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VANCOUVER, British Columbia, Feb. 16, 2021 (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 February 2021 distribution. Monthly distributions will be reduced from their current level of $0.05 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 February 26, 2021 to unitholders of record on February 21, 2021. Annually, the revised distributions result in a decrease from the current level of $0.60 per Unit to $0.42 per Unit. The Fund currently plans to make those distributions each month for the next five months on the traditional pattern ending on June 30, 2021.
“The COVID-19 pandemic remains a very disruptive element in the daily lives of Canadians. Within the restaurant industry specifically, it remains at least as disruptive,” said David Aisenstat, CEO of The Keg. “In many parts of the country, restaurants have once again been mandated to completely close indoor dining. Where we have been permitted to operate, we have had to deal with limited hours of service and with limited capacity. This has of course led to very significant decreases in The Keg’s total sales and, as a result, large decreases in the royalties on sales which we pay to the Fund. That said, The Keg has continued to pay the royalties due to the Fund each month, in full and on time, without interruption throughout the COVID-19 crisis. The Keg will of course continue to do so going forward, just as it has done every single month since the Fund’s first royalty was paid on July 31st, 2002.”
“It is very difficult to predict when The Keg will be permitted to reopen in the many communities in which it operates,” said Mr. Kip Woodward, Chairman of the Fund. “It is equally difficult to predict what, if any, operating restrictions may be mandated by various government authorities upon reopening. Regrettably, the only prediction we can make with confidence is that it will be many months before The Keg can come close to achieving the sales levels it enjoyed pre-COVID-19. The reduction in sales during the disruption means the royalties to be paid to the Fund will also remain significantly lower. In light of this, the Trustees thought it prudent to revert to the previous distribution level of $0.035, initiated in the spring of 2020, in order to ensure adequate cash reserves remain in the Fund for the medium and long term.”
To conclude, Aisenstat said: “While the time frame continues to be uncertain, we remain fully confident that The Keg will once again return to the levels of sales and success it has enjoyed for nearly half a century. We also remain extremely proud of and grateful to our staff and management and very grateful to our guests who continue to support us where we are allowed to operate. And most of all, we look forward to welcoming back the staff and guests who are unable to be with us in the communities where we remain unable to open. The sooner we can be over this painful COVID-19 episode in all of our lives, the better.”
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 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 eighteen years.