Limestone Boat signs LOI to acquire Ebbtide Holdings 2021-03-29 10:19 ET - News Release
Mr. Bill Mitoulas reports
LIMESTONE ANNOUNCES PROPOSED ACQUISITION OF EBBTIDE HOLDINGS, LLC AND OFFERING OF UP TO $17 MILLION OF CONVERTIBLE DEBENTURES
The Limestone Boat Company Ltd. has entered into a Letter of intent to purchase 100 per cent of Ebbtide Holdings LLC of White Bluff, Tenn. The purchase price of the Acquisition is comprised of USD$5,280,000 in cash and the assumption and payment of USD$4,043,800 Ebbtide's existing debt. The Acquisition and working capital will be financed through the issuance of up to $17.0 million of convertible debentures of the Company through a non-brokered private placement (the "Offering").
Acquisition of Ebbtide
Ebbtide manufactures the Aquasport and Boca Bay brands for their own account, as well as the Limestone line-up under contract for Limestone. The Acquisition will allow for the expanded production of all of these brands, in an effort to meet the growing market demand for marine products. Following the closing of the Acquisition, Limestone will have over 50 independent dealer locations servicing the Great Lakes and the East and Gulf Coasts of the United States. "The acquisition of Ebbtide Holdings is a keystone transaction in the continued and rapid growth of our company. The combination of heritage brands Limestone and Aquasport provides continuity in reputation for safety, performance and quality, coupled with the addition of the Boca Bay and Ebbtide brands further diversifying the Company's offering. Our team members in Collingwood, Ontario will be responsible for directing product development and North American sales, marketing, distribution and finance, allowing the team in Tennessee to focus primarily on production and regional sales. By securing expanded manufacturing capacity and a broad dealer network, we are well positioned to become a significant force in the North American marine industry" said Scott Hanson, CEO of the Company. All boats will continue to be manufactured in Ebbtide's recently upgraded 145,000 square foot facility in White Bluff, Tennessee.
Benefits to Limestone:
- Full control of manufacturing process: Brings manufacturing in-house, giving Limestone full control of the process and ability to capture margin at various stages of production.
- Significantly increases production capacity: Recently upgraded 145,000 square-foot manufacturing plant with annual capacity of ~1,300 boats.
- Expanded and diversified brand portfolio: Adds Aquasport heritage brand with large consumer following to complement the Limestone brand, along with Boca Bay and Ebbtide brands.
- Strengthened dealer distribution network: Nearly triples the number of dealer locations and deepens Limestone's presence along the US East Coast, Southeast Coast and Gulf Coast.
- Accretive to Limestone shareholders: Significantly increases pro forma revenue and profitability.
Offering of Convertible Debentures
The Company intends to complete a non-brokered private placement of up to $17.0 million aggregate principal amount of unsecured, convertible debentures (the "Debentures"), which mature 3 years from their date of issuance (the "Term"). The Debentures will bear interest at a rate of 10% per annum, payable annually in arrears. The Debentures will be convertible at any time at the option of the holder into common shares of the Company ("Common Shares") at a conversion price of $0.36 per Common Share (the "Conversion Price"). If at any time following 120 days from the date of issuance of the Debentures (the "Closing Date") and prior to the date that is 30 days prior to the end of the Term, the volume weighted average closing price of the Common Shares on the TSX Venture Exchange, or such other exchange on which the Common Shares may be listed, (the "Exchange"), is equal to or higher than $0.50 per Common Share for 20 consecutive trading days, the Company may notify the holders of the Debentures that the Debentures will be automatically converted into Common Shares at the Conversion Price 30 days following the date of such notice.
The Company will pay qualified brokers a cash commission of 8% of the gross proceeds from each Debenture subscription and compensation options equal to 8% of the common shares underlying the Debentures (the "Compensation Options"). Each Compensation Option will be exercisable into one Common Share at an exercise price of $0.36 for a period of 18 months from the Closing Date.
The Acquisition and Offering are subject to a number of customary conditions, including satisfactory due diligence, receipt of applicable regulatory and third-party approvals, including the approval of the Exchange and completion of definitive documentation in respect of the Acquisition and the Offering. Subject to the satisfaction of applicable closing conditions, the Offering and Acquisition are expected to close by April 30, 2021.
Grant of Options
On March 27, 2021 the Company granted to Mr. David Grandin, a director of the Company, one million options to acquire Common Shares of the Company at a price of $0.33 cents per Common Share, which options shall vest over three years from the date of grant.