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Imvescor Restaurant Group Inc. (IRG)
Market: CDN Consolidated
$ 1.84
Sep 30, 2014, 5:33 AM EDT
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PDM Royalties Income Fund Announces increase to Royalty Pool

MONCTON, NB, Feb. 28 /CNW/ - PDM Royalties Income Fund (the "Fund") (TSX: PDM.UN) announced that as of January 1, 2008: 17 new restaurants comprised of 10 Scores, 5 Baton Rouge, 1 Mikes, and 1 Pizza Delight restaurant, opened during the period October 3, 2006 through December 31, 2007, will be added to the royalty pool on which the Fund earns royalty revenue. The sales from these 17 new restaurants will generate an estimated $48.7 million in sales. The pool of restaurants will decrease from 261 locations to 259, reflecting the closure of 19 underperforming restaurants with annual sales of $12.4 million. The closed locations included 14 Mikes and 5 Pizza Delight restaurants.

The net increase in sales of approximately $36.3 million will generate an estimated additional $2.4 million in annual royalties for the Fund. The Fund will compensate Imvescor Inc. (Imvescor) for this increased revenue stream based on a formula set out in the License agreement. There is a 7.5% discount applied to the value of the revenues which provides added value to the existing unitholders. The consideration to Imvescor will represent the equivalent of 1,698,990 units increasing the retained interest by 16.9% (13.8% on a fully diluted basis). This amount will be adjusted at December 31, 2008 once the actual sales for the new restaurants are determined.

In addition, the adjustment to the January 2007 addition of restaurants to the royalty pool has now been finalized. The actual annual sales for 2007 for the new restaurants added on January 1, 2007 were $12.6 million compared to the original estimate of $12.3 million. Due to the additional sales, the unit entitlement increased from 259,366 to 261,382.

The net impact of these changes increases the retained interest held by Imvescor to approximately 3.3 million units which is 32.4% of the Fund (26.5% on a fully diluted basis).

New restaurant development at Scores and Baton Rouge was very strong in 2007 and is continuing at a similar pace for 2008. Scores has also opened its first Ontario restaurant in Kanata and is experiencing strong consumer acceptance. The new "Oven Fresh Kitchen" Pizza Delight concept and "Trattoria" Mikes has met with excellent consumer support and the franchisees for each brand have started to commit to renovations with eight Pizza Delights and eight Mikes planned for 2008.

PDM Royalties Income Fund (the "Fund") is a limited purpose open-ended trust established under the laws of Ontario. The Fund makes monthly distributions of its available cash to holders of units. The Fund indirectly owns the trade marks and intellectual property for the Pizza Delight(R), Mikes(R), Scores(R) and Baton Rouge(R) brands and has licensed them to Imvescor in consideration for a royalty equal to 4% of system sales for Pizza Delight and Mikes, and in the case of Scores and Baton Rouge, the royalty rate is 6%.

Imvescor is a privately owned corporation, headquartered in Moncton, New Brunswick. It operates franchised and corporate restaurants under the brand names Pizza Delight, Mikes, Scores, and Baton Rouge restaurants. Pizza Delight operates primarily in Atlantic Canada, where it dominates the family/mid-scale segment. Mikes and Scores restaurants operate primarily in Quebec in the family and casual dining segments and the take-out and delivery segments. Baton Rouge has operations in Quebec and Ontario in the high end casual segment.

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