Second Cup Royalty Income Fund Proposes Modification to Fund Structure, Announces March distribution
MISSISSAUGA, ON, April 13 /CNW/ - Second Cup Royalty Income Fund today
announced that at its Annual and Special Meeting of Unitholders, being held on
May 10th, unitholders will be asked to approve a reorganization of the Fund
and its subsidiaries. Since its creation in 2004, the Fund has owned the
Second Cup trade-marks through intermediary corporate subsidiaries. This
structure subjects these subsidiaries to income tax which, in turn, reduces
the cash available for distribution to the Fund'''''s unitholders. The Fund
proposes to modify the current structure of the Fund by replacing the
intermediary corporations with a newly formed trust and limited partnership.
The proposed reorganization, which has been adopted by a number of other
income trusts, will provide the Fund with a "flow through" structure that will
maximize the cash available for distribution by eliminating the income taxes
paid by the Fund. The reorganization would be conditional on obtaining a
number of regulatory and third party approvals, including a favourable income
tax ruling from Canada Revenue Agency.
From a unitholder's perspective, the reorganization will not result in a
change to the number, type and ownership of outstanding units of the Fund. In
addition, there will be no impact on the daily operations of the Fund.
A detailed description of the reorganization is contained in the Notice
of Meeting and Management Information Circular that will be mailed to
unitholders in connection with the Annual and Special Meeting. The Annual and
Special Meeting will be held at 2 pm on May 10, 2006 at the offices of Osler,
Hoskin & Harcourt, 63rd floor, First Canadian Place, Toronto, Ontario. The
Notice of Meeting and Management Information Circular are expected to be
available electronically at www.sedar.com on April 18, 2006.
March Distribution Announcement and First Quarter Same Café Sales Growth
Second Cup Royalty Income Fund has also announced that its Board of
Trustees has approved a cash distribution of $0.0834 per unit for the month of
March, 2006 to be paid on April 28, 2006 to unitholders of record at the close
of business on April 26, 2006.
In addition, the Fund is pleased to announce that same café sales growth
for cafés in the Royalty Pool was 6.4% for the period January 1, 2006 through
March 31, 2006. Sales were favourably impacted by the mild winter in Ontario
together with the change in the timing of Easter.
"We are pleased with the continued momentum of our same café sales
growth, especially in the absence of any significant price increases during
the quarter" said Bruce Elliot, President of The Second Cup Ltd. "Second Cup
has achieved positive same café sales growth in each quarter since the Fund's
inception, and we remain confident that we will be able to achieve our target
of 3% to 5% for 2006. I wish to take this opportunity to thank our franchise
partners, sales associates, and the Second Cup team for their continued
efforts and, most importantly, thank our guests for their ongoing patronage
The Fund is an open-ended trust established under the laws of the
Province of Ontario. It holds, through an indirect wholly-owned subsidiary,
the Canadian trade-marks and other intellectual property and associated rights
used by The Second Cup Ltd. ("Second Cup") in connection with the operation of
Second Cup cafés in Canada. For more information on the Second Cup Royalty
Income Fund please visit www.secondcupincomefund.com.
Second Cup is Canada's largest specialty coffee café franchisor and
second largest retailer of specialty coffee, as measured by number of cafés.
Second Cup is a wholly owned subsidiary of Cara Operations Limited, Canada's
leading integrated restaurant company.
For further information: please contact: Rachel Douglas, Manager,
Communications at (905) 405-6904, email@example.com