A&W Revenue Royalties Income Fund

Press Releases


Toronto Stock Exchange: AW.UN

VANCOUVER, Feb. 9 /CNW/ - A&W Revenue Royalties Income Fund (the "Fund") and A&W Food Services of Canada Inc. ("Food Services") announce that the Fund and Food Services have entered into an agreement with CIBC and National Bank Financial Inc. and a syndicate of underwriters (collectively, the "Underwriters") to complete a secondary bought deal offering of units of the Fund ("Units"). Under the agreement, the Underwriters will purchase 2,997,000 Units at a purchase price of $23.35 per Unit for gross proceeds of $69,979,950. The Units are being sold by Food Services. The Fund will not receive any proceeds from the offering. The offering will be made pursuant to a short form prospectus to be filed with securities regulators in each of the provinces of Canada. The offering is expected to close on or about March 2, 2011. Closing is subject to a number of customary conditions, including receipt of all necessary regulatory approvals.

Food Services currently owns securities indirectly exchangeable for 4,247,358 Units (the "Exchangeable Securities"), representing a 34% indirect interest in the Fund. Prior to closing of the offering, Food Services will exchange only the number of Exchangeable Securities needed for the number of Units to be sold pursuant to the offering. Following the closing of the offering, Food Services will own Exchangeable Securities indirectly exchangeable for 1,250,358 Units, or approximately a 10% indirect interest in the Fund.

This press 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. ("TMI"), 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, TMI (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 quickservice 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 are issued to Food Services to reflect the annual adjustment. Food Services' additional limited partnership units are exchangeable for additional non-voting common shares of TMI which shares are exchangeable for Units of the Fund.

Food Services currently owns 34% of the common shares of TMI, and therefore currently owns the equivalent of 34% of the Units of the Fund on a fully-diluted basis.

TMI's dividends 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 TMI, and are thereby isolated from many of the factors that impact an operating business.

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.

For further information:

Don Leslie, Chief Financial Officer: (604) 988-2141 or investorrelations@aw.ca