A&W Revenue Royalties Income Fund - President and CEO, Susan Senecal
President and CEO, Susan Senecal
Source: The Globe and Mail
Market Herald logo

Subscribe

Be the first with the news that moves the market
  • Hospitality investment firm, A&W Revenue Royalties Income Fund (TSX:AW.UN) has suspended its distribution, to help weather the recent industry upheaval
  • Due to ongoing COVID-related shutdowns, the company has temporarily closed 220 hamburger franchises and seen its sales figures drop by 50 per cent
  • To assist the closed franchises, the company has deferred a number of its royalty payments due from its franchisees, which are now expected by December 21, 2021
  • In a further effort to retain liquidity, A&W recently announced a C$10 million equity investment by its shareholders and has increased its credit facility from $6 million to $25 million
  • Before the market opens, A&W Revenue Royalties Income Fund (AW.UN) is trading at $27.73, with a market cap of $390 million. 

Hospitality investment firm, A&W Revenue Royalties Income Fund (TSX:AW.UN) has suspended its distributions, to help weather the recent industry upheaval.

The suspension comes into effect immediately and will help to the company retain some liquidity, while the COVID-19 pandemic continues to severely impact its operations.

The fund manages the A&W trademark associated with Canada’s hamburger chain of the same name. 

The company conceded that the impact of COVID-19 generally, and more specifically the impact of government mandated shutdowns, has been unprecedented.

So far, the company has been forced to temporarily close 220 locations out of its total of 995.

To assist the closed franchises, the company has deferred a number of its royalty payments, due from its franchisees.

However, the company still expects these royalties to be paid in full by December 21, 2021, at the latest.

Sales have dropped more than 50 per cent in recent months and the company has determined that it will require a liquidity boost until the pandemic abates.

Toward this end, last week the company announced a C$10 million equity investment by its shareholders, to help outlast the pandemic’s effects on the industry.

Furthermore, the company has increased its credit facility from $6 million to $25 million.

Susan Senecal, President and CEO of Food Services, remains confident that, once the pandemic abates, A&W will be well positioned to thrive.

“All enterprises in Canada are navigating very difficult challenges as they seek to ensure the long-term health and success of those businesses, for all stakeholders.

“A&W has consistently been one of the fastest growing and best performing restaurant chains in Canada. Food Services and our franchisees are working collaboratively to position the business for this kind of growth once the current pandemic crisis is resolved, whether in 3 months, 6 months or 24 months,” she said.

Before the market opens, A&W Revenue Royalties Income Fund (AW.UN) is trading at $27.73, with a market cap of $390 million. 

More From The Market Herald
FAX Capital - CEO, Blair Driscoll.

" FAX Capital Corp. (TSX:FXC) completes going-private transaction

FAX Capital (FXC) has announced that Fax Investments has indirectly acquired all of the issued and outstanding subordinate voting shares of the company.
Colliers - CEO, Jay Hennick.

" Colliers (TSX:CIGI) to acquire majority stake in Versus Capital

Colliers (CIGI) will acquire a 75-per-cent stake in alternative investment manager Versus Capital.

" Pentagon I Capital Corp. (TSXV:PNTI.P) closes initial public offering

Pentagon I Capital Corp. (PNTI.P) has completed its initial public offering of 3,000,000 common shares for gross proceeds of $300,000.

" Mobi724 (TSXV:MOS) signs a long-term agreement with CGI

Mobi724 (MOS) has signed a long-term license and support agreement with independent IT and business consulting services firm CGI (TSX:GIB.A).