Mr. Kip Woodward of Keg Royalties reports

THE KEG ROYALTIES INCOME FUND ENTERS INTO ARRANGEMENT AGREEMENT

Further to the non-binding letter of intent previously announced on May 5, 2025, The Keg Royalties Income Fund has entered into an arrangement agreement with 1543965 B.C. Ltd., an affiliate of Fairfax Financial Holdings Ltd., pursuant to which the purchaser has agreed to acquire all of the issued and outstanding units of the fund other than units already owned by Fairfax for a price of $18.60 per unit, payable in cash. The transaction is not subject to a financing condition. The fund will continue to pay its monthly cash distribution to unitholders until the transaction is completed, including a prorated cash distribution for the month in which the closing of the transaction 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-per-cent 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-per-cent premium to the 20-day volume-weighted average trading price as of that date.
• Certainty and immediate liquidity -- The purchase price is 100 per cent 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 9.46 cents 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 5.5 cents 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 and representatives of Fairfax. Throughout the negotiations, the trustees were advised by independent and highly qualified legal and financial advisers.

In connection with their review of the transaction, the trustees retained Fort Capital Partners as its independent valuator in accordance with Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. 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 that will be sent to the unitholders in connection with the special meeting to be called to approve the transaction, the fair market value of the units is in the range of $16.50 to $19.50 per unit. 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).

Additionally, Capital West Partners, financial adviser 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).

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 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 herein), approval of the Toronto Stock Exchange and regulatory approval under the Competition Act (Canada).

The completion of the transaction will be subject to the approval of: (i) more than two-thirds (66-2/3rds per cent) 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 per cent of the units on a fully diluted basis, including securities exchangeable into 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. These unitholders who have entered into support agreements currently hold an aggregate of approximately 14.7 per cent of the issued and outstanding units on an undiluted basis (representing approximately 9.9 per cent of the issued and outstanding units on a fully diluted basis, including the exchangeable units).

Advisers

Capital West Partners and Lawson Lundell LLP are acting as financial adviser and legal adviser, respectively, to the trustees in respect of the transaction. Torys LLP is acting as legal adviser to Fairfax in respect of the transaction.

About The Keg Royalties Income Fund

The fund is a limited-purpose, open-ended trust established under the laws of Ontario that, through The Keg Rights LP, 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.

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