A&W Revenue Royalties Income Fund - President and CEO, Susan Senecal
President and CEO, Susan Senecal
Source: The Globe and Mail
  • Hospitality investment firm, A&W Revenue Royalties Income Fund (TSX:AW.UN) has suspended its distribution, to help weather the recent industry upheaval
  • Due to ongoing COVID-related shutdowns, the company has temporarily closed 220 hamburger franchises and seen its sales figures drop by 50 per cent
  • To assist the closed franchises, the company has deferred a number of its royalty payments due from its franchisees, which are now expected by December 21, 2021
  • In a further effort to retain liquidity, A&W recently announced a C$10 million equity investment by its shareholders and has increased its credit facility from $6 million to $25 million
  • Before the market opens, A&W Revenue Royalties Income Fund (AW.UN) is trading at $27.73, with a market cap of $390 million. 

Hospitality investment firm, A&W Revenue Royalties Income Fund (TSX:AW.UN) has suspended its distributions, to help weather the recent industry upheaval.

The suspension comes into effect immediately and will help to the company retain some liquidity, while the COVID-19 pandemic continues to severely impact its operations.

The fund manages the A&W trademark associated with Canada’s hamburger chain of the same name. 

The company conceded that the impact of COVID-19 generally, and more specifically the impact of government mandated shutdowns, has been unprecedented.

So far, the company has been forced to temporarily close 220 locations out of its total of 995.

To assist the closed franchises, the company has deferred a number of its royalty payments, due from its franchisees.

However, the company still expects these royalties to be paid in full by December 21, 2021, at the latest.

Sales have dropped more than 50 per cent in recent months and the company has determined that it will require a liquidity boost until the pandemic abates.

Toward this end, last week the company announced a C$10 million equity investment by its shareholders, to help outlast the pandemic’s effects on the industry.

Furthermore, the company has increased its credit facility from $6 million to $25 million.

Susan Senecal, President and CEO of Food Services, remains confident that, once the pandemic abates, A&W will be well positioned to thrive.

“All enterprises in Canada are navigating very difficult challenges as they seek to ensure the long-term health and success of those businesses, for all stakeholders.

“A&W has consistently been one of the fastest growing and best performing restaurant chains in Canada. Food Services and our franchisees are working collaboratively to position the business for this kind of growth once the current pandemic crisis is resolved, whether in 3 months, 6 months or 24 months,” she said.

Before the market opens, A&W Revenue Royalties Income Fund (AW.UN) is trading at $27.73, with a market cap of $390 million. 

More From The Market Online

Why Decisive Dividend stock lets you have your cake and eat it too

Acquisition-oriented company Decisive Dividend Corp. (TSXV:DE) announces a monthly dividend of C$0.045 per common share for July 2024.

National Bank expands Western Canadian presence at hefty premium

National Bank (TSX:NA) will acquire Canadian Western Bank (TSX:CWB) for C$5 billion or a 110% premium to Tuesday's closing share price.

Report: Companies suffer financially from software supply chain attacks

BlackBerry (TSX:BB) releases the results of a global survey of 1,000 senior IT decision-makers and cybersecurity leaders.