SIR Royalty Income Fund Announces Correction to Additions to Royalty Pool

BURLINGTON, ON, Feb. 1, 2019 /CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today announced that it has corrected an error that was contained in the press release issued on January 29, 2019 with respect to the adjustment to the Royalty Pool effective January 1, 2019. The February 1, 2019 press release should be read in conjunction with the press release issued on January 29, 2019. The correction is in respect of the 2019 Adjustment for Reduction for the closure of the Canyon Creek on Front Street in downtown Toronto that was closed effective December 9, 2018.

2019 Adjustment for Reduction
The Base Level Revenue of the closed restaurant, previously reported in error as $4.2 million, has been revised to the correct amount of $3.4 million, and the corresponding estimated annual reduction to the Royalty Pool based on 6% of the Base Level Revenue, previously reported in error as $0.3 million, has been revised to the correct amount of $0.2 million. The original number of Class A GP Units that offset the 312,552 Class A GP Units received by SIR for the two new restaurants added to the Royalty Pool on January 1, 2019, previously reported in error as 210,333, has been revised to the correct amount of 170,198.

As a result of this amendment, the number of Class A GP Units SIR owns, controls and holds has been revised from 2,174,115 to 2,214,250, representing the equivalent of 20.91% of the units of the Fund on a fully diluted basis (previously reported in error as 20.61%). The number of Class B GP Units SIR owns, controls and holds has been revised from 95,402,170 to 95,362,035, representing 100% of the issued and outstanding Class B GP Units.

Capital Structure
Following the 2019 Initial Adjustment, 2018 Second Incremental Adjustment and the corrected 2019 Adjustment for Reduction, all effective January 1, 2019, SIR owns, controls and holds 2,214,250 Class A GP Units, representing the equivalent of 20.91% of the units of the Fund on a fully diluted basis. This 20.91% consists of:

• 2,016,426 Class A GP Units held by SIR as at December 31, 2018, and
• The 197,824 in additional Class A GP Units received for the adjustments to the Royalty Pool effective January 1, 2019 (312,552 for the 2019 Initial Adjustment plus 55,470 received for the 2018 Second Incremental Adjustment minus 170,198 returned for the 2019 Adjustment for Reduction). 197,824 Class B GP Units were exchanged for Class A GP units effective January 1, 2019. This conversion of Class B GP units into Class A GP units increases SIR's share of the fully diluted units from 19.40% to 20.91%.

Subsequent to the aforementioned exchanges, SIR owns, controls and holds 95,362,035 Class B GP Units (previously reported in error as 95,402,170 Class B GP Units), which are convertible in certain circumstances (based on the addition of further new restaurants to Royalty Pooled Restaurants) into Class A GP Units on a one-for-one basis. The 95,362,035 Class B GP Units currently represent 100% of the issued and outstanding Class B GP Units.

The Offeror and Peter Fowler (who beneficially owns 31,500 units of the Fund apart from the Offeror's holdings), who are affiliated, may be considered under applicable securities laws to be acting jointly or in concert. This news release is not confirmation of same, and the 20.91% equivalent Fund unit holding, represented by SIR's Class A GP Units noted above, would increase to 21.21%, previously reported in error as 20.91%, taking into account such additional units of the Fund.

Calculation of SIR's share of the Fund on a Fully Diluted Basis	Issued and Outstanding Units, & Additional Units resulting from 2019 Adjustments to Royalty Pool
Public Float at December 31, 2018	8,375,567
Class A GP Units held by SIR as at December 31, 2018 (convertible
to Units on a one-for-one basis)	2,016,426
Add / (Subtract):
Class A GP Units per the 2019 Initial Adjustment	312,552
Class A GP Units per the 2018 Second Incremental Adjustment	55,470
Class A GP Units per the 2018 Adjustment for Reduction	(170,198)
Number of fully-diluted Units	10,589,817
Number of fully diluted Units available for exchange by
SIR effective January 1, 2019	2,214,250
Percentage of fully-diluted Units available for exchange
by SIR effective January 1, 2019	20.91%

