Diamond Estates Wines & Spirits Inc. (TSXV:DWS) agreed to acquire Equity Wine Group Inc. from Stonechurch Vineyards and Winery Holdings Inc. on August 5, 2021. The consideration includes, CAD 1.5 million in cash payable on closing, subject to a working capital adjustment, CAD 5.5 million in common shares of Diamond Estates Wines & Spirits payable on closing, 22,916,667 share purchase warrants each entitling the holder to acquire three quarters common share of the Company at an exercise price of CAD 0.22 for a period of 36 months from their date of issuance and valued at CAD 476,667 under Black-Scholes and the assumption of the Equity Wine's term and line-of-credit debt of approximately CAD 4.1 million with the Bank of Montreal. The Equity Consideration Shares will be issued at a deemed price of CAD 0.18 per share. The Equity Consideration Shares will be subject to certain contractual restrictions on trading for a period of 12 months from the date of issuance with equal portions being released from escrow every quarter. Diamond Estates expects the convertible debentures to be converted at closing. The agreement ensures Stonechurch will continue to produce our popular cider on behalf of Diamond and will support future expansion and growth. In related transaction Diamond Estates Wines & Spirits Inc. agreed to acquire Shiny Apple craft cider brand from Stonechurch Vineyards and Winery Holdings Inc. The Equity Cash Payment will be paid from a portion of the cash proceeds raised from the Financing. Completion of the Acquisitions will be dependent on Diamond raising a minimum total of CAD 8.5 million in equity through private placements. The Financing will consist of up to 47,223,000 units at CAD 0.18 per Unit with each Unit consisting of one common share and three-quarters of one common share purchase warrant, Each Warrant will be exercisable at CAD 0.22 per common share for 36 months following the closing of the Financing. The acquisitions are subject to the execution of definitive agreements and customary closing conditions including of the approval of the TSX Venture Exchange and Bank of Montreal and closing of the private placement, Receipt and satisfaction by the Purchaser of the Corporation's Financial Statements, completion and being satisfied, acting reasonably, with the result of any and all of
due diligence investigations of the Corporation, including independent appraisals, third party consents and Approval of the transaction by the Board of Directors for each of the Corporation, the Purchaser and any Vendors that are incorporated entities. Diamond Estates Wines & Spirits expects to close the Acquisitions on or around September 10, 2021. Diamond Estates now expects to close the acquisitions and the private placement on or around October 1, 2021. The transaction is expected to be highly accretive to Diamond's current business, capture additional revenues, create brand expansion, further leverage the Diamond Estates Wines & Spirits infrastructure and deliver on cost saving synergies. Both transactions will result in a significant accretion in Diamond Estates Wines & Spirits EBITDA, and are expected to generate an incremental CAD 30 million in gross revenue and CAD 9 million in incremental EBITDA over the four-year period ending in fiscal 2025. Miller Thomson LLP acted for Stonechurch Vineyards and Winery Holdings Inc. in the deal.