NIAGARA-ON-THE-LAKE, Ontario - Diamond Estates Wines & Spirits Inc. (TSXV: DWS), a Canadian producer and marketer of alcoholic beverages, has announced the replacement of $4.884 million in 10% unsecured convertible debentures due November 9, 2023, with new debentures maturing on November 9, 2024. The conversion price for these new 2023 Replacement Debentures has been adjusted to $0.30 from the previous $0.80.
The original 2022 Debentures were part of a non-brokered private placement that closed on November 9, 2022. The company has also reached an agreement to sell its Queenston Mile Vineyard for approximately $4.4 million, with a closing date of February 15, 2024. The sale is a part of Diamond Estates' strategy to reduce debt and improve working capital.
The transaction involves a $500,000 vendor take-back mortgage and the acquisition of about $400,000 worth of finished goods inventory. Proceeds from the vineyard sale will be used to reduce the company's working capital and long-term debt obligations.
Additionally, insiders of the company have subscribed for $3,350,000 in principal amount of the 2022 Debentures, and the issuance of the 2023 Replacement Debentures to these insiders is considered a related party transaction. However, it has been exempted from the formal valuation and minority shareholder approval requirements under certain conditions, as the company is in serious financial difficulty and the transaction is intended to improve its financial position.
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