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Priszm shelves monthly distribution Add to ...

Units of Priszm Income Fund plummeted almost 30 per cent Thursday after the company announced the suspension of monthly distributions to unitholders in an effort to increase its cash position.

Priszm, which operates and franchises KFC, Taco Bell and Pizza Hut restaurants in Canada, said it needed cash to fund capital programs required by franchise renewals with Yum! Restaurants International.

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It said it would also use the cash to strengthen its balance sheet and to fuel future growth.

Investors reacted by driving down Priszm units 36 cents or 29.27 per cent to 87 cents in early trading Thursday on the Toronto Stock Exchange.

"The decision to modify our capital allocation has been made to ensure that our cash reserves allow us to make necessary capital investments in our restaurants, to continue to improve our customers' experience and fuel further growth in our business," said John Bitove, Priszm's executive chairman.

Mr. Bitove added that Priszm had returned more than $155-million to unitholders since its launch in 2003.

He said the fund's trustees will continue to assess the status of distribution in the coming years as long-term capital commitments are quantified, refinancing options become available and an optimal corporate structure is developed to reflect income trust legislation taking effect in 2011.

Priszm holds a 60-per-cent interest in Priszm Limited Partnership, which owns and operates more than 400 quick service restaurants across Canada.

 

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