Second Cup Royalty Income Fund completes initial public offering

Date Closed: 12/02/2004

Value: $81 million

Second Cup Royalty Income Fund completed its initial public offering of units on December 2, 2004, raising gross proceeds of over $81 million. A total of 8,145,346 units were offered to the public at $10 per unit. The Fund is one of Canada’s newest royalty trusts, established to indirectly hold the Canadian trademarks and other intellectual property rights used by the Second Cup Ltd. in connection with the operation of Second Cup-branded cafés in Canada. Pursuant to license arrangements with Second Cup, the Fund receives, indirectly, a royalty based on system sales generated by 351 Second Cup cafés in Canada. The Bank of Nova Scotia acted as agent for a syndicate of lenders that had extended credit facilities to Cara Operations Ltd., the promoter of the Fund and the parent of Second Cup. Cara used the proceeds received by it indirectly in connection with the completion of the Fund’s initial public offering to reduce indebtedness under those credit facilities and related notes. The Bank also provided certain loans to a subsidiary of the Fund in connection with the offering.

The Bank of Nova Scotia was represented by BLG with a team that included Bruce Fowler, Gus Karantzoulis and Jeffrey Ellis (financial services), and Ziad Katul (intellectual property).