Family Memorials Inc.

Family Memorials Inc.

May 20, 2011 11:23 ET

Family Memorials Announces Proposed Financing

THUNDER BAY, ONTARIO--(Marketwire - May 20, 2011) - Family Memorials Inc. (TSX VENTURE:FAM) (the "Corporation") announces that it has signed a letter of intent with Macquarie Private Wealth Inc. ("Macquarie") to sell, on a commercially reasonable efforts basis, a minimum of $2,845,000 and a maximum of $4,345,000 aggregate principal amount of 10% secured convertible debentures (the "Debentures") at a price (the "Issue Price") of $1,000 per Debenture (the "Offering").

The Corporation has granted Macquarie an over-allotment option to sell up to an additional $434,500 aggregate principal amount of Debentures at the Issue Price exercisable at any time for a period of up to 30 days following closing of the Offering to cover over-allotments, if any.

The Debentures will have a maturity date of June 15, 2016 (the "Maturity Date") and will bear interest at an annual rate of 10% payable semi-annually on June 15 and December 15 in each year commencing December 15, 2011. The Debentures will be redeemable by the Corporation three years after issuance for a cash payment consisting of the outstanding principal amount of the Debentures, the outstanding accrued and unpaid interest to the date of redemption and a premium of 5% of the principal amount of the Debentures.

Each Debenture will be convertible into common shares of the Corporation (the "Common Shares") at the option of the holder at any time prior to the Maturity Date at a conversion price of $0.19 per Common Share, being a conversion rate of 5,263.1579 Common Shares per $1,000 principal amount of Debentures. Holders converting their Debentures will receive accrued and unpaid interest thereon from the period of the last interest payment date on their Debentures prior to the date of conversion to the date that is one day prior to the date of conversion.

The Debentures will be secured against all of the assets of the Corporation and its subsidiaries.

The net proceeds of the Offering will be used for development of the Corporation's new sales software "imonuments", for working capital and, if the maximum offering is achieved, for potential future acquisitions.

Macquarie will be paid a cash commission (the "Agent's Commission") equal to 10% of the gross proceeds of the Offering except for the gross proceeds from the issuance of Debentures in the principal amount of up to $845,000 to Lakehead Monuments Ltd. ("Lakehead"), in which case, the Agent's Commission will be 3% of the gross proceeds from the issuance of Debentures to Lakehead. Macquarie will also receive an option to purchase, at an exercise price of $0.19 per share, a number of Common Shares equal to 10% of the gross proceeds of the Offering divided by $0.19 except for the gross proceeds from the issuance of the Debentures in the principal amount of up to $845,000 to Lakehead, in which case the option granted to Macquarie will be equal to 3% of such gross proceeds divided by $0.19.

The Offering will be made under a Short Form Prospectus in Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia. The Offering is subject to due diligence by Macquarie, formal documentation, and regulatory approval.

About Family Memorials

The Corporation is in the business of consolidating retail businesses selling granite monuments for placement on individual cemetery lots. The Corporation carries on business through its wholly-owned subsidiaries Grajack Industries Ltd. in Belleville, Ontario; R.H. Verduyn Granite Co. Ltd., in Peterborough, Ontario; Barber Monuments Ltd. in St. Catharines, Ontario; and Somerville Memorials Ltd. in Calgary, Alberta; and under the Family Memorials banner in Brandon, Manitoba, and Regina, Saskatchewan.

The information and statements in this news release contain certain forward-looking information. This forward-looking information relates to future events or the Corporation's future performance. In particular, this document contains forward-looking information and statements regarding: (i) the completion of the Offering and the issuance of the Debentures; and (ii) the use of proceeds of the Offering. All statements other than statements of historical fact may be forward-looking information. This forward-looking information is subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking information. These assumptions include market acceptance of the terms of the Offering and that, in respect of the use of proceeds, historical costs and expenses will be representative of future costs and expenses. The outcome and timing of the proposed Offering, as well as the Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward- looking information, and accordingly, no assurances can be given that any of the events anticipated by the forward-looking information will transpire or occur or, if any of them do, what benefits that the Corporation will derive from them. The Corporation's forward-looking information is expressly qualified in its entirety by this cautionary statement. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward- looking information.


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