Quinsam Capital Corporation
TSX VENTURE : QCA.P

July 07, 2005 11:27 ET

Quinsam Capital Corporation Announces Proposed Acquisition of 241 Pizza & Robin's

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 7, 2005) - Quinsam Capital Corporation (TSX VENTURE:QCA.P) ("Quinsam" or the "Corporation") today announced that it has entered into a Purchase and Sale Agreement (the "Agreement") dated July 6, 2005 with Zeifman Partners Inc. of Toronto, Ontario, as the court appointed receiver (the "Receiver") of the assets of Afton Food Group Ltd. and various of its subsidiaries ("Afton"), to acquire certain assets of Afton for $7 million in cash (the "Transaction"). The assets to be acquired include substantially all of the assets and business undertakings of 241 Pizza®, a Toronto based franchisor of pizza take-out and delivery restaurants and Robin's®, a national franchisor of coffee, donuts and deli quick service restaurants. The assets are being acquired free of all debt.

241 Pizza was established in 1986 in Toronto, Ontario. The restaurants feature pizza, chicken wings, garlic bread, beverages and related items for the take-out and delivery markets. There are currently 87 franchisees operating under the 241 Pizza name, approximately two thirds of whom are clustered in the greater Toronto area where customer calls are directed through the company's unique 416-241-0241 phone number.

Robin's was established in 1975 in Thunder Bay, Ontario. Robin's quick service restaurants principally feature coffee, donuts and deli items for either dine-in or take-out customers. The Robin's brand has a critical mass of operations situated in Manitoba, Saskatchewan and north- west Ontario. Significant operations are also present in Alberta, British Columbia and the Maritimes, which are managed through two master franchise agreements. There are currently 118 franchisee locations and 10 corporate stores operating under the Robin's name.

Afton acquired 241 Pizza in 1997 and Robin's in 2000 for total cash payments of approximately $30 million. Afton subsequently encountered financial difficulties, in part due to the debt it carried following these acquisitions, and obtained protection under the Companies' Creditors Arrangement Act on July 16, 2004. Since then, Afton has undertaken a substantial restructuring of its operations. The Receiver was appointed by the Ontario Superior Court of Justice on February 28, 2005.

Bruce Smith has been President of Afton since April, 2004 and has led its restructuring process. Mr. Smith is a Chartered Accountant with over 15 years experience in restaurant operations and franchising. He was formerly Chief Financial Officer of Kelsey's International Inc., a leading national franchisor of casual family dining restaurants across Canada.

Mr. Smith commented that, "We have two great brands that have long, established histories in their key markets. Our franchisees and staff have been extremely supportive of our efforts throughout this restructuring process and both create a solid foundation for the renewed growth and development of our businesses. We are highly excited about the prospects for the Robin's and 241 brands in the future."

Quinsam is a capital pool company and intends for the Transaction to be its "qualifying transaction" as such term is defined by the policies of the TSX Venture Exchange (the "Exchange"). Completion of the Transaction is subject to numerous conditions including but not limited to approval by the Exchange, receipt of an acceptable vesting order from the Ontario Superior Court of Justice in respect of the assets being acquired and arrangement of appropriate financing by Quinsam.

Under the Agreement, Quinsam has agreed, subject to approval of the Exchange, to provide a refundable deposit of $225,000 to be held in trust by the Receiver's legal counsel pending closing of the Transaction.

In conjunction with, and as a condition precedent to, closing of the Transaction, Quinsam will seek to complete a financing. The Corporation has initiated discussion with potential agents in respect of the financing. There is no assurance that the financing can be arranged on terms satisfactory to the Corporation. Terms and structure of the financing are subject to negotiation.

The Transaction is an arm's length transaction. No related party of the Corporation has any interest in Afton or the Receiver. Accordingly, the Transaction will not, as currently contemplated, be subject to approval by the shareholders of the Corporation. There are no changes to the Board of Directors of the Corporation anticipated as a result of the Transaction.

Roy Zanatta, President of Quinsam, commented, "We are very pleased to announce this transaction and we are looking forward to working with the management, staff and franchisees of 241 Pizza and Robin's towards the growth and development of these two brands. We believe the transaction provides our shareholders with a unique opportunity to invest in two well known Canadian brands with long histories, great products and strong growth potential."

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the require shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

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