Source: GlobeNewswire (MIL-OSI)

Not for distribution to U.S. News wire services or dissemination in the U.S.

VANCOUVER, British Columbia, June 17, 2025 (GLOBE NEWSWIRE) — The Keg Royalties Income Fund (the “Fund”) (TSX: KEG.UN) today announced that, further to the non-binding letter of intent previously announced on May 5, 2025 (the “LOI”), it has entered into an arrangement agreement (the “Arrangement Agreement“) with 1543965 B.C. Ltd. (the “Purchaser“) an affiliate of Fairfax Financial Holdings Limited (collectively with its affiliates, “Fairfax”) pursuant to which the Purchaser has agreed to acquire all of the issued and outstanding units of the Fund (“Units”) other than Units already owned by Fairfax, for a price of $18.60 per Unit (the “Purchase Price”), payable in cash (the “Transaction”). The Transaction is not subject to a financing condition. The Fund will continue to pay its monthly cash distribution to unitholders (“Unitholders”) until the Transaction is completed, including a prorated cash distribution for the month in which the closing of the Transaction (the “Closing”) occurs, as well as a special cash distribution based on the Fund’s historical practice of paying annual special distributions, prorated for the portion of the fiscal year completed as of the Closing.

Kip Woodward, Chairman of the Fund, commented, “The Transaction offers the Fund’s unitholders a substantial premium at a compelling valuation, as well as immediate liquidity. It also provides the Keg business with additional financial flexibility in the hands of a committed, well-capitalized owner with a long-term perspective. We are very pleased to have reached this definitive agreement with Fairfax for our unitholders, following our announcement of the non-binding LOI last month.”

Benefits of the Transaction to Unitholders

The Transaction, if completed, will provide numerous benefits to Unitholders, including the following:

• Compelling Value and Significant Premium – the Purchase Price represents a 30.8% premium to the closing price for the Units on May 2, 2025 (the last trading day prior to the announcement of the LOI), and a 34.7% premium to the 20-day volume weighted average trading price as of that date.
• Certainty and Immediate Liquidity – the Purchase Price is 100% payable in cash, with no financing condition, providing Unitholders with certainty and immediate liquidity.
• Continued Distributions to Closing – the Fund will continue to pay its monthly cash distribution to Unitholders of $0.0946 per Unit until the Transaction is completed, including a prorated monthly distribution for the month in which the Closing occurs, as well as a special cash distribution based on the Fund’s historical practice of paying annual special distributions, with such special cash distribution being set at $0.055 per Unit for the 2025 fiscal year, prorated for the portion of the fiscal year completed as of the Closing.

Trustee Recommendation

The Transaction is the product of extensive, arm’s length negotiations that took place between the board of trustees of the Fund (the “Trustees”) and representatives of Fairfax. Throughout the negotiations, the Trustees were advised by independent and highly qualified legal and financial advisors.

In connection with their review of the Transaction, the Trustees retained Fort Capital Partners (“Fort Capital”) as its independent valuator in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). Fort Capital delivered an oral opinion to the Trustees that, as of June 16, 2025, and subject to certain assumptions, limitations and qualifications to be set forth in the written formal valuation that will be included in the management information circular (the “Circular“) that will be sent to the Unitholders in connection with the special meeting to be called to approve the Transaction (the “Special Meeting“), the fair market value of the Units is in the range of $16.50 to $19.50 per Unit (the “Formal Valuation“). Fort Capital has also delivered an oral fairness opinion to the Trustees that, as of June 16, 2025, and subject to the assumptions, limitations and qualifications to be set forth in Fort Capital’s written fairness opinion that will be included in the Circular, the consideration to be received by the Unitholders (other than Fairfax) pursuant to the Transaction is fair, from a financial point of view, to the Unitholders (other than Fairfax) (the “Fort Capital Fairness Opinion“).

Additionally, Capital West Partners (“Capital West”), financial advisor to the Trustees, provided an oral fairness opinion to the Trustees stating that, as of June 16, 2025, and subject to certain assumptions, limitations and qualifications to be set forth in Capital West’s written fairness opinion that will be included in the Circular, the consideration to be received by the Unitholders (other than Fairfax) pursuant to the Transaction is fair, from a financial point of view, to the Unitholders (other than Fairfax) (together with the Fort Capital Fairness Opinion, the “Fairness Opinions“).

The Trustees of the Fund, after receiving legal and financial advice, the Fairness Opinions and the Formal Valuation, have unanimously determined that the Transaction is in the best interests of the Fund and fair to the Unitholders (other than Fairfax) and unanimously recommend that the Unitholders vote in favour of the Transaction.

