares will be held in escrow.
    In addition, the actual sales of the new restaurants added to the Royalty
Pool on January 5, 2008 have now been determined. The actual annual sales for
the 52 weeks ended November 2, 2008 for the 23 new restaurants added on
January 5, 2008 were $24,716,000 compared to the original estimate of
$23,156,000. As a result, the 90,092 shares held in escrow will now be
released to Food Services and, due to the sales exceeding the original
estimate, additional consideration of $449,000 is payable to Food Services in
the form of 33,591 Class B and 33,591 common shares of Trade Marks.
    After these amendments to the Royalty Pool, Food Services will receive a
proportionate increase in monthly dividends from Trade Marks, and will own the
equivalent of 41.5% of the units of the Fund on a fully-diluted basis.
    The growth of the Royalty Pool reflects the continuing strength and
success of the A&W restaurant business. The Fund's current annual distribution
rate is $1.272 per unit.

    About the Fund

    The source of revenue for the Fund is through its ownership interest in
Trade Marks which owns the A&W trade-marks and, under a Licence and Royalty
Agreement entered into February 15, 2002 between Food Services and Trade
Marks, licenses these trade-marks to Food Services for use in operating and
franchising A&W restaurants. In return, Food Services pays Trade Marks a
top-line royalty of 3% of sales from A&W restaurants in the Royalty Pool. The
Royalty Pool is adjusted annually to add new restaurants, less any A&W
restaurants that have permanently closed. Trade Marks pays Food Services for
the additional net new restaurants in the form of additional Class B and
common shares of Trade Marks, based upon a formula set out in the licence
agreement. These annual adjustments to the Royalty Pool are required under the
licence agreement.

    This release may contain certain forward-looking statements reflecting
A&W Revenue Royalties Income Fund's current expectations in the quick service
segment of the restaurant food industry in Canada. Investors are cautioned
that all forward-looking statements involve risks and uncertainties,
including, without limitation, changes in market, competitive developments,
and potential downturns in economic conditions generally. Additional
information on these and other potential factors that could affect the Fund's
financial results are detailed in documents filed from time to time with the
provincial securities commissions in Canada.

For further information:
For further information: Don Leslie, Chief Financial Officer, A&W Food
Services of Canada Inc., (604) 988-2141, email: investorrelations@aw.ca,