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Diamond Estates Wines & Spirits Inc. (TSXV: DWS) ("Diamond Estates" or "the Company") is pleased to announce the closing of its previously announced non-brokered private placement (the “Placement”) of 10.0 % unsecured convertible debentures of the Company (the “Debentures”) for gross proceeds of $4.884 million. 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 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 into common shares of the Company (the “Common Shares”) 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.
Insiders of the Company subscribed for an aggregate of $500,000 in principal amount of Debentures. The issuance of Debentures to insiders pursuant to the Placement may 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 is relying on exemptions from the formal valuation and minority approval requirements, as neither the fair market value of the securities issued to insiders, nor the consideration 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.
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 TSX Venture Exchange (the “TSXV”).
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.
Early Warning Disclosure
Today, 3346625 Canada Inc. (“Lassonde Holding”), a corporation controlled by Mr. Pierre-Paul Lassonde, Chairman of the Board of Lassonde Industries Inc. (“Lassonde Industries”, and together with Lassonde Holding, the “Lassonde Group”), and a joint actor of Lassonde Industries, purchased and was issued a Debenture in the aggregate principal amount of $2,850,000. Concurrently, Lassonde Industries purchased and was issued a Debenture in the aggregate principal amount of $500,000.
Lassonde Holding also entered today into an agreement with a shareholder of the Company to purchase a block of 294,117 Common Shares at a price per share of $0.51 (the “Acquisition”).
Both Lassonde Holding and Lassonde Industries willfilean early warning report in connection with the Offering and the Acquisition which, in the case of Lassonde Industries, amends information disclosed in an earlier report filed by Lassonde Industries dated October 7, 2021.
Prior to the Offering and the Acquisition, Lassonde Holding held, directly and indirectly, 333,340 Common Shares, representing approximately 1.2% of the Common Shares and 250,000 common share purchase warrants (the “Warrants”), convertible into 250,000 Common Shares, and Lassonde held 5,346,506 Common Shares, representing approximately 19.18% of the issued and outstanding Common Shares, 1,123,958 Warrants, convertible into 1,123,958 Common Shares and 80,000 options (the “Options”), exercisable for 80,000 Common Shares. As such, the Lassonde Group held, directly and indirectly, 5,679,846 Common Shares, representing approximately 20.38% of the Common Shares, 1,373,958 Warrants, convertible into 1,373,958 Common Shares and 80,000 Options, exercisable for 80,000 Common Shares.
Following the Offering and the Acquisition, if Lassonde Holding were to convert all of the Debenture (exclusive of accrued interest) and exercise all of the Warrants it holds, it would own, directly and indirectly, 4,439,957 Common Shares, representing approximately 14.01% of the issued and outstanding Common Shares (based on Diamond Estates’ then current issued and outstanding number of Common Shares, assuming no additional issuance or conversion). Additionally, if Lassonde Industries were to convert all of the Debenture (exclusive of accrued interest) and exercise all of the Warrants and Options it holds, it would own, directly and indirectly, 7,175,464 Common Shares, representing approximately 24.18% of the issued and outstanding Common Shares (based on Diamond Estates’ then current issued and outstanding number of Common Shares, assuming no additional issuance or conversion).
Accordingly, the Lassonde Group would own, directly and indirectly, 11,615,421 Common Shares, representing approximately 34.65% of the Common Shares (based on Diamond Estates’ then current issued and outstanding number of Common Shares, assuming no additional issuance or conversion).
Pursuant to the terms of its Debenture certificate and in accordance with the polices of the TSXV, Lassonde Holding has agreed not to convert any of its Debentures if such conversion would result in Lassonde Holding owning 10% or more of the issued and outstanding Common Shares (after giving effect to the conversion), until such time as a Personal Information Form concerning Lassonde Holding is reviewed and approved by the TSXV.
The subscriptions by the Lassonde Group and the Acquisition are being undertaken for investment purposes. The Lassonde Group may from time to time acquire securities of Diamond Estates for investment purposes and it may, from time to time, increase or decrease its beneficial ownership or control depending on market or other conditions.
This news release is being issued as required by National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues and NI 62-104 and relates to: (a) Lassonde Holding, at 54 rang de la Montagne, Rougemont, Québec, J0L 1M0; and (b) Lassonde Industries, whose head office is located at 755 rue Principale, Rougemont, Québec, J0L 1M0. Copies of the Early Warning Reports with additional information in respect of the foregoing matters will be available on www.SEDAR.com or by contacting:
For Lassonde Holding:
Pierre Boulais, Financial Director
3346625 Canada Inc.
54 Rang de la Montagne, Rougemont, Québec, J0L 1M0
450-469-2912
For Lassonde Industries:
Éric Gemme, Chief Financial Officer
Lassonde Industries Inc.
755 rue Principale, Rougemont, Québec, J0L 1M0
450-469-4926, ext 10456
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. 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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