Prime Restaurants Royalty Income Fund announced today that the Fund has reached an agreement in principle with Prime Restaurants of Canada Inc. (“PRC”), PRC’s sole shareholder, Prime Restaurant Holdings Inc. (“PRH”) and PRC Trademarks Inc. (“TradeMarkCo”) regarding the principal terms of a proposed transaction (the “Combination Transaction”) to combine and form a new, publicly-traded corporation to be named Prime Restaurants Inc. (“Amalco”).
PRC also announced that an operational restructuring plan designed to improve its business of operating and franchising restaurants is being implemented.
Under the existing structure, TradeMarkCo receives licensing royalties generated by the Prime Restaurants. The Combination Transaction will consolidate ownership of the intellectual property for the Prime Restaurants (which is currently owned by TradeMarkCo) and the franchising business currently operated by PRC. The conversion to a corporation in conjunction with the Combination Transaction will also provide certainty to the unitholders of the Fund (“Unitholders”) with respect to the 2011 effective date of tax legislation affecting income trusts and will simplify the structure of the combined business. Read full article.