Sir Royalty Income Fund T.SRV.UN

RE:RE:RE:Statement from the Independent Trustees

[BlueJay2020]

I agree that it is unlikely that there will be a white knight at this stage - I think the best we can hope for is for the price to be bumped up by a buck OR we just sit tight and wait for the situation to improve and start earning dividends.

I actually think the short statement from independent trustees is quite revealing for a number of reasons:

1) Sir Corp have been interested in buying out the royalties for MONTHS - not clear how long this actually is, but it is not too long ago that the shares were selling for a buck-fifty.    At that point, an offer north of $3.00 would have perhaps been more attractive.  But once the vaccines were announced, this changed the landscape.  Who knows what the original offer was and whether it was bumped up to $3.55?  In any event, the independent trustees seem to have done us a huge favour by delaying the offer long enough to make it clear just how much of a lowball offer it now is.

2) At one point, Sir Corp wanted to offer us shares in Sir Corp rather than cash.  I find this very surprising.  Can anyone explain the potential benefits to the buyer or the seller. The seller would be exchanging a known expense for an unknown sacrifice of equity (in the long-run).  For the buyer (us) - how would we know what a fair number of shares were in exchange for the royalty stream.  Some of us are concerned with the opaqueness of things as they stand - well, they would be a whole lot worse!  Usually, restaurant stocks are royalty plays so it would be odd to change this (somewhat) to a more conventional arrangement with an equity stake in ops.  On top of that we would lose the independent trustees and be stuck with a minority stake that we would be able to do nothing with - it would also be highly illiquid. 

3) There is inadequate communication with the independent trustees.   SIr Corp has gone on ahead and made an offer directly to us on an unofficial basis.  This was already clear to some extent based on the original PR, with the talk of a 'hostile' offer.  However, now we know that the independent Trustees have unanswered questions themselves.  One suspects that SIR CORP have got tired of the Independent Trustees blocking and have decided to move ahead.  If they are that keen to acquire the royalty stream, that tells me they are prepared to pay more than $3.55.

4) The Independent Trustees are exploring other alternatives.  As others have said, I imagine those options are quite limited.  However, it is quite significant to me that the Independent Trustees have come out and said what they have.  It's basically saying to shareholders that there may well be a better outcome than $3.55.

I guess the ball is now back in Sir Corp's court to respond.  They may be up against the impossible but I am pleased to see that the Independent Trustees have not just rolled over, but are sticking to theitr fiduciary duty to look after its shareholders.