Copies of the Formal Valuation and the Fairness Opinions, as well as additional details regarding the terms and conditions of the Transaction, will be contained in the Circular, which will be filed with applicable Canadian securities regulators, made available on the SEDAR+ profile of the Fund at www.sedarplus.ca and mailed to the Unitholders in connection with the Special Meeting.

Transaction Structure and Details

The Transaction is structured as a statutory plan of arrangement under the Business Corporations Act (British Columbia), pursuant to which, among other things, the Purchaser will acquire all of the issued and outstanding Units, other than Units already owned by Fairfax, for the Purchase Price payable in cash.

The Transaction is expected to close in the third quarter of this year and is subject to customary closing conditions, including court approval, the approval of the Unitholders (as further described below), approval of the Toronto Stock Exchange and regulatory approval under the Competition Act (Canada).

Completion of the Transaction will be subject to the approval of (i) more than two-thirds (66 2/3%) of the votes cast by Unitholders present in person or represented by proxy at the Special Meeting and (ii) the majority of the votes cast by Unitholders present in person or represented by proxy at the Special Meeting, excluding the votes of Fairfax (which currently owns approximately 33.92% of the Units on a fully-diluted basis, including securities exchangeable into Units (“Exchangeable Units”)) and any other Unitholders whose votes are required to be excluded for the purposes of “minority approval” under MI 61-101. Further details regarding the applicable voting requirements will be contained in the Circular.

The Trustees and certain other Unitholders, including individuals who are directors and/or officers of certain subsidiaries of the Fund, and, as previously announced, the largest holder of outstanding Units (without taking into account any Exchangeable Units held by Fairfax), have agreed to vote their respective Units, if any, in favour of the resolution approving the Transaction, subject to certain customary conditions set forth in voting and support agreements (the “Support Agreements”). These Unitholders who have entered into Support Agreements currently hold an aggregate of approximately 14.7% of the issued and outstanding Units on an undiluted basis (representing approximately 9.9% of the issued and outstanding Units on a fully diluted basis, including the Exchangeable Units).

Advisors

Capital West Partners and Lawson Lundell LLP are acting as financial advisor and legal advisor, respectively, to the Trustees in respect of the Transaction. Torys LLP is acting as legal advisor to Fairfax in respect of the Transaction.

Forward Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. This information includes, but is not limited to, statements concerning the Fund’s objectives, its strategies to achieve those objectives, as well as statements made with respect to the Trustees’ beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “estimates”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent the Trustees’ expectations, estimates and projections regarding future events or circumstances. Forward-looking information in this news release, which includes, among other things, statements relating to the Transaction (including statements in respect of the consummation of the Transaction, the payment of cash distributions, and the satisfaction of the conditions precedent thereto, in each case, if at all), is necessarily based on a number of opinions and assumptions that the Trustees considered appropriate and reasonable as of the date such statements are made in light of their experience, current conditions and expected future developments, including the assumption that the Transaction can be completed on acceptable terms and that any conditions precedent can be satisfied.

Risks and uncertainties related to the Transaction include, but are not limited to: the possibility that the Transaction will not be completed on the terms and conditions currently contemplated; failure of the Fund and Fairfax to obtain the required regulatory, court, stock exchange and Unitholder approvals for, or satisfy other conditions to effect, the Transaction; the risk that the Transaction may involve unexpected costs, liabilities or delays; the risk of a change in general economic conditions; the risk that, prior to the completion of the Transaction, the business of KRL (as defined below) may experience significant disruptions; the risk that any legal proceedings may be instituted against the Fund or determined adversely to the interests of the Fund; and other risk factors contained in filings made by the Fund with the Canadian securities regulators, including the Fund’s annual information form dated March 25, 2025 and financial statements and related management discussion and analysis for the financial year ended December 31, 2024 filed with the securities regulatory authorities in certain jurisdictions of Canada and available at www.sedarplus.ca.

Although the Trustees have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to them or that they presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward- looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents the Fund’s expectations as of the date of this news release (or as the date they are otherwise stated to be made) and are subject to change after such date. However, the Fund disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

About The Keg Royalties Income Fund

The Fund is a limited purpose, open-ended trust established under the laws of the Province of Ontario that, through The Keg Rights Limited Partnership, a subsidiary of the Fund, owns certain trademarks and other related intellectual property used by Keg Restaurants Ltd. (“KRL”). Vancouver-based KRL is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL has been named the number one restaurant company to work for in Canada in the latest edition of Forbes “Canada’s Best Employers 2025” survey.

About Fairfax Financial Holdings Limited

Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management.

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