Not for distribution to U.S. News wire services or dissemination in the U.S.
VANCOUVER, British Columbia, April 13, 2020 (GLOBE NEWSWIRE) -- The Keg Royalties Income Fund (TSX: KEG.UN or the “Fund”) today announced that it would be reducing the monthly distributions on units of the Fund (“Units”) commencing with the March 2020 distribution. Monthly distributions will be reduced from their current level of $0.0946 per Unit to $0.035 per Unit. The revised monthly distribution of $0.035 per Unit has therefore been declared and will be paid on April 30, 2020 to unitholders of record on April 21, 2020. Annually, the revised distributions result in a decrease from the current level of $1.1352 per Unit to $0.42 per Unit. The Fund currently plans to make those distributions each month for the next six months on the traditional pattern beginning on April 30, 2020, as noted above.
On March 16, 2020, Keg Restaurants Ltd. (“KRL”) and the Fund announced the temporary closure of all 107 Keg locations across Canada and in select US states. At that time, KRL explained the decision was a result of the impending COVID-19 spread. The company felt it was a necessary step in order to protect the health and safety of The Keg’s guests, employees and the communities in which The Keg operates. Very quickly thereafter, Governments at various levels in each of their jurisdictions validated KRL’s decision by ordering the closure of all dine-in restaurants until further notice.
In that initial announcement, senior management of KRL anticipated the closures would last at least two weeks and indicated more updates would be provided as the situation evolved. Unfortunately, and tragically, the spread of COVID-19 has escalated since that time at great human loss and with far reaching lifestyle changes as we all try to do our part to minimize the spread of the virus. It would now appear to be nearly certain that no re-openings will be possible for The Keg or our fellow restaurant companies before June in a best case scenario.
“In its forty-nine year history, The Keg has been through many different cycles and events - some good and some difficult.” said David Aisenstat, CEO of KRL. “We have come through them all with our brand and business fully intact. We have not seen anything like the magnitude of COVID-19 and its devastating trail, but we are confident we will survive these dark days with our brand and business fully intact once again.”
“The closure of The Kegs was painful for The Keg as a company, for our guests, our suppliers, and, most importantly, to our fine and loyal employees” continued Aisenstat. “Through no fault of their own or of ours, our restaurant level staff members are currently unable to work. The Keg has financially supported them all, salaried and hourly, as much as possible with what we believe is the most generous plan of any Canadian restaurant company. We want the Keggers to be back in full force, feeling good and with their well-known enthusiasm when we are able to open.”
To conclude, Aisenstat said: “The Keg’s financial position is strong and our liquidity is good, so we will get through this unprecedented dark period. We will of course continue to honour all of our obligations, including the payment of royalties to the Fund. We are now very focused on ensuring we are in a position to open quickly when we get the ‘green light’ from the Governments. However, the factor which we are unable to control, or even reliably predict, is when that ‘green light’ will come.”
Speaking for the Fund, Chairman Kip Woodward said: “In response to the COVID-related closures of The Keg locations, the Trustees of the Fund needed to make a decision about the Fund’s distribution policy and its ability to make payments at this time. With the cash position of the Fund and assurance from KRL to remain current with its obligation to the Fund, we determined it was not necessary to fully suspend monthly distributions to Unitholders at this time. Our liquidity allows us to use the cash reserves we have carefully retained in the Fund for a ‘rainy day’ and maintain distributions for the next six-month period, albeit at a lower monthly level. It is the sincere hope of the Trustees that the Fund Unitholders will be pleased that, unlike most of our fellow restaurant royalty income funds, our distributions will continue at this point.”
The Fund (TSX: KEG.UN) is a limited purpose, open-ended trust established under the laws of the Province of Ontario that, through The Keg Rights Limited Partnership, owns certain trademarks and other related intellectual property used by Keg Restaurants Ltd. (“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.
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” for the past seventeen years by Aon Hewitt. For more information on our brand, visit www.kegsteakhouse.com.
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, 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.
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 Fund 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 Keg Royalties Income Fund 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 an application for exemption from the registration requirement under U.S. securities laws.
The Trustees of the Fund have approved the contents of this press release.
For media inquiries contact:
Nick Dean, President
Tel: 416-695-2400
nick.dean@kegrestaurants.com www.kegincomefund.com