About SIR Corp.
SIR is a privately held Canadian corporation that owns a portfolio of 60 restaurants and one seasonal retail outlet in Canada. SIR's Concept brands include: Jack Astor's Bar and Grill®, with 40 locations; Scaddabush Italian Kitchen & Bar®, with eight locations; and Canyon Creek®, with six locations.  SIR also operates one-of-a-kind "Signature" brands, including Reds® Wine Tavern, Reds® Midtown Tavern, Reds® Square One and The Loose Moose®.  All trademarks related to the Concept and Signature brands noted above are used by SIR under a License and Royalty Agreement with SIR Royalty Limited Partnership in consideration for a Royalty, payable by SIR to the Partnership, equal to six percent of the revenue of the 58 restaurants currently included in the Royalty Pool. SIR also owns Duke's Refresher® & Bar in downtown Toronto and one seasonal Signature restaurant, Abbey's Bakehouse, which are currently not in consideration to be part of the Royalty Pool. For more information on SIR Corp. or the SIR Royalty Income Fund, please visit www.sircorp.com.  

About SIR Royalty Income Fund
The Fund is a trust governed by the laws of the province of Ontario that receives distribution income from its investment in the SIR Royalty Limited Partnership and interest income from the SIR Loan. The Fund intends to pay distributions to unitholders on a monthly basis.

Caution concerning forward-looking statements

Certain statements contained in this report, or incorporated herein by reference, including the information set forth as to the future financial or operating performance of the Fund or SIR, that are not current or historical factual statements may constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning the objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of the Fund, the SIR Holdings Trust (the "Trust"), the Partnership, SIR, the SIR Restaurants or industry results, are forward-looking statements. The words "may", "will", "would", "should", "expect", "believe", "plan", "anticipate", "intend", "estimate" and other similar terminology and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Fund, the Trust, the Partnership, SIR, the SIR Restaurants or industry results, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. These statements reflect Management's current expectations, estimates and projections regarding future events and operating performance and speak only as of the date of this document. Readers should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. Risks related to forward-looking statements include, among other things, challenges presented by a number of factors, including: market conditions at the time of this filing; competition; changes in demographic trends; weather; changing consumer preferences and discretionary spending patterns; changes in consumer confidence; changes in national and local business and economic conditions; changes in tariffs and international trade; changes in foreign exchange; changes in availability of credit; legal proceedings and challenges to intellectual property rights; dependence of the Fund on the financial condition of SIR; legislation and governmental regulation, including the cost and/or availability of labour as it relates to changes in minimum wage rates or other changes to labour legislation; laws affecting the sale and use of alcohol (including availability and enforcement); changes in cannabis laws; accounting policies and practices; and the results of operations and financial condition of SIR. The foregoing list of factors is not exhaustive. Many of these issues can affect the Fund's or SIR's actual results and could cause their actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Fund or SIR.  There can be no assurance that SIR will remain compliant in the future with all of its financial covenants under the Credit Agreement and imposed by the lender. Given these uncertainties, readers are cautioned that forward-looking statements are not guarantees of future performance and should not place undue reliance on them. The Fund and SIR expressly disclaim any obligation or undertaking to publicly disclose or release any updates or revisions to any forward-looking statements. Forward-looking statements are based on Management's current plans, estimates, projections, beliefs and opinions, and the Fund and SIR do not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change, except as expressly required by applicable securities laws.

In formulating the forward-looking statements contained herein, Management has assumed that business and economic conditions affecting SIR's restaurants and the Fund will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, competition, general levels of economic activity (including in downtown Toronto), regulations (including those regarding employees, food safety, cannabis, tobacco and alcohol), weather, taxes, foreign exchange rates and interest rates, that there will be no pandemics or other material outbreaks of disease or safety issues affecting humans or animals or food products, and that there will be no unplanned material changes in its facilities, equipment, customer and employee relations, or credit arrangements. Recent changes in employment law, including announced increases in minimum wages, are factored into management's assumptions. These assumptions, although considered reasonable by Management at the time of preparation, may prove to be incorrect.  In particular, Management has assumed that the tax effects on distributions will remain consistent with current regulations or pronouncements, and also in estimating the revenue for new restaurants, Management has assumed that they will operate consistent with other similar SIR restaurants and has assumed that SIR will remain compliant in the future with all of its financial covenants under the Credit Agreement and imposed by the lender. For more information concerning the Fund's risks and uncertainties, please refer to the March 14, 2018 Annual Information Form, for the period ended December 31, 2017, which is available under the Fund's profile at www.sedar.com. All of the forward-looking statements made herein are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Fund or SIR.

SOURCE SIR Royalty Income Fund

Jeff Good, Chief Financial Officer, Tel: [phone]; Bruce Wigle, Bay Street Communications, Tel: [phone]

Related Links

http://www.sircorp.com