Strategic Addition of B.C. Winery
Transforms Company into a National VQA Wine Producer
NIAGARA-ON-THE-LAKE, ON,
June 28, 2018 /CNW/ - Diamond Estates
Wines & Spirits Inc. ("Diamond Estates" or "the Company")
(DWS-TSX Venture) is pleased to announce that it has today acquired
Backyard Vineyards Inc. ("Backyard") of Langley, British Columbia. This highly
strategic transaction transforms Diamond Estates into a national
producer of VQA wines and positions the Company to build a major
new winery in the internationally-recognized Okanagan Valley
wine-producing region. The total purchase price is $3.0 million, consisting of $0.75 million of cash, $1.5 million of Diamond Estates stock valued at
$0.32 per share, and the assumption
of $0.75 million of debt. The vendor
is Ewen Stewart.
Backyard owns a 10,000 square-foot winery, retail store and
warehouse in Langley, which has
operated for 15 years and won numerous awards. Backyard generated
revenue of approximately $2.0 million
in the twelve months ended May 31,
2018. Current capacity of the Langley facility is 25,000 cases annually. The
facility is approximately 50% utilized at present, giving Diamond
Estates the ability to launch its own brands in the market without
a material infrastructure expansion. Diamond Estates has an
existing business relationship with Backyard.
In addition, Mr. Stewart and his development company Azura
Management Corp. have obtained the rights to 180 acres of land on
the Naramata Bench, located in the southern portion of the Okanagan
Valley near Penticton. Azura
Management and Diamond Estates plan to co-develop a new
Lakeview Cellars winery on a portion of the site. The estimated
initial capital expenditure for this winery would be approximately
$7 million.
The Backyard Vineyards acquisition represents a significant
opportunity for Diamond Estates. It will allow the Company to
introduce its existing brands into British Columbia and Alberta, Canada's third and fourth largest
wine markets. By becoming a truly national producer for the first
time, Diamond Estates is positioned to pursue sales opportunities
with national chain restaurant companies, airlines, and railways
that sell very large volumes of wine across the country. This has
the potential to increase the Company's brand exposure
significantly.
Diamond Estates also gains a rare opportunity to build a
greenfield winery in a prime location on the acclaimed Naramata
Bench in the Okanagan Valley. The property is in close proximity to
other high-quality wineries and the Company is confident it can
develop the site into an attractive tourist destination that
produces outstanding VQA wines. The Company will also be well
positioned to acquire additional Okanagan wineries in the
future.
"We are pleased to be expanding our relationship with Diamond
Estates, with both the purchase of Backyard Vineyards and also the
development of the exciting Naramata property," said Mr. Stewart. "It is a
unique opportunity to develop a greenfield winery in a world-class
location."
"For a long time, one of our central goals at Diamond Estates
has been to transition the Company from a regional VQA producer
into a national VQA producer that can pursue national business
opportunities. This transaction does just that," said Murray Souter, President and CEO. "We now have a
platform for significant growth in British Columbia, Canada's most highly
developed VQA market. The Backyard winery is a small but
outstanding asset with the potential to increase capacity and boost
sales both within the province of British
Columbia and in other jurisdictions and channels. The
opportunity to build a greenfield Lakeview Cellars winery in the
Okanagan is also very exciting."
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 and
one in Toronto, producing VQA and
blended wines under such well-known brand names as 20 Bees,
EastDell, Lakeview Cellars, FRESH, Dan
Aykroyd, McMichael Collection, Benchmark and Seasons.
Through its wholly-owned subsidiary, Kirkwood Diamond Canada
Partnership, 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, Hommage and Fat
Bastard wines from France, Kaiken
wines from Argentina, Deep Eddy
Vodka from Texas, Marston's beers from England, Hpnotiq Liqueur from France, Tequila
Rose from the United
States, Anciano wines from Spain, Malfy Gin from Italy, Rossi d'Asiago Limonello from
Italy, Glengoyne and Tamdhu
Whiskies from Scotland, Edinburgh
Gin from Scotland, Francois Lurton wines from France and Argentina, Waterloo Brewing and Amsterdam
Brewing, both from Ontario,
Landshark Lager from the USA, Blue
Nun wines from Germany,
ready-to-drink alcoholic beverage SocialLite from Ontario, and Evan
Williams Bourbon from the USA.
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.
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.
SOURCE Diamond Estates Wines & Spirits Inc.