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| Press Release

A&W Revenue Royalties Income Fund and A&W Food Services of Canada Inc. Announce an Increase to Secondary Bought Deal Offering of Units

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

VANCOUVER, British Columbia, May 16, 2019 (GLOBE NEWSWIRE) -- A&W Revenue Royalties Income Fund (the “Fund”) (TSX: AW.UN) and A&W Food Services of Canada Inc. ("Food Services") are pleased to announce that, due to strong demand, the Fund and Food Services have entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets (collectively the “Underwriters”) to increase the size of its previously announced secondary offering to 1,460,000 trust units (the “Units”) of the Fund on a bought deal basis at a price of $44.55 per Unit (the “Offering Price”), for gross proceeds to Food Services of $65,043,000 (the “Offering”). 

The Fund will not receive any proceeds from the Offering. Food Services will distribute the net proceeds of the Offering to its long standing shareholders.

The Underwriters have also been granted an over-allotment option (the “Over-Allotment Option”) by Food Services to purchase up to an additional 219,000 Units from Food Services at the Offering Price for additional gross proceeds of approximately $9.8 million if the Over-Allotment Option is exercised in full. The Over-Allotment Option can be exercised at any time, in whole or in part, for a period of 30 days from the closing date of the Offering.

Food Services currently owns securities exchangeable for 4,997,603 units of the Fund, representing approximately a 28.6% indirect interest in the Fund on a fully-diluted basis. Following the exchange of these securities for Units and the sale of the Units, assuming no exercise of the Over-Allotment Option, Food Services will own securities exchangeable for 3,537,603 Units of the Fund, or approximately a 20.2% indirect interest in the Fund on a fully-diluted basis. If the Over-Allotment Option is exercised in full, Food Services will own securities exchangeable for 3,318,603 Units of the fund, or approximately a 19.0% indirect interest in the Fund.

The Offering will be made pursuant to a short form prospectus to be filed with securities regulators in each of the provinces of Canada (other than Quebec). The Offering is expected to close on or about June 5, 2019. Closing is subject to a number of customary conditions, including receipt of all necessary regulatory approvals.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, which may be made only by means of the prospectus, nor shall there be any sale of the Units in any state, province or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state, province or jurisdiction. The Units have not been, and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or compliance with an applicable exemption from the registration requirement under U.S. securities laws.

About the Fund

The Fund is a limited purpose trust established to invest in A&W Trade Marks Inc. (“Trade Marks”), which through its interest in A&W Trade Marks Limited Partnership (the “Partnership”), owns the A&W trade-marks used in the A&W quick service restaurant business in Canada.  The A&W trade-marks comprise some of the best-known brand names in the Canadian foodservice industry.  In return for licensing A&W Food Services to use its trade-marks, Trade Marks (through the Partnership) receives royalties equal to 3% of the sales of A&W restaurants in the Royalty Pool.  A&W is the second largest quick-service hamburger restaurant chain in Canada.  Operating coast-to-coast, A&W restaurants feature famous trade-marked menu items such as The Burger Family, Chubby Chicken and A&W Root Beer.

The Royalty Pool is adjusted annually to reflect sales from new A&W restaurants, net of the sales of any A&W restaurants that have permanently closed.  Additional limited partnership units (“LP units”) are issued to A&W Food Services to reflect the annual adjustment.  A&W Food Services' additional LP units are exchanged for additional shares of Trade Marks which are exchangeable for units of the Fund.  The 17th annual adjustment to the Royalty Pool took place on January 5, 2019 at which time the number of restaurants in the Royalty Pool increased from 896 to 934.

A&W Food Services owns 28.6% of the common shares of Trade Marks, and therefore owns the equivalent of 28.6% of the units of the Fund on a fully-diluted basis.  

Trade Marks' dividends to A&W Food Services and the Fund, and the Fund's distributions to unitholders are based on top-line revenues of the A&W restaurants in the Royalty Pool, less interest, general and administrative expenses and current income taxes of Trade Marks, and are thereby isolated from many of the factors that impact an operating business.

Follow A&W on Facebook (www.facebook.com/AWCanada) and Twitter @AWCanada or visit www.awincomefund.ca.

Forward Looking Information

Certain statements in this news release may contain forward-looking information within the meaning of applicable securities laws in Canada (forward-looking information). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.  Specific forward-looking information in this news release includes statements related to: the expected use of proceeds of the offering; the expected closing date for the Offering and the expected indirect interest of Food Services in the Fund following the completion of the Offering. The forward-looking information is based on assumptions that management considered reasonable at the time it was prepared, including the assumption that the Offering will be completed at the time and on the terms contemplated herein and that all necessary regulatory approvals required for the Offering will be obtained.  The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by the forward-looking information.  The factors which could cause results to differ from current expectations include, without limitation, those factors described in the Fund's most recent Management Discussion and Analysis under the heading "Risks and Uncertainties" and the Fund's Annual Information Form under the heading "Risk Factors", available on SEDAR at www.sedar.com.  The forward-looking information contained in this news release represent The Fund’s and Food Services’ expectations as of the date of this news release, and are subject to change after this date. The Fund and Food Services each assume no obligation to update or revise any forward-looking information, except as required by applicable law.

SOURCE A&W Revenue Royalties Income Fund

For further information: Don Leslie, Chief Financial Officer: (604) 988-2141 or investorrelations@aw.ca

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