Business
Pizza Pizza Royalty Income Fund adds 35 restaurants to Royalty Pool
Pizza Pizza Royalty Income Fund adds 35 restaurants to Royalty Pool.
About this update from Pizza Pizza Royalty Corp.
[{"type":"text","content":"\n\n\n\nTORONTO, Jan. 10 /CNW/ - Pizza Pizza Royalty Income Fund (the \"Fund\") and\nPizza Pizza Limited (\"PPL\") today announced that effective January 1, 2007,\nthe pool of Pizza Pizza restaurants (the \"Royalty Pool\") for which royalties\nare paid to the Fund by PPL will be increased to include the royalties from 35\nnew restaurants opened between September 1, 2005 and December 31, 2006. Five\nnontraditional restaurants were closed during the calendar year 2006. Of the\n35 new restaurants, 16 are traditional restaurants and 19 are nontraditional\nlocations. With the addition of these 30 net, new restaurants, royalties are\nnow paid to the Fund from 531 Pizza Pizza restaurants in the Royalty Pool.\n\n\nThe Fund owns the trademarks and trade names used by PPL in its\nrestaurants. In 2005, the trademarks and trade names were licensed to PPL for\n99 years, and in return PPL pays the Fund a royalty equal to 6% of the Royalty\nPool system sales.\n\n\nAnnually, on January 1 (the \"Adjustment Date\"), Pizza Pizza restaurants\nin the Royalty Pool are adjusted to include the forecasted system sales from\nnew Pizza Pizza restaurants opened on or before December 31 of the prior year,\nless system sales from any Pizza Pizza restaurants that have been permanently\nclosed during the year.\n\n\nAt each annual Adjustment Date the Fund pays PPL for the royalty stream\ngenerated from the net, new restaurant sales. The payment is based on a\nformula set out in the License and Royalty Agreement. The formula, designed to\nbe accretive to current Unitholders, is based on the forecasted sales from new\nrestaurants less sales from any closed restaurants, multiplied by the 6%\nroyalty rate then divided by the current yield on the Fund's units, which is\n10.56% for January 1, 2007 (\"current yield\" (equal sign) 2006 distribution paid divided\nby a 20 day average, December trading price). The resulting amount is\ndiscounted by 7.5% before payment is made to PPL by the Fund in the form of\nsecurities exchangeable for Fund units at the current unit price. Of this\namount, PPL is entitled to receive 80% on the Adjustment Date, with the\nbalance determined when the full year sales of the new restaurants have been\nverified by an independent sales audit.\n\n\nThe forecasted, 2007, system sales for the 35 new restaurants, estimated\nto be $16,000,000, is r...