BURLINGTON, ON, Dec. 6, 2024
/CNW/ - SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund") today
announced that SIR Corp. ("SIR" or the "Company"), the operating
entity from which the Fund's equity income is ultimately derived,
has completed a Twelfth amending agreement (the "Twelfth Amending
Agreement") to its credit agreement with its senior lender (the
"Lender"). The Twelfth Amending Agreement is intended to support
SIR's needs over the upcoming two quarters as it rebuilds
liquidity.
The Twelfth Amending Agreement, among other things:
- Increases the maximum Senior Leverage Ratio from 2.5x to 3.0x
for SIR's fiscal 2025 first and second quarters. The Senior
Leverage Ratio returns to 2.5x for SIR's fiscal 2025 third
quarter,
- Excludes the $6.25 million Export
Development Canada (the "EDC Guaranteed Facility") principal
repayment in July 2025 from the
calculation of fixed charges in the Fixed Charge Coverage
Ratio,
- Reverts Credit Facility 2 to a non-revolving facility, and
- Increases the applicable interest rates, with the exception of
the guaranteed facility with Business Development Bank of
Canada (the "BDC Guaranteed
Facility"), which remains fixed at 4% per annum.
On or before December 31, 2024,
SIR is required to provide a written report detailing its plan to
repay in full the EDC Guaranteed Facility on or before the
repayment date.
SIR will require the Lender's approval for any new lease
commitments beyond the currently committed Scaddabush locations in
Barrie and Oshawa, Ontario. SIR will also pay the Lender
a $25,000 amendment fee.
The following is a current summary of SIR's credit facilities
under the Twelfth Amending Agreement:
- Credit Facility 1 – a $20.0
million revolving facility, bearing interest at the prime
rate plus 3.25% or the CORRA rate plus 4.25%, with principal to be
repaid on July 6, 2026. As of the
current date, SIR has drawn $17.0
million on Facility 1.
- Credit Facility 2 – a $9.6
million non-revolving facility, bearing interest at the
prime rate plus 3.25% or the CORRA rate plus 4.25%. 2. Credit
Facility 2 shall be repaid and permanently reduced by SIR in
quarterly instalments of principal in the amount of $1.2 million in respect of the first five
payments, $0.2 million in respect of
the sixth payment and the balance due at maturity. As at the
current date, SIR has drawn $9.6
million on Facility 2 and this facility is fully drawn.
- The $6.25 million EDC Guaranteed
Facility, bearing interest at the prime rate plus 3.5%. The EDC
Guaranteed Facility is a 364-day revolving term facility that
matures July 6, 2025. The EDC
Guaranteed Facility is currently fully drawn.
- The $6.25 million BDC Guaranteed
Facility, bearing interest at a fixed rate of 4%. The BDC
Guaranteed Facility is a fully drawn, non-revolving term credit
facility. As of the current date, SIR has drawn $4.4 million on the BDC Guaranteed Facility.
As part of the Twelfth Amending Agreement, the Fund and the SIR
Royalty Limited Partnership (the "Partnership") also entered into
an acknowledgement agreement (the "Acknowledgement Agreement") with
the Lender acknowledging, among other things:
- receipt of a copy of the Twelfth Amending Agreement, and
- that none of either: entering the agreement, borrowing under
the agreement, or performing any of the obligations under the
agreement shall breach any of the terms or constitute an event of
default under any of the Fund's or the Partnership's existing
agreements with the Company.
The Twelfth Amending Agreement and the Acknowledgement Agreement
can be accessed via the Fund's profile on the SEDAR+ website at
www.sedarplus.ca.
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.
About SIR Corp.
SIR Corp. ("SIR") is a privately held Canadian corporation that
owns a portfolio of 54 restaurants in Canada. SIR's Concept brands include
Jack Astor's Bar and Grill® with 36
locations and Scaddabush Italian Kitchen & Bar® with 13
locations. SIR also operates one-of-a-kind "Signature" brands
including The Loose Moose® and Reds® Square One. 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. SIR also owns three additional restaurants, including
two Duke's Refresher® + Bar locations and Edna + VitaTM,
which are currently not part of the Royalty Pool. For more
information on SIR Corp. or the SIR Royalty Income Fund, please
visit www.sircorp.com.
Caution concerning forward-looking information
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 SIR Royalty Limited Partnership (the
"Partnership"), SIR, the SIR Restaurants or industry results, are
forward-looking statements. The words "may", "will", "should",
"would", 'could", "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 the 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; pandemics or
other material outbreaks of disease or safety issues affecting
humans or animals or food products; the ability to maintain
staffing levels; the impact of inflation, including on input prices
and wages; the impact of the war in the Ukraine; changes in tariffs and international
trade; changes in foreign exchange and interest rates; 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 and forced closures of or other limits placed on
restaurants and bars; laws affecting the sale and use of alcohol
(including availability and enforcement); changes in cannabis laws;
changes in environmental laws; privacy matters; accounting policies
and practices; changes in tax laws; the impact of cybersecurity
breaches; 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.
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.
For more information concerning risks and uncertainties, please
refer to the 'Risk Factors' in the Fund's March 14, 2024 Annual Information Form, for the
period ended December 31, 2023, and
the Fund and SIR's most recent interim and / or annual filings,
which are available under the Fund's profile at
www.sedarplus.ca.
SOURCE SIR Royalty Income Fund
