Diamond Estates Wines & Spirits Announces Closing of $1.83 Million Private Placement of 10.0% Unsecured Convertible Debentures
June 10, 2021, Niagara-on-the-Lake, Ontario – Diamond Estates Wines & Spirits Inc. (“Diamond Estates” or “the Company”) (DWS-TSX Venture) is pleased to announce that it has completed a non-brokered private placement (the "Offering") of $1.83 million aggregate principal amount of 10.0 % unsecured convertible debentures of the Company (the "Debentures") with certain insiders of the Company, including Lassonde Industries Inc. ("Lassonde") and Oakwest Corporation Limited.
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 on July 2, 2023 (the "Maturity Date"), unless the holder requests to accelerate the Maturity Date in the event the Company completes an equity financing for minimum gross proceeds of $2 million 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 $0.185 (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. The Debentures are also redeemable at the Company's option, subject to an early redemption fee during the first 12 months following closing of the offering of an additional 1% interest and, if during the first six months, a minimum six months interest.
All securities issued in connection with the Offering are subject to a four-month hold period expiring October 11, 2021. The Company intends to use the net proceeds of the Offering for general working capital purposes in support of an anticipated increase in operations coinciding with of the reopening of the economy over the next several months.
Pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the Offering constitutes a "related party transaction" as insiders of the Company subscribed for Debentures. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101 as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% of the Company's market capitalization (as determined under MI 61-101). The Offering was approved by all of the independent directors of the Company.
Early Warning Disclosure
Lassonde purchased and was issued today $1,160,000 aggregate principal amount of Debentures. Prior to the Offering, Lassonde owned, directly and indirectly, 38,478,947 Common Shares, representing approximately 19.239% of the Common Shares. Following the Private Placement, if Lassonde were to convert all of the Debentures it holds (exclusive of accrued interest), it would own, directly and indirectly, 44,749,217 Common Shares, representing approximately 22.374% of the issued and outstanding Common Shares (based on the Company's current issued and outstanding number and that no other convertible securities convert).
Pursuant to the terms of the Debenture, the Company and Lassonde have agreed that, unless the Company has, prior to a conversion, duly obtained the approval of its shareholders for the issuance of Common Shares upon conversion, the whole in accordance with the policies of the TSX Venture Exchange, neither the Company nor Lassonde may convert any portion of the Debentures if such conversion would result in Lassonde owning 20% of the issued and outstanding Common Shares (after giving effect to the conversion).
The approval of the shareholders of the Company will be sought at the next meeting of shareholders, to be held on or before the date of its 2021 annual meeting of shareholders. In connection with this vote, Diamond Estates and Lassonde have entered into voting and support with senior management and directors of the Company and Oakwest Corporation Limited pursuant to which each of them undertook to vote in favour of the issuance of Common Shares to Lassonde upon conversion of its Debenture, which could have the result of creating a new control person pursuant to the policies of the TSX Venture Exchange.
The subscription of Lassonde is being undertaken for investment purposes and it may, from time to time, increase or decrease its beneficial ownership or control depending on market or other conditions.
A copy of the Early Warning Report with additional information in respect of the foregoing matters may be found on www.SEDAR.com.
For further information, please contact:
Investor contact :
Chief Financial Officer
Industries Lassonde Inc.
450-469-4926, ext 10456
c/o 755 rue Principale, Rougemont, Québec, J0L 1M0
Industries Lassonde Inc.
450-469-0856, ext 10167
c/o 755 rue Principale, Rougemont, Québec, J0L 1M0
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high-quality wines and a sales agent for over 120 beverage alcohol brands across Canada. The Company operates two wineries, one in Ontario and one in British Columbia, that produce predominantly VQA wines under such well-known brand names as 20 Bees, EastDell, Lakeview Cellars, Dan Aykroyd, Fresh, McMichael Collection, Seasons, Serenity, and Backyard Vineyards. Through its wholly owned subsidiary, 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 and Andre Lurton wines from France, Kaiken wines from Argentina, Blue Nun wines from Germany, Francois Lurton wines from France and Argentina, Felix Solis wines from Spain, Waterloo Brewing from Ontario, Landshark Lager from the USA, Marston's beers from England, Edinburgh Gin, Tamdhu, Glengoyne and Smokehead single-malt Scotch whiskies from Scotland, Barcelo Rum from the Dominican Republic, Becherovka Liqueur from the Czech Republic, C.K. Mondavi & Family wines (including Charles Krug) from Napa, Bols Vodka from Amsterdam, Koyle Family Wines from Chile, Pearse Lyons whiskies and gins from Ireland, Niagara Craft Distillers' beverages from Ontario, Fontana di Papa wines and Cielo e Terra wines from Italy and certain Heineken International beer brands, including Tiger from Singapore, Red Stripe and Dragon Stout from Jamaica and Gösser and Kaiser from Austria.
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. Such 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.
For more information, please contact:
Ryan Conte Chief Financial Officer
Diamond Estates Wines & Spirits Inc.
Phone: (905) 933-8244
1067 Niagara Stone Rd., Niagara-on-the-Lake, Ontario, L0S 1J0
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.