Pizza Pizza Royalty Corp. Adds 45 Restaurants to, and removes 14 Restaurants from, the Royalty Pool
By brand, 41 new Pizza Pizza restaurants and four new Pizza 73 restaurants were added to the Royalty Pool; there were 13 Pizza Pizza restaurants and one Pizza 73 restaurant closed and removed from the Royalty Pool. Of the 45 new restaurants, 23 were traditional restaurants and 22 were non-traditional locations, while the 14 closures were comprised of seven traditional restaurants and seven non-traditional locations.
For 2024, there will be 774 restaurants (2023 - 743) in the Royalty Pool made up of 672 Pizza Pizza locations and 102 Pizza 73 locations.
The Company, indirectly through the
Annually, on
In exchange for adding new restaurants to the Royalty Pool, PPL is compensated in equivalent Company shares ("Equivalent Shares") using an agreed-upon formula which is designed to be accretive to current shareholders. Generally, when restaurants are added to the Royalty Pool, the forecasted increase to PPL's System Sales (and thus, the Company's royalty income) result in an increase in PPL's ownership interest in the Company, reflected through an increase to the Class B and/or Class D Exchange Multipliers. In the case where system sales of the closed restaurants exceed the additional system sales of the additional restaurants added to the Royalty Pool, PPL will pay royalty income on the deficit (the "Make-Whole Carryover Amount") to the Partnership in that year. The Make-Whole Amount will be carried over and royalties will continue to be paid for subsequent years, until on an Adjustment Date, additional system sales from additional restaurants are sufficient to fully offset the Make-Whole Amount. As per the
After the
On
Additionally,
Table 1 – Summary of the Company's Outstanding and Fully-Diluted Shares, including an analysis before and after the 20% entitlement holdback:
|
|
Issued & Outstanding
Shares, and Holdback of Equivalent Shares |
|
|
Issued & Outstanding Shares, and Equivalent Shares |
|
|
|
|
||
Shares outstanding & issuable after |
|
||
|
|
||
Public float |
24,618,392 |
24,618,392 |
|
Class B equivalent Shares held by PPL |
5,760,014 |
5,760,014 |
(1) |
Class D equivalent Shares held by PPL |
2,244,975 |
2,244,975 |
(2) |
Additional PPL Class B equivalent Shares as of January 1, 2024 (80%) |
285,250 |
285,250 |
(3) |
Additional PPL Class B equivalent Shares - 20% Holdback as of |
- |
71,313 |
(4) |
Additional PPL Class D equivalent Shares as of January 1, 2024 (80%) |
- |
- |
(5) |
Additional PPL Class D equivalent Shares - 20% Holdback as of |
- |
- |
(4) |
Number of fully-diluted Shares |
32,908,631 |
32,979,944 |
|
Percentage of fully-diluted Shares available for exchange by PPL at |
25.2 % |
25.4 % |
|
|
|
|
(1) |
In early |
|
|
|
|
(2) |
In early |
|
|
|
|
(3) |
Additional Class B equivalent Shares available |
|
|
|
|
|
(a) |
Determined Amount = 92.5% x (1-Tax%) x [(Additional System Sales of |
Share Yield |
||
|
|
|
|
(b) |
Exchange Multiplier increase = (80% of Determined Amount / Market Price of Shares determined on the Adjustment Date) |
|
Class B Partnership Units Outstanding |
|
|
|
|
|
(c) |
Issuable Equivalent Shares = Exchange Multiplier increase amount x Class B Partnership Units Outstanding |
|
|
|
|
|
New Class B Exchange Multiplier = 2.410163 |
|
|
Tax % = 24.2% |
|
|
Net Additional System Sales = |
|
|
Royalty rate = 6% |
|
|
Share yield = 6.19% |
|
|
Class B Partnership Units Outstanding = 2,508,239 |
|
|
|
(4) |
A preliminary calculation of the 20% holdback of equivalent Shares was done as of |
|
|
|
|
(5) |
Due to the Determined Amount being zero, we do not anticipate there will be Additional Class D shares in 2024. |
Certain statements in this press release, including those concerning Forecasted Sales performance of new restaurants and related adjustments to the Exchange Multipliers, may constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
When used in this press release, such statements include such words as "may", "will", "expect", "believe", "plan", and other similar terminology in conjunction with a discussion of future operating or financial performance. These statements reflect management's current expectations regarding future events and operating performance of the restaurants added to the Royalty Pool and speak only as of the date of this press release. Material factors or assumptions reflected in the presentation of Forecasted Additional System Sales include: demographic and competitive studies, historical sales performance of similar stores and economic forecasts for the retail industry. These forward-looking statements involve a number of risks and uncertainties. The following are some factors that could affect the forecasted performance of these restaurants, causing actual results to differ materially from those expressed in or underlying such forward-looking statements: competition, the store owner's performance, changes in demographic trends, changing consumer preferences and discretionary spending patterns, changes in national and local business and economic conditions, and legislation and governmental regulation. These factors could also affect PPL's ability to develop new restaurants. The foregoing list of factors is not exhaustive and should be considered in conjunction with the other risks and uncertainties described in the Company's most recent Annual Information Form. The Company assumes no obligation to update these forward-looking statements, except as required by applicable securities laws.
www.pizzapizza.ca and www.pizza73.com or www.sedar.com.
SOURCE