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Second Cup Royalty Income Fund announces adjustment to Royalty Pool
Second Cup Royalty Income Fund announces adjustment to Royalty Pool.
About this update from Aegis Brands Inc
[{"type":"text","content":"\n\n\n\nMISSISSAUGA, ON, Jan. 12 /CNW/ - Second Cup Royalty Income Fund (the\n\"Fund\") and The Second Cup Ltd. (\"Second Cup\") announced today their annual\nadjustment to the number of Second Cup cafes in the royalty pool (the \"Royalty\nPool\"). The system sales of Second Cup cafes in the royalty pool is the basis\non which the Fund's wholly-owned subsidiary, Second Cup Trade-Marks Inc.\n(\"MarksCo\") receives royalty payments from The Second Cup Ltd. (\"Second Cup\").\n\n\nThe Royalty Pool is adjusted on January 1 of each year to include sales\nfrom new cafes that have been open for at least 60 days prior to November 1 of\nthe preceding year, after deducting sales of any Second Cup cafes that have\nclosed since the previous adjustment date. The Fund (through MarksCo) pays\nSecond Cup for the additional royalty stream, if any, from the sales of the\nnew cafes vended in to the Royalty Pool, based upon a formula set out in the\nlicence and royalty agreement between Second Cup and MarksCo. The formula,\ndesigned to be accretive, is based on the sales from the new cafes and the\nyield of the Fund's units. The accretion is achieved by discounting the\npayment by 7.5%. The payment to Second Cup may be in the form of cash or\nadditional units of the Fund.\n\n\nEffective January 1, 2007, eleven cafes with estimated total annual\nsystem sales of $4.6 million in 2007 were vended in to the Royalty Pool.\nTwelve cafes having total system sales of $3.8 million were permanently closed\nin 2006 and removed from the Royalty Pool. This resulted in an estimated net\nsystem sales increase for the Royalty Pool of $0.8 million. As a result of\nthis adjustment, the total number of cafes in the Royalty Pool as at January\n1, 2007 is 351.\n\n\nThe estimated net system sales increase from this adjustment would result\nin additional annual royalty revenues to the Fund of $48,000. The initial\npayment by MarksCo to Second Cup for these estimated additional royalty\nrevenues is $0.3 million. The initial payment is 80% of what will be owed by\nMarksCo to Second Cup based on the estimated system sales of the eleven cafes\nvended in to the Royalty Pool. MarksCo has elected to satisfy this payment by\ndelivering 34,630 units of the Fund. These units were valued at $9.0920 per\nunit, calculated as the weighted average trading price of the units of the\nFund ...