The Niagara-area maker of actor Dan Aykroyd’s wine line is set to sell up to $8.8 million in shares to expand its main wine production site.
Diamond Estates Wines and Spirits on Dec. 2 announced an agreement with Paradigm Capital and GMP Securities to sell up to 22.73 million common shares at 22 cents per share via private placement, for gross proceeds of up to $5 million.
The company on Dec. 5 announced it would boost the size of that offering to 36.36 million common shares, for gross proceeds of up to $8 million, citing “positive investor response.”
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The two selling agents also get an option to sell another stake worth up to 10 per cent of the main offering. If they exercise that option in full, the company said, the aggregate gross proceeds would run up to 40 million common shares, or $8.8 million.
Proceeds from the share sale are meant to go toward expansion of the company’s “principal wine production facility” to add barrel storage — also known as cooperage — as well as warehouse and bottling space.
“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 company said.
“Our planned capacity expansion will provide the company with sufficient production to meet the expected growth in our business,” CEO Murray Souter said in a release.
That business, he added, “is benefitting from a number of very positive factors including our strong brand lineup, broad industry growth, particular strength in the VQA segment, the introduction of wine into the Ontario grocery channel and robust export growth.”
Currently, up to 70 grocery stores in Ontario are authorized to sell domestic and imported wine, out of 130 that can also sell beer and cider. The province has previously announced a target of 450 grocery stores selling beer and cider, including 300 also selling wine.
Depending on the authorization, eligible grocers must set aside 10 or 20 per cent of shelf space for products from “small producers.”
Diamond Estates, whose other domestic wine brands include 20 Bees, Lakeview Cellars, Fresh, 1914, EastDell Estates, Dois Amigos, Benchmark and Seasons, is also a partner in Kirkwood Diamond Canada, which acts as a sales agent for other domestic and international brands in Canada and as a distributor in the West.
Brands it distributes include Canada’s Brick Brewing beers and Iceberg vodka, France’s Fat Bastard wines, Argentina’s Kaiken wines, British beer brand Charles Wells, German wine brand Blue Nun, Nicaraguan rum Flor de Cana, U.S. bourbon brand Evan Williams and coolers and spirits from Independent Distillers in New Zealand. — AGCanada.com Network
