Prime Restaurants Inc. Agrees to be Acquired by Cara Operations Limited

Prime Restaurants Inc. ("PRI" or the "Company") (TSX:EAT) announced today that
it has entered into an acquisition agreement (the "Acquisition Agreement")
pursuant to which Cara Operations Limited ("Cara") has agreed, subject to
certain conditions, to acquire all of the issued and outstanding shares of the
Company. Shareholders will receive a total of $7.00 per share on the effective
date, comprised of $6.75 per share payable by Cara in cash and $0.25 per share
as a special dividend from PRI. The special dividend will be an eligible
dividend for purposes of the Income Tax Act (Canada) and any applicable
provincial taxing statutes. The transaction (the "Transaction") will be effected
pursuant to a plan of arrangement under Section 182 of the Business Corporations
Act (Ontario) and is expected to close on January 4, 2012. The Transaction is
conditional on Cara securing financing as described below. 


The $7.00 per share total amount to be received by shareholders represents a 44%
premium over the closing price of PRI's Class A limited voting shares on the TSX
on October 14, 2011 of $4.85 per share and a 53% premium over the volume
weighted average price of the Class A limited voting shares over the 20 trading
days ended October 14, 2011 of $4.59.


The Company's board of directors, based on the recommendation of a special
committee of independent directors, has unanimously recommended that
shareholders vote in favour of the Transaction. The special committee made its
recommendation with the benefit of input from its independent legal and
financial advisors. Morrison Park Advisors, independent financial advisors to
the special committee, has rendered an opinion, subject to the assumptions and
limitations described therein, that the consideration to be received pursuant to
the Transaction is fair, from a financial point of view, to the Company's
holders of Class A Limited Voting Shares.


"This Transaction delivers a significant premium and an excellent liquidity
opportunity to our shareholders that is unanimously supported by the Company's
board of directors," said Steven Sharpe, Chairman of the Company and the special
committee. "Furthermore, Cara Operations Limited will strengthen the Company's
future growth prospects and provide new business opportunities to the benefit of
both our franchisees and our employees."


"This is a proud day for Prime Restaurants and the entire Prime family who has
contributed to the growth and success of the Company over the past 30 years,"
said John A. Rothschild, Chief Executive Officer of the Company. "Becoming part
of the Cara family will create new opportunities to grow our brands."


The Transaction is subject to a number of conditions, including (a) the
completion of Cara's financing necessary to complete the Transaction; (b) the
approval of the Company's shareholders at a special meeting; (c) approval of
Ontario's Superior Court of Justice; and (d) certain other customary conditions.



The Acquisition Agreement includes a "go shop" provision allowing PRI to seek
other buyers for the Company until Cara irrevocably waives its financing
condition. In the event that Cara is unable to complete its financing, it will
pay the Company a termination fee in the amount of $3 million. 


The Acquisition Agreement also includes, among other things, a non-solicitation
covenant on the part of the Company following the expiry of the "go shop"
period, subject to a customary "fiduciary out" provision, which entitles the
Company to consider and accept a superior proposal, subject to the right of Cara
to match the superior proposal and the payment to Cara of a termination fee
(generally $1 million during the "go shop" period and $3 million thereafter). 


Prime Restaurant Holdings Inc. ("PRH"), which holds approximately 30% of the
outstanding shares eligible to vote on the Transaction, has entered into a
merger support agreement (the "Support Agreement") with Cara pursuant to which
it has committed to vote its shares in favour of the Transaction, subject to
certain terms and conditions. The Support Agreement automatically terminates if
the Acquisition Agreement is terminated.


Further details of the Transaction are expected to be included in a proxy
circular to be mailed to security holders in due course. The full Acquisition
Agreement, as well as the Support Agreement, will be filed on SEDAR at
www.sedar.com.


The Company's financial advisors are Morrison Park Advisors and its legal
counsel are Goodmans LLP and Stikeman Elliott LLP. Cara's financial advisors are
Scotia Capital Inc. and its legal counsel is Osler, Hoskin & Harcourt LLP.


About Prime Restaurants Inc.

PRI franchises, owns and operates one of Canada's leading networks of casual
dining restaurants and pubs. With such well-respected brands as East Side
Mario's, Casey's, Fionn MacCool's, D'Arcy McGee's, Paddy Flaherty's, Tir nan Og,
and Bier Markt, Prime has been delivering quality, value and a superior guest
experience for more than thirty years. Prime's class A limited voting shares are
listed on the Toronto Stock Exchange under the symbol "EAT".


About Cara Operations Limited

Cara Operations Limited (Cara) is Canada's leading branded full service
restaurant organization. The company is more than 125 years old and operates
some of the most recognized brands in the country, including Swiss Chalet
Rotisserie & Grill(R), Harvey's(R), Milestones Grill & Bar(R), Montana's
Cookhouse(R) and Kelsey's Neighbourhood Bar & Grill(R). Canadian-owned and led,
Cara is the restaurant family that brings Canadians together. For more
information visit www.cara.com.


Forward-Looking Statements

The public communications of PRI often include written or oral forward-looking
statements. Statements of this type are included in this news release, and may
be included in filings with Canadian securities regulators, or in other
communications. Forward-looking statements may involve, but are not limited to,
the completion of the Transaction in accordance with its proposed terms, the
ability of Cara to complete its necessary financing, comments with respect to
our objectives for 2011 and beyond, our strategies or planned future actions,
and our targets or expectations for our financial performance and condition. All
statements, other than statements of historical fact, contained in this news
release are forward-looking statements, including, without limitation,
statements regarding the future financial position and operations, business
strategy, plans and objectives of or involving PRI. Readers can identify many of
these statements by looking for words such as "believe", "expects", "will",
"intends", "projects", "anticipates", "estimates", "continues" and similar words
or the negative thereof. Although management believes that the expectations
represented in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. 


The forward-looking statements contained herein are expressly qualified in their
entirety by this cautionary statement. The forward-looking statements included
in this news release are made as of the date of this news release. Except as
required by applicable securities laws, PRI does not undertake to update any
forward-looking statement, whether written or oral, that may make or that may be
made, from time to time.