The Keg Royalties Income Fund and Keg Restaurants Ltd. Announce Completion of the Sale of a 51% Interest in Keg Restaurants L...
February 04 2014 - 7:29PM
Marketwired
The Keg Royalties Income Fund and Keg Restaurants Ltd. Announce
Completion of the Sale of a 51% Interest in Keg Restaurants Ltd.
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 4, 2014) - The
Keg Royalties Income Fund (the "Fund") (TSX:KEG.UN) and Keg
Restaurants Ltd. ("KRL") today announced that Fairfax Financial
Holdings Limited ("Fairfax") has completed the transaction to
acquire a 51% interest in KRL from David Aisenstat. Mr. Aisenstat
will continue to hold the remaining 49% interest in KRL and he,
along with the rest of the current KRL management team, will remain
in operational control of The Keg.
The Fund is a limited purpose, open-ended trust established
under the laws of the Province of Ontario that, through The Keg
Rights Limited Partnership (the "Partnership"), a subsidiary of the
Fund, owns certain trademarks and other related intellectual
property used by KRL. In exchange for use of those trademarks, KRL
pays the Fund a royalty of 4% of gross sales of Keg restaurants
included in the royalty pool.
With approximately 9,500 employees, over 100 restaurants and
system sales of approximately $500 million, Vancouver-based KRL is
the leading operator and franchisor of steakhouse restaurants in
Canada and has a substantial presence in select regional markets in
the United States. KRL continues to operate The Keg restaurant
system and expand that system through the addition of both
corporate and franchised Keg steakhouses. KRL has been named one of
the "50 Best Employers in Canada" by Aon Hewitt for the past twelve
years.
KRL currently holds 905,944 Class A Units ("Class A Units"),
176,700 Class B Units ("Class B Units"), 5,700,000 Class C Units
and 2,192,944 Class D Units ("Class D Units") of the Partnership.
The Class A Units, the Class B Units and the Class D Units
(collectively, the "Exchangeable Units") are exchangeable on a
one-for-one basis into units of the Fund ("Fund Units").
Assuming all the Exchangeable Units were exchanged for Fund
Units, they would currently represent approximately 22.4% of the
Fund Units.
Fairfax has acquired the Shares for investment purposes. Fairfax
currently has no intention of acquiring Fund Units. KRL is entitled
to receive additional Exchangeable Units in accordance with
contractual arrangements between KRL and the Partnership.
The Early Warning Report filed by Fairfax in connection with
this transaction can be obtained by contacting John Varnell at
(416) 367-4941.
Fairfax's registered and head office is located at 95 Wellington
Street West, Suite 800, Toronto, Ontario M5J 2N7.
This press release may contain certain "forward looking"
statements reflecting The Keg Royalties Income Fund's current
expectations in the casual dining segment of the restaurant food
industry. Investors are cautioned that all forward looking
statements involve risks and uncertainties, including those
relating to the Keg's ability to continue to realize historical
same store sales growth, changes in market and existing
competition, new competitive developments, tax legislation, 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.
The Trustees of the Fund have approved the contents of this
press release.
The Keg Royalties Income FundNeil MacleanChief Financial
Officer(604) 821-6416www.kegincomefund.com
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