BOSTON PIZZA ROYALTIES INCOME FUND AND BOSTON PIZZA INTERNATIONAL ANNOUNCE THREE-YEAR RENEWAL OF CREDIT FACILITIES

Executive Summary

• Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") announced the three-year renewal and amendment of their respective credit facilities with a Canadian chartered bank.
• The Fund's credit facilities were extended to mature on July 1, 2029, with modest increases in interest rates and margins reflecting current macroeconomic factors.
• BPI's credit facilities were also extended to July 1, 2029, but the total credit amount was significantly reduced from $34.0 million to $12.6 million, primarily due to principal repayments and a reduction in the Term Loan size.

Key Details

• Fund's Amended and Extended Credit Facilities:

  • Maturity: Extended from July 1, 2026, to July 1, 2029.
  • Structure:
    • Facility A: $2.0 million committed revolving operating facility (Royalties LP); no amounts drawn.
    • Facility B: $53.3 million committed non-revolving credit facility (Royalties LP) for refinancing, unit repurchases, and exchanges; fully drawn.
    • Facility D: $33.3 million committed revolving credit facility (Holding LP) for subscribing to LP Units; fully drawn.
  • Interest Rates:
    • Canadian Prime Rate Loans: Prime rate + 0.10% to 0.50% (based on Total Funded Net Debt to EBITDA ratio).
    • CORRA Loans: CORRA + CSA (0.29547% for 1-month or 0.32156% for 3-month periods) + 1.60% to 1.80% (based on ratio).
  • Standby Fee: 0.32% to 0.36% (based on ratio).
  • Covenants:
    • Total Funded Net Debt to EBITDA ratio must not exceed 2.25:1 (tested quarterly).
    • Distributions cannot exceed distributable cash and cash on hand by more than $2.0 million (tested quarterly on a trailing 12-month basis).
  • Other Terms: Maximum term for interest rate swaps reduced to seven years (from ten years); guarantees and security remain unchanged.

• BPI's Amended and Extended Credit Facilities:

  • Maturity: Extended from July 1, 2026, to July 1, 2029.
  • Credit Amount: Decreased by $21.4 million, from $34.0 million to $12.6 million.
    • Term Loan reduced from $24.0 million to $2.6 million.
    • Includes a $0.4 million principal repayment made on June 30, 2026.
  • Structure:
    • Operating Line: $10.0 million committed revolving facility; no amounts drawn.
    • Term Loan: $2.6 million committed non-revolving facility; fully drawn.
    • Term Loan principal reduced by quarterly payments of $0.4 million.
  • Interest Rates:
    • Canadian Prime Rate Loans: Prime rate + 0.10% to 0.90% (based on Total Funded Net Debt to EBITDA ratio).
    • CORRA Loans: CORRA + CSA (0.29547% for 1-month or 0.32156% for 3-month periods) + 1.60% to 2.10% (based on ratio).
  • Standby Fee: 0.32% to 0.42% (based on ratio).
  • Covenants:
    • Total Funded Net Debt to EBITDA ratio must not exceed 3.00:1.
    • Pre-distribution debt service coverage ratio must not be less than 1.25:1.
    • Post-distribution debt service coverage ratio must not be less than 1.00:1.
  • Other Terms: Covenant requiring pledged units to exceed outstanding advances was eliminated; guarantees and security remain unchanged.

Notable Quotes

• "The three-year renewal of the Fund's and BPI's credit facilities provides continued financial stability and flexibility for both the Fund and BPI," said Michael Harbinson, Chief Financial Officer of BPI and the Fund. "The modest increase in interest rates for the Fund and BPI are reflective of the overall increase in the cost of capital Canadian banks are experiencing due to current macroeconomic factors. The renewed facilities extend our debt maturities through 2029 and support our continued focus on maintaining a strong and stable business for all stakeholders."