VANCOUVER, BC, February 10, 2011 – The Keg Royalties Income Fund (the “Fund”) (TSX: KEG.UN) today announced that its February 2011 distribution of $0.08 cents per unit has been declared and is payable to unitholders of record as at February 21, 2011. The February 2011 distribution will be paid on February 28, 2011.
On January 1, 2011, legislative changes to the tax treatment of certain income trusts, as a result of the Specified Investment Flow-through Trust tax (the “SIFT tax”), came into effect. As a result of these changes, income trusts will not be entitled to deduct distributions of certain types of income for tax purposes, and will therefore be subject to taxation similar to corporations. Accordingly, the Fund will be subject to tax at a rate of 26.5% for 2011 and 25% for the 2012 and later taxation years.
As previously announced, as a result of this taxation, the Fund's Trustees have adopted a new distribution policy which reflects the Fund's obligation to make the SIFT tax payments. Beginning with the distribution payable to unitholders on February 28, 2011, distributions have been set at $0.08 per unit per month. This amounts to a distribution of $0.96 per unit annually. At this level, the eligible dividend portion of the Fund's distribution, combined with the return of capital component of the distribution, should provide taxable Canadian individuals with an effective after-tax cash return very closely comparable to the return that existed before the imposition of the SIFT tax.
The Fund is a limited purpose, open-ended trust established under the laws of Ontario. The Fund indirectly owns certain trademarks and other related intellectual property used by Keg Restaurants Ltd. ("KRL") in its Keg Steakhouses & Bars. In exchange for the use of those trademarks, KRL pays the Fund a royalty equal to 4% of the sales of all Keg restaurants in the royalty pool.
Vancouver-based Keg Restaurants Ltd. 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 continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses. Keg Restaurants Ltd. has been named one of the “50 Best Employers in Canada” by Aon Hewitt for the past nine years. Established in North Vancouver in 1971, The Keg celebrates its 40th anniversary in 2011. For more information on our brand visit www.kegsteakhouse.com.
For further information contact:
Karyn Byrne, Investor Relations Manager