Units of fast-food restaurant owner Priszm Income Fund slipped more than 7 per cent on Thursday after it said it was cutting its monthly payout and selling off or closing nearly 30 per cent of its outlets.

The fund's units finished down 43 cents at $5.65 on the TSX.

Priszm Income Fund 3-month chart

Priszm owns a 60.2 per cent stakes in Priszm LP and its general partner, Priszm Inc., which owns and operates 484 KFC, Taco Bell, Pizza Hut and Long John Silver's restaurants.

The fund will sell off more than 120 outlets and close another 25 money-losing stores.

The fund's sales for the third quarter were $122.4 million, a drop of $5.1 million or 4 per cent from the same period in 2006, while its net income fell to $4.6 million from $5.1 million year-over-year.

The company slashed its monthly distribution to three cents per unit for October, November and December from its previous level of 10.67 cents. The distribution will go to 10 cents beginning in January.

"While our distributable cash for the third quarter was down only slightly from last year, the results were not strong enough to meet
expectations and make up for the first half of the year," said John Bitove, Priszm's chairman and CEO.

"As a result, we are taking immediate steps to refocus and to restructure the business for the future and to ensure a consistent and reliable cash flow for our unitholders for years to come," he said.

Priszm said it expects to receive between $20 million and $30 million from the sale of its outlets over the next two years.