New Stock Arbitrage — A&W Revenue Royalties Income Fund
A&W Revenue Royalties Income Fund is a limited purpose trust established to invest in A&W Trade Marks Inc, which through its ownership interest in A&W Trade Marks Limited Partnership owns the A&W trade-marks used in the A&W quick service restaurant business in Canada. The company has opened approximately 32 locations, bringing the total number of A&W restaurants to approximately 854, of which almost 845 are franchised and nine are owned and operated corporately. It has granted A&W Food Services of Canada Inc, a license to use the A&W trade-marks to market Root Beer in cans and bottles to the retail grocery trad as well as its acts as a franchisor of hamburger quick service restaurants in Canada.
A&W Revenue Royalties Income Fund and A&W Food Services of Canada Inc. announced yesterday that the Fund and Food Services have entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets to complete a secondary offering of 1,125,000 trust units of the Fund on a bought deal basis at a price of $44.55 per Unit, for gross proceeds to Food Services of $50,118,750. The Fund will not receive any proceeds from the Offering. Food Services will distribute the net proceeds of the Offering to its long-standing shareholders.
The Offering is expected to close on or about June 5, 2019.
The stock price fell to $43.90 after the market open, and it has steadily rebounded. According to the latest information, due to strong demand, the Fund and Food Services have entered into an agreement with the underwriters to increase the size of the offering to 1,460,000 trust units at a price of $44.55 per Unit, for gross proceeds of $65,043,000. We will pay close attention to the price trend of the stock and seek opportunities for new stock arbitrage. Interested group members please keep close attention to future updates.