A Statement by Gateway Newstands

TORONTO, ONTARIO--(Marketwire - Jan. 30, 2013) - Gateway Newstands, the largest operator of newstands in North America, today stated that it welcomes political and media scrutiny of the harmonization and extension of three of its lease agreements with the Toronto Transit Commission (TTC).

"This is clearly the best deal for the TTC, for its ridership and for taxpayers," said Michael Aychental, CEO of Gateway Newstands. "In every respect, the harmonization and extension of our lease agreements provides the TTC with better value than a competitive bid that appears to offer a great deal, but in fact provides far less."

Aychental pointed to 10 facts that have been mostly overlooked in the coverage of Gateway's agreement with the TTC.

1. The competing bid, which purports to offer the TTC more in revenue than Gateway's agreement, would in fact provide less. (Comparisons to date have not included the immediate payment of a $1-million signing bonus by Gateway, the $1.4-million in increased rent from Gateway for 2013 and 2014, and the loss of revenue due to downtime of at least $1.5-million to $2-million - the result of transitional costs, as outlined by TTC staff in the Commission report.)
2. Comparisons with the competitive bid have not included the fact that any new tenant would have required six months to a year of construction, in the latter half of 2014 and into 2015, when our previous lease agreements expired, to construct its newstand facilities. The construction would have resulted in significant passenger inconvenience.
3. The harmonization and extension of lease agreements in the transit business is not uncommon, especially with organizations such as Gateway, which have established long and trusting relationships with many transit authorities. In fact, Gateway has previously negotiated harmonized lease agreements with the TTC, OC Transpo (the Ottawa-Carleton Regional Transit Commission) and VIA Rail.
4. Gateway has been operating newstands in the TTC since 1994. We have been partners in a successful, mutually beneficial business relationship.
5. In the general marketplace, the criteria for lease extensions is not only determined by dollars, but by experience, the size of the chain, payment records, cooperation with landlords - and the ability to pay and follow through on rental obligations. Gateway's record of payment and performance is unblemished.
6. Gateway's agreement with the TTC was thoroughly evaluated by an independent third party, which determined that Gateway is paying "above market" value under the lease harmonization.
7. Gateway has committed a minimum of $1.45-million in capital expenditures, bringing to more than $4-million the immediate financial benefit to the TTC in harmonizing the three lease expiry dates.
8. Like any private sector business, Gateway wouldn't have been able to make a capital investment in its TTC locations, including a commitment to renovate and expand its stores in time for the 2015 Pan Am Games, without the certainty of the harmonization of the existing contracts. It's the way the real world works.
9. The original RFP for newstands by the TTC was issued for a 10-year period, an industry standard.
10. Gateway has committed to building new stores - over and above the minimum capital requirements - during the term of our lease. During our 19-year relationship with the TTC, we have consistently exceeded our minimum capital improvement commitment.

"Gateway has been operating newstands in the TTC for almost 20 years," said Aychental. "We're immensely proud of our partnership, and of the 79 family-run businesses that operate newstands within the transit system. These newstands are run by incredibly hard-working people, who were very happy to hear about our new agreement - the harmonization of the expiry dates - with the TTC. It's their livelihood."

Gateway Newstands is the largest operator of newstands in North America, with more than 500 stores in transit - including subways, bus stations, train stations, other transit venues, office towers, shopping centres, hospitals, and other institutional venues. Where we are located, we pride ourselves on being a trusted and reliable partner.