Prime Restaurants Royalty Income Fund

Prime Restaurants Royalty Income Fund

December 16, 2009 16:40 ET

Prime Restaurants Royalty Income Fund Announces December 2009 Cash Distribution

MISSISSAUGA, ONTARIO--(Marketwire - Dec. 16, 2009) - Prime Restaurants Royalty Income Fund (TSX:EAT.UN) announced today that it has declared a cash distribution of $0.04 per trust unit for the period December 1, 2009 to December 31, 2009. The distribution will be made on January 15, 2010 to Unitholders of record at the close of business on December 31, 2009.

Due to the difficult operating environment, Prime Restaurants of Canada ("PRC") has requested that PRC Trademarks Inc. ("TradeMarkCo") defer collecting a portion of the royalty payable to it from PRC in the month of January 2010 under the Amended and Restated License and Royalty Agreement dated March 13, 2008 (the "Royalty Agreement"). TradeMarkCo has agreed to defer collecting a portion of the royalty payable in the month of January and to refrain from taking any actions under the Royalty Agreement until January 31, 2010 (or earlier in certain limited circumstances). This will not prejudice TradeMarkCo's rights and remedies after January 31, 2010 in respect of all amounts payable under the Royalty Agreement. TradeMarkCo has in turn advised the Fund that TradeMarkCo will be unable to pay the full amount of interest owing on the notes of TradeMarkCo held by the Fund in the month of January 2010, which is the source of cash for distributions to Unitholders. As part of the strategic review announced on June 29, 2009, the Fund's Board of Trustees and TradeMarkCo's Board of Directors is currently in discussions with PRC about the terms of a possible combination of the Fund with TradeMarkCo and PRC in order to reduce costs and maximize operating synergies. These discussions include consideration of a longer term distribution policy (although it is not anticipated that distributions would be reduced below a level equivalent to $0.04 per unit per month for the foreseeable future). There can be no assurance that such a combination or any other transaction will result from the strategic review.

About the Royalty Income Fund

Prime Restaurants Royalty Income Fund, through PRC Trademarks Inc. ("TradeMarkCo"), is entitled to receive top-line royalties of 3.25% of the gross food and beverage revenue from pooled restaurants under the terms of a 99-year licence agreement between TradeMarkCo and Prime Restaurants of Canada Inc. ("PRC"). PRC operates and franchises a diversified portfolio of casual dining restaurants and premium pubs in Canada under the East Side Mario's, Casey's, and Fionn MacCool's brands.

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