The Keg Royalties Income Fund Completes $81.535M IPO

On May 31, 2002, The Keg Royalties Income Fund completed an initial public offering of 8,153,500 units for gross proceeds of $81.535 million. The issue was underwritten by a syndicate of Canadian investment dealers led by CIBC World Markets Inc. As part of the transaction, CIBC provided credit facilities to the fund.

The fund owns, indirectly, a 90 per cent interest in the trademarks and related property used by Keg Restaurants Ltd. in the operation of 80 Keg restaurants in Canada and the U.S. Unit holders of the fund are entitled, indirectly, to a royalty equal to 4 per cent of the sales by Keg restaurants in Canada and the U.S. New Keg restaurants will be added each year to the royalty pool upon which the 4 per cent royalty is paid to the unit holders. As new Keg restaurants are added to the royalty pool, the fund will issue additional units or pay to Keg Restaurants, indirectly, an amount determined by a formula based upon the net increase in sales attributable to the new restaurants added to the royalty pool.

Keg Restaurants and the fund were represented by Goodmans LLP, with a team led by Daniel Gormley, and included Neil Sheehy (securities), John Northrop (tax) and Justin Beber and Steve Cohen, and by Keg Restaurant’s in-house counsel, Sylvia Antonius.

CIBC World Markets was represented by Farris, Vaughan, Wills & Murphy, with a team led by Mitchell Gropper, Q.C., and including James Hatton (intellectual property), Chuck Pearson (tax), Maria McKenzie (banking) and Brad Newby and Trevor Scott. Rosemarie Wertschek, Q.C., of McCarthy Tétrault LLP provided special income tax advice. CIBC was represented by Joanne Payne, Michael Coburn and Richard Sarabando of Blake, Cassels & Graydon LLP.