A&W Revenue Royalties Income Fund completed an $83.4 million initial public offering of units on February 15, 2002. The proceeds, together with a loan of $10 million from CIBC, were used to acquire from A&W Food Services of Canada Inc. the trademarks associated with the A&W restaurants. Concurrently with the transfer of these trademarks, A&W Food Services of Canada was granted a licence to use the trademarks in Canada for a 99-year term. For the use of these trademarks, A&W Food Services of Canada is to pay a royalty equal to 3 per cent of the gross sales of A&W restaurants in Canada. Currently, there are 585 A&W restaurants in Canada, almost all of which operate as franchises of A&W Food Services of Canada. This is the first transaction in which an operator of a franchise system was able to obtain financing on the basis of a royalty measured by gross sales.
The offering was underwritten by a syndicate of investment dealers led by RBC Dominion Securities Inc. and included CIBC World Markets Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., TD Securities Inc., National Bank Financial Inc. and Raymond James Ltd.
Farris, Vaughan, Wills & Murphy represented the fund and A&W Food Services of Canada with a team led by Mitchell Gropper, Q.C., and assisted by James Hatton (intellectual property), Maria McKenzie (banking) and Gil Malfair, Brad Newby, Trevor Scott, Erinn Broshko, Priya Reddy and Charles Pearson (tax). The fund’s wholly owned subsidiary was represented by Lang Michener’s Vancouver office with a team led by John Stark, and assisted by Charlotte Olsen and Barbara Snyder.
McCarthy Tétrault LLP’s Vancouver office represented the underwriters with a securities team led by Richard Balfour, and assisted by Linda Brown, Ted Koffman, Michael Urbani and Ciara Brady (business), Rosemarie Wertschek, Q.C., (tax), K. Beth Macdonald and Cappone D’Angelo (intellectual property), James Bond (franchising) and Byran Gibson (secured transactions).
Donald Bird and Douglas Copland, assisted by Chris Gouglas, Anne Lau and Robert Piasentin, all of Borden Ladner Gervais LLP in Vancouver, represented CIBC.