The Keg Royalties Income Fund Enters into Arrangement Agreement

Core Viewpoint - The Keg Royalties Income Fund has entered into an arrangement agreement with Fairfax Financial Holdings for the acquisition of all outstanding units at a price of $18.60 per unit, providing unitholders with a substantial premium and immediate liquidity [1][2]. Transaction Details - The transaction is structured as a statutory plan of arrangement under the Business Corporations Act (British Columbia) [9]. - The purchase price 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 that date [5]. - The transaction is expected to close in the third quarter of 2025, subject to customary closing conditions including court approval and unitholder approval [10]. Benefits to Unitholders - Unitholders will continue to receive monthly cash distributions of $0.0946 per unit until the transaction is completed, along with a special cash distribution of $0.055 per unit for the 2025 fiscal year, prorated for the portion of the fiscal year completed as of the closing [5]. - The transaction provides certainty and immediate liquidity as the purchase price is 100% payable in cash with no financing condition [5]. Trustee Recommendations - The transaction is the result of extensive negotiations, and the trustees have received independent legal and financial advice [3][4]. - The trustees unanimously recommend that unitholders vote in favor of the transaction, determining it to be in the best interests of the fund [7]. Fairness Opinions - Fort Capital Partners provided a formal valuation indicating the fair market value of the units is between $16.50 and $19.50 per unit [4]. - Both Fort Capital and Capital West Partners provided fairness opinions stating that the consideration received by unitholders (excluding Fairfax) is fair from a financial perspective [6]. Support Agreements - Certain trustees and unitholders, including directors and officers of subsidiaries, have agreed to vote in favor of the transaction, representing approximately 14.7% of the issued and outstanding units [12]. Company Background - The Keg Royalties Income Fund is an open-ended trust that owns trademarks and intellectual property used by Keg Restaurants Ltd., a leading operator of steakhouse restaurants in Canada [18]. - Fairfax Financial Holdings is primarily engaged in property and casualty insurance and reinsurance, along with investment management [19].