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Diamond Estates Wines & Spirits Inc. (TSXV: DWS) ("Diamond Estates" or "the Company") is pleased to announce a non-brokered private placement (the “Placement”) of up to $5.0 million aggregate principal amount of 10.0 % unsecured convertible debentures of the Company (the “Debentures”). The Placement is expected to close on or about November 2, 2022 (the “Closing”), subject to customary closing conditions, including approval from the TSX Venture Exchange (the “TSXV”). The Company intends to use the net proceeds of the Placement for general working capital and investment purposes.
The Debentures bear interest from the date of issue at 10.0% per annum, calculated monthly, in arrears. The interest accrues on the principal outstanding under the Debentures until such principal is repaid or converted. The Debentures will mature one year from their date of issuance (the “Maturity Date”), unless the holder requests to accelerate the Maturity Date in the event the Company completes an equity financing within the next 12 months.
The Debentures are convertible at the holder’s option from the date of issuance until the Maturity Date at a conversion price of $0.80 (the “Conversion Price”). If repayment of the Debentures on the Maturity Date would constitute non-compliance by the Company under its senior borrowing obligations, the holder has the option to convert at the Conversion Price, or to roll the obligations over into new one-year debentures, on similar terms to be negotiated, subject to TSXV approval.
It is currently anticipated that insiders of the Company may subscribe for Debentures. The issuance of Debentures to insiders pursuant to the Placement will also be considered related party transactions within the meaning of TSXV Policy 5.9 and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company intends to rely on exemptions from the formal valuation and minority approval requirements, as neither the fair market value of the securities being issued to insiders, nor the consideration being paid by such insiders, exceeds 25% of the Company’s market capitalization. Further details will be provided in the Company's material change report to be filed on SEDAR, which it expects to file less than 21 days prior to the closing of the Placement, which the Company deems reasonable in the circumstances so as to be able to avail itself of the proceeds of the Placement in an expeditious manner.
All securities issued in connection with the Placement are subject to a four-month hold period expiring four months and one day from their date of issuance. Closing of the Placement remains subject to the acceptance of the TSXV.
The Company also announces today it has entered into an amendment (the “Amendment”) to its Second Amended and Restated Credit Agreement (the “SARCA”) with Bank of Montreal (“BMO”). The notable terms of the Amendment are as follows:
- Interest Rates. The interest rate on each of the facilities is now as follows:
- prime plus 2.40% under the revolving term facility;
- prime plus 2.65% under the non-revolving term facility;
- prime plus 2.65% under the BCAP facility;
- alternate base rate Canada plus 2.40% in the case of each base rate Canada loan under the revolving term facility; and
- alternate base rate Canada plus 2.65% in the case of each base rate Canada loan under the non-revolving term facility.
- Affirmative Covenants. The Amendment is subject to compliance with the following additional covenants: the leverage ratio shall not be less than or equal to 2.00 to 1 for every calendar month and fiscal quarter
- the Company will not permit its forecasted or actual liquidity (as defined under the SARCA) to be less than $0.00.
All other terms of the SARCA, as amended, remain in full force and effect.
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high-quality wines and ciders as well as a sales agent for over 120 beverage alcohol brands across Canada. The Company operates five production facilities, four in Ontario and one in British Columbia, that produce predominantly VQA wines under such well-known brand names as 20 Bees, Creekside, EastDell, Lakeview Cellars, Mindful, Queenston Mile, Shiny Apple Cider, Fresh, Proud Pour, Red Tractor, Seasons, Serenity, Persona and Backyard Vineyards.
Through its commercial division, Trajectory Beverage Partners, the Company is the sales agent for many leading international brands in all regions of the country as well as being a distributor in the western provinces. These recognizable brands include Josh wines from California, Fat Bastard, Meffre, Pierre Chavin and Andre Lurton wines from France, Brimincourt Champagne from France, Merlet and Larsen Cognacs from France, Kaiken wines from Argentina, Blue Nun and Erben wines from Germany, Felix Solis wines from Spain, Calabria Family Estate Wines from Australia, Saint Clair Family Estate Wines from New Zealand, Redemption Bourbon and Rye whiskies from the U.S., Gray Whale Gin from California, Storywood and Cofradia Tequilas from Mexico, Magnum Cream Liqueur from Scotland, Talamonti and Cielo wines from Italy, Catedral and Cabeca de Toiro wines from Portugal, Waterloo Beer & Radlers from Canada, Landshark Lager from the USA, Edinburgh Gin, Tamdhu, Glengoyne and Smokehead single- malt Scotch whiskies from Scotland, Islay Mist, Grand MacNish and Waterproof whiskies from Scotland, C. Mondavi & Family wines including C.K Mondavi & Charles Krug from Napa, Wize Spirits and Hounds Vodka from Canada, Bols Vodka from Amsterdam, Koyle Family Wines from Chile and Pearse Lyons whiskies and gins from Ireland.
Forward Looking Statements
This press release contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Diamond Estates Wines and Spirits Inc. to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. There can be no assurance that the Placement will close. Forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to the economy generally; consumer interest in the services and products of the Company; financing; competition; and anticipated and unanticipated costs. While the Company acknowledges that subsequent events and developments may cause its views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the views of the Company as of any date subsequent to the date of this press release. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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