April 25, 2018 - RUS
New! Russel Metals Inc. Price Target Update .....
April 24, 2018 - OSB
New! Norbord Inc. - 2017 Earnings & 2018 Price Target Update .....
April 21, 2018 - BNS
Bank of Nova Scotia - Fiscal Q1-2018 Earnings Update .....
April 20, 2018 - CM
Canadian Imperial Bank of Commerce -Fiscal 2018 Earnings Update .....
April 19, 2018 - BMO
Bank of Montreal - Fiscal Q1-2018 Earnings Update .....
April 18, 2018 - TD
Toronto-Dominion Bank, Fiscal Q1-2018 Earnings Update .....
April 17, 2018 - RY
Royal Bank - Fiscal Q1-2018 Earnings Update .....
April 15, 2018 - PZA
Pizza Pizza Royalty Corp. 2017 Earnings & Price Target Update .....
Recommendation Changes
PZA, DRG.UN, MIC(US), VET, BRE, more...

The Keg Royalties Income Fund - Price Target Update

This is only a sample of the article, please login to view the entire article

The Keg is positioned towards the higher end of the casual dining restaurant segment, focusing on customers looking for high quality steak and prime rib at a reasonable price. Vancouver-based KRL is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses with revenues split approximately equally as of Mar-31-2017and 15% of revenues from the US. As of Mar-31-2017, the Royalty Pool includes 100 Keg restaurants, 43 of which are owned and operated by KRL and its subsidiaries, (33 in Canada and 10 in the United Sates), and 57 Keg restaurants which are owned and operated by Keg franchisees (all of which are in Canada). As of Mar-31-2017, one franchise restaurant in Canada is not included in the Royalty Pool, as it opened subsequent to Oct-2-2016.

The Keg brand has been in existence for over thirty-eight years. The Keg is connected to Hy's of Canada thru a common owner and executive estimated to own 23%. They employ 9,500 with annual system sales forecast to exceed $650M in 2017. Corporate market expansion in the US is focused on three target markets, specifically: Phoenix, Arizona; Denver, Colorado; and Dallas, Texas.

The Keg Rights LP owns rights to certain trademarks and other related intellectual property used by franchised and corporately owned restaurants by the Keg Restaurants Ltd. (KRL). The Keg Royalties Income Fund, through the Partnership, earns royalty income equal to 4% of gross sales of Keg restaurants in the Royalty Pool. The amount is calculated as the royalty income, less the Partnership's operating expenses, less earnings attributable to KRL. KRL pays a royalty equal to 4% of the sales of all Keg restaurants in the royalty pool to the Keg Rights LP who in turn pays interest on a $57M, 7.5% loan from the income fund. The interest on the loan and the fund's approximate 75% interest in the Keg Rights LP provide the cash flow to pay distributions. The funds only function is to flow thru the income received. The fund retains the income trust structure, with distributions being primarily taxed as dividends. The ability of KRL to pay the royalty, then make-whole payments on closed restaurants, and interest on the loan from the income fund depends on the sales and profitability at KRL.

You must be a member to view the entire article, please subscribe or login

New Issues & Acquisition
April 20, 2018
New! Coverage Universe - Weekly Price Changes Apr 13-20, 2018
April 13, 2018
Coverage Universe - Weekly Price Changes Apr 6 - Mar 13, 2018
April 6, 2018
Coverage Universe - Weekly Price Changes Mar 30-Apr 6, 2018
March 30, 2018
Coverage Universe - Weekly Price Changes Mar 23-30, 2018
March 26, 2018
Extendicare Inc. - New Convertible Debenture
March 23, 2018
Coverage Universe - Weekly Price Changes Mar 16-23, 2018
March 17, 2018
Coverage Universe - Weekly Price Changes Mar 9-16, 2018
March 15, 2018
Premium Brands Holdings Corporation - New Convertible Debenture