Business
Pizza Pizza Royalty Income Fund provides update on third-party claim against Pizza Pizza Limited
Pizza Pizza Royalty Income Fund provides update on third-party claim against Pizza Pizza Limited.
About this update from Pizza Pizza Royalty Corp.
[{"type":"text","content":"\n\n\n\n\nTORONTO, Feb. 10 /CNW/ - Pizza Pizza Royalty Income Fund (the \"Fund\")\n(TSX:PZA.UN) announced today it has received an update from Pizza Pizza\nLimited (\"PPL\") regarding a potential claim disclosed in the Fund's 2005\ninitial public offering (\"IPO\") prospectus and PPL's subsequent financial\nstatement filings.\nThe claim - which does not name the Fund or its subsidiaries - was\nformally served on PPL and certain of its associates by Lawrence Austin, a\nformer consultant to PPL. In the claim, Mr. Austin asserts a right to \n$45 million in damages and other amounts, including entitlements to a portion\nof the proceeds of the Fund's IPO that were directly or indirectly received by\nPPL and its associates.\nPPL advised the Fund that Mr. Austin has not been involved in the affairs\nof PPL for approximately 10 years and that it does not currently have, nor did\nit have at the time of the Fund's IPO, a contractual relationship with Mr.\nAustin, and Mr. Austin had no involvement in the Fund's IPO.\nPPL has advised the Fund it believes the demand to be without merit and\nit will vigorously defend the claim. The Fund notes that Michael Overs, the\nChairman and CEO of PPL, has agreed in an indemnity agreement to indemnify PPL\nand the Fund against any liabilities they may incur in this matter.\nAs the matter is before the courts, PPL will issue no further comments at\nthis time but will provide updates on material developments as they arise.\n\nABOUT THE FUND\n\nThe Fund is a limited purpose, open-ended trust established under the\nlaws of Ontario to indirectly acquire certain trademarks and trade names used\nby Pizza Pizza in its restaurants. The trademarks are licensed to Pizza Pizza\nfor 99 years, for which Pizza Pizza pays the Fund a royalty equal to 6% of the\nsystem sales of its 501 Pizza Pizza restaurants in Canada as at \nJanuary 1, 2006 (the \"Royalty Pool\").\nA key attribute of the Fund is that it is based on top-line, system sales\nof the Royalty Pool restaurants and not on the profitability of either Pizza\nPizza or the restaurants in the Royalty Pool. The success of the Fund depends\nprimarily on the ability of Pizza Pizza to maintain and increase system sales\nof the Royalty Pool and to meet its royalty obligations.\nPizza Pizza Limited, a privately held-Canadian corporation, is one of\nCanada's most successf...