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VANCOUVER, B.C. – May 5, 2025 – The Keg Royalties Income Fund (the “Fund”) (TSX: KEG.UN) today announced that it has entered into a letter of intent (the “Letter of Intent”) pursuant to which one or more affiliates of Fairfax Financial Holdings Limited (collectively, “Fairfax”) would acquire all of the issued and outstanding units of the Fund (“Units”) other than those Units already owned by Fairfax (including any Units issuable in respect of securities exchangeable into Units (the “Exchangeable Units”)), at a purchase price of $18.60 per Unit (the “Offer Price“), payable in cash (the “Proposed Transaction”).

The Offer Price represents a 30.8% premium to the closing price for the Units on May 2, 2025, and a 34.7% premium to the 20-day volume weighted average trading price as of the end of trading on May 2, 2025.

The Proposed Transaction would not be subject to any financing condition.

The Letter of Intent was entered into following negotiations between Hamblin Watsa Investment Counsel Ltd. (“HWIC”), in its capacity as investment manager on behalf of Fairfax, and the board of trustees of the Fund (the “Trustees”), each of whom is independent. The Trustees determined to enter into the Letter of Intent after carefully evaluating the financial terms of the Proposed Transaction and receiving advice from the Fund’s independent financial and legal advisors.

The largest holder of outstanding Units (without taking into account any Exchangeable Units held by Fairfax), which currently holds 14.6% of the issued and outstanding Units on an undiluted basis (representing 9.9% of the Units on a fully diluted basis, including the Exchangeable Units), has entered into an agreement with HWIC, in its capacity as investment manager on behalf of Fairfax, to support the Proposed Transaction, subject to certain customary conditions.

In connection with their continued review of the Proposed Transaction, the Trustees have retained an independent valuator to prepare a formal valuation of the Units (the “Formal Valuation“) as required under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“) and provide an opinion that, subject to the assumptions, limitations and qualifications to be set forth in any written opinion, the consideration to be received by the holders of Units (other than Fairfax) pursuant to the Proposed Transaction is fair, from a financial point of view, to the holders of Units (other than Fairfax) (a “Fairness Opinion”).

The Letter of Intent is not a definitive agreement with respect to the Proposed Transaction, and the execution of a definitive agreement in respect of the Proposed Transaction, if any, remains subject to, among other things, (i) the negotiation and execution of a definitive agreement on terms satisfactory to the Fund and Fairfax, (ii) final approval of the Proposed Transaction by the Trustees, and (iii) receipt of the Formal Valuation and Fairness Opinion satisfactory to the Trustees. The consummation of the Proposed Transaction would be subject to various conditions customary for transactions of this nature, including, among others, (i) receipt of any required regulatory, court and stock exchange approvals, and (ii) the approval of the Proposed Transaction at a special meeting of the holders of Units entitled to vote on the Proposed Transaction, including “minority approval” as defined under MI 61-101.

Unitholders of the Fund do not need to take any action at this time in respect of the proposal from Fairfax pursuant to the Letter of Intent and should await further information from the Trustees in respect of the Proposed Transaction.

While the Trustees have determined to enter into the Letter of Intent with respect to the Proposed Transaction, the Letter of Intent does not bind the Trustees or the Fund to enter into the Proposed Transaction, or any agreement in respect thereof, all of which remains subject to final approval by the Trustees. There can be no assurance that the Fund and Fairfax will enter into a definitive agreement in respect of the Proposed Transaction or that the Proposed Transaction will occur as proposed or at all. The Fund does not expect to make further public comment regarding the matters contemplated herein until a definitive agreement in respect of the Proposed Transaction is entered into or the Proposed Transaction is abandoned.

Advisors

Capital West Partners and Lawson Lundell LLP are acting as financial advisor and legal advisor, respectively, to the Trustees in respect of the Proposed Transaction. Torys LLP is acting as legal advisor to Fairfax in respect of the Proposed Transaction.

Forward Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. This information includes, but is not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements made with respect to the Trustees’ beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “estimates”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent the Trustees’ expectations, estimates and projections regarding future events or circumstances. Forward-looking information in this news release, which includes, among other things, statements relating to the Proposed Transaction (including statements in respect of the execution of the definitive agreement and the consummation of the Proposed Transaction, including the satisfaction of the conditions precedent thereto, in each case, if at all), is necessarily based on a number of opinions, estimates and assumptions that the Fund considered appropriate and reasonable as of the date such statements are made in light of its experience, current conditions and expected future developments, including the assumption that the Proposed Transaction can be completed on acceptable terms and that any conditions precedent can be satisfied.

Risks and uncertainties related to the Proposed Transaction include, but are not limited to: the possibility that the Proposed Transaction will not be completed on the terms and conditions currently contemplated; failure of the Fund and Fairfax to enter into a definitive agreement for the Proposed Transaction on terms satisfactory to the Fund and Fairfax, or at all; failure of the Fund and Fairfax to obtain the required regulatory, court, stock exchange and unitholder approvals for, or satisfy other conditions to effect, the Proposed Transaction; failure by the independent valuator to deliver a Formal Valuation and Fairness Opinion satisfactory to the Trustees at the time the definitive agreement is entered into; the risk that the Proposed Transaction may involve unexpected costs, liabilities or delays; the risk of a change in general economic conditions; the risk that, prior to the completion of the Proposed Transaction, the business of KRL (as defined below) may experience significant disruptions; the risk that any legal proceedings may be instituted against the Fund or determined adversely to the interests of the Fund; and other risk factors contained in filings made by the Fund with the Canadian securities regulators, including the Fund’s annual information form dated March 25, 2025 and financial statements and related management discussion and analysis for the financial year ended December 31, 2024 filed with the securities regulatory authorities in certain jurisdictions of Canada and available at www.sedarplus.ca.

Although the Trustees have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to them or that they presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward- looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents the Fund’s expectations as of the date of this news release (or as the date they are otherwise stated to be made) and are subject to change after such date. However, the Fund disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

About The Keg Royalties Income Fund

The Fund is a limited purpose, open-ended trust established under the laws of the Province of Ontario that, through The Keg Rights Limited Partnership, 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. KRL has been named the number one restaurant company to work for in Canada in the latest edition of Forbes "Canada's Best Employers 2025" survey.

For further information, contact:

Investor Relations

Telephone: 604-276-0242
E-mail: InvestorRelations@kegrestaurants.com
https://www.thekeg.com/en/keg-income-fund