The Keg Royalties Income Fund Enters into a Letter of Intent in Respect of a Proposed Acquisition of All Issued and Outstanding Units at $18.60 per Unit

Core Viewpoint - The Keg Royalties Income Fund has entered into a letter of intent for Fairfax Financial Holdings Limited to acquire all outstanding units of the Fund at a price of $18.60 per unit, representing significant premiums over recent trading prices [1][2]. Group 1: Proposed Transaction Details - The offer price of $18.60 per unit represents a 30.8% premium to the closing price on May 2, 2025, and a 34.7% premium to the 20-day volume weighted average trading price as of the same date [2]. - The transaction is not subject to any financing condition, indicating a straightforward cash offer [2]. - The letter of intent was established after negotiations between Fairfax's investment manager and the Fund's independent board of trustees, who evaluated the financial terms and received independent advice [3]. Group 2: Support and Valuation - The largest holder of outstanding units, holding 14.6% of the issued units, has agreed to support the proposed transaction under customary conditions [4]. - The trustees have engaged an independent valuator to prepare a formal valuation of the units and provide a fairness opinion regarding the transaction's financial terms for minority unit holders [5]. Group 3: Conditions and Next Steps - The letter of intent is not a definitive agreement, and the execution of a definitive agreement is subject to negotiation, approval by the trustees, and receipt of satisfactory valuation and fairness opinions [6]. - The consummation of the proposed transaction will require various customary conditions, including regulatory approvals and a special meeting of unit holders for voting [6]. - Unitholders are advised to await further information from the trustees regarding the proposed transaction [7]. Group 4: Company Background - The Keg Royalties Income Fund is a limited purpose, open-ended trust that owns trademarks and intellectual property used by Keg Restaurants Ltd., a leading operator of steakhouse restaurants in Canada with a notable presence in the U.S. [15]. - Keg Restaurants Ltd. has been recognized as the number one restaurant company to work for in Canada according to Forbes' "Canada's Best Employers 2025" survey [15].