Prime Restaurants Completes Offering of Units

On July 22, 2002, Prime Restaurants completed a $61.1 million offering of units in Prime Restaurants Royalty Income Fund, a trust established as the vehicle to issue the units to the public. The fund used the initial public offering proceeds to buy all of the equity in a new company, which in turn purchased the trademarks owned by Prime Restaurants (East Side Mario’s, Casey’s, Fionn MacCool’s, Esplanade Bier Markt, Red Devil and others). That company has licensed the use of the Prime Marks back to Prime Restaurants for a royalty payment equal to 3.25 per cent of sales of the 125 Prime restaurants in existence at February 24, 2002 and designated as in the sales pool. The royalty payments are used by the fund to pay approximately 11.25 percent per year on the units. As new restaurants are closed and opened, payments are made to or by the company owning the trademarks by or to Prime Restaurants.

This is the first royalty trust deal structured as a multi-brand royalty trust with the fund having the ability to also buy future royalty streams generated by new restaurant concepts developed by Prime Restaurants. The offering was underwritten by a syndicate led by RBC Dominion Securities Inc., and including National Bank Financial Inc., TD Securities Inc., Canaccord Capital Corporation and Raymond James Ltd.
Prime Restaurants’s legal team was led by Ross Bain, vice-president, administration, secretary and legal counsel. Stikeman Elliott was external counsel to Prime Restaurants, with a team including Sidney Horn, Christine Desaulniers, Quentin Markin, Nathalie Mercure, Kevin Kyte, Geneviève Lavertu and Matthew Dooley (corporate), Frederic Harvey and Derek Chiasson (tax) and Mirko Bibic (intellectual property). The necessary corporate reorganization was handled by general counsel to Prime Restaurants, Todd Greenbloom of Blaney McMurtry LLP.

McCarthy Tétrault LLP acted for the underwriters, with a team including David Tennant, Bill Ford, Marwan Awad and Beth Macdonald (intellectual property) and Jerald Wortsman (tax) and Greg Turnbull acted for the trustees. Louis Gambino of PricewaterhouseCoopers LLP, auditors, provided tax advice to Prime Restaurants.