Diamond Estates Wines and Spirits Completes $8.8 million Private Placement
̶ NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES ̶
December 20, 2016 – Niagara-on-the-Lake, Ontario – Diamond Estates Wines & Spirits Inc. (the “Company” or “Diamond Estates”) (http://www.diamondestates.ca) (TSXV: DWS), is extremely pleased to announce that it has closed its previously announced private placement offering (the "Offering") of 40 million common shares ("Common Shares") at a price of $0.22 per Common Share for total gross proceeds of $8.8 million (including the exercise, in full, of the Agents’ over-allotment option). Paradigm Capital Inc. and GMP Securities L.P. (the “Agents”) acted as agents in respect of the Offering. The Common Shares issued pursuant to the Offering are subject to a hold period expiring April 21, 2017. Directors, officers and other insiders of the Company subscribed for $198,022 worth of Common Shares in the Offering.
Pursuant to the terms of an agency agreement entered into among the Agents and the Company dated December 20, 2016 (the “Agency Agreement”), the Agents received a cash payment on closing of the Offering equal to 6% of the aggregate gross proceeds of the Offering not including subscriptions received from purchasers on the Company’s president’s list, and 3% of the aggregate gross proceeds of the Offering on subscriptions received from purchasers on the president’s list.
The Company intends to employ the proceeds of the Offering primarily to expand principal wine production facility and to add cooperage (barrel storage), warehouse and bottling space. When completed, Diamond Estates’ wine processing, ageing and bottling operations will be increased by approximately 50%, due to a mix of operational efficiency improvements and increased capacity. The resulting economies of scale are expected to produce significant operating leverage that is anticipated to translate into higher margins on incremental sales volume. The balance of the proceeds will be used for general corporate purposes including reduction of debt.
Participation by the Company’s directors and other insiders in the Offering is considered to be a “related party transaction” as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Offering is exempt from the formal valuation and minority shareholder approval requirements of Multilateral Instrument 61-101, as neither the fair market value of the securities being issued to insiders, nor the consideration being paid by such insiders, exceeds 25% of Diamond Estates’ market capitalization.
“We are very pleased by the response to our offering in the financial community,” said Murray Souter, President & CEO of Diamond Estates. “Our business is benefitting from a number of very positive factors including our strong brand portfolio, broad industry growth, our strength in the VQA segment, the introduction of wine into the Ontario grocery channel and robust export growth. With the increased capacity, we will be well positioned to meet the increasing market demand, which will generate stronger returns for shareholders. The additional investment will allow Diamond Estates to significantly advance its growth plans and will accelerate the expansion of our core business.”
The Company is also pleased to announce that it has engaged the services of Bay Street
Communications (“BSC”) to provide strategic investor relations and capital markets communications services at a cost of $5,000 per month effective January 1, 2017. BSC is a private firm specializing in investor & public relations and strategic communications, assisting companies in achieving a full and fair valuation of their publicly traded securities. Either party may terminate or amend the terms of the engagement after six months upon 30 days written notice. To the knowledge of Diamond Estates, BSC does not have any interest, directly or indirectly, in the Company or its securities, or any right or intent to acquire such an interest. The appointment of BSC is subject to TSX Venture Exchange approval.
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 in the Niagara region of Ontario producing VQA and blended wines under such well-known brand names as 20 Bees, EastDell Estates, Diamond Estates Cellars, Dois Amigos, Dan Aykroyd, Benchmark and Seasons. Through its partnership, Kirkwood Diamond Canada, the Company is the sales agent for top selling international brands in all regions of the country as well as being a distributor in the western provinces. These recognizable brands include Fat Bastard wines from France, Kaiken wines from Argentina, Charles Wells beers from England, Hpnotiq Liqueur from France, Anciano wines from Spain, Francois Lurton wines from France and Argentina, Blue Nun wines from Germany, coolers and spirits from Independent Distillers in New Zealand, Brick Brewing from Canada, Evan Williams Bourbon from USA, Flor de Cana rum from Nicaragua, Iceberg Vodka from Canada and many others. For further information on the company, please visit the company’s SEDAR profile at www.sedar.com.
Diamond Estates Wines & Spirits Inc. common shares trade on the TSX Venture Exchange (symbol: DWS). For more information, please contact:
J. Murray Souter
President & CEO
Diamond Estates Wines & Spirits Inc.
jmurraysouter@diamondwines.com
905 641 1042 Ext 234
Alan Stratton, CPA, CA
Chief Financial Officer
Diamond Estates Wines and Spirits Inc.
astratton@diamondwines.com
905-641-1042 Ext 225
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.
Forward Looking Statement
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.
