A&W Revenue Royalties Income Fund and A&W Food Services of Canada Inc. (A&W Food Services) announced that, effective January 5, 2023, the number of A&W restaurants for which royalties are paid to A&W Trade Marks Limited Partnership (the Partnership) will be increased by 29 new restaurants that were opened across Canada between September 10, 2021 and September 8, 2022, less 7 restaurants that were permanently closed between November 8, 2021 and November 6, 2022. The addition of these 22 net new restaurants brings the total number of A&W restaurants in the royalty pool (Royalty Pool) to 1,037. Since the inception of the Fund in 2002, the number of restaurants for which royalties are paid to the Fund (through the Partnership) has increased by 452 restaurants, from 585 to 1,037.

The estimated annualized sales of the 29 new A&W restaurants being added to the Royalty Pool on January 5, 2023 are $44,339,000 and annual sales for the 7 permanently closed restaurants were $3,424,000. Based on the royalty to the Fund that is equal to 3% of sales, the net estimated annualized sales of $40,915,000 from the 22 net new restaurants translates into estimated net additional annual royalty payments to the Fund of $1,227,000. The consideration to be paid to A&W Food Services for the estimated net additional royalty revenue is calculated in accordance with the license agreement and is $12,894,000, representing 80% of the consideration payable for such net additional royalty payments, calculated by discounting the estimated additional royalties by 7.5% and dividing the result by the yield on units of the Fund.

The yield is calculated as the total amount of cash distributed to unitholders of the Fund during the Reporting Period, adjusted to reflect income tax payable by A&W Trade Marks Inc. (Trade Marks), divided by the weighted average trading price of the units of the Fund for the 20 trading days ending October 31, 2022 which was $33.90. This consideration will be paid on January 5, 2023 by issuance of 380,368 limited partnership units of the Partnership (LP units), which will immediately be exchanged for 760,736 non-voting common shares of Trade Marks. An amount representing 20% of the consideration payable for the net additional royalty revenue, will be paid by issuance of additional LP units in December 2023.

The actual amount of the consideration to be paid, and the number of LP units to be issued, in December 2023 will be determined based upon on the actual annual sales reported by the 29 new restaurants.