Groupe Bikini Village inc.
TSX : GBV

Groupe Bikini Village inc.

May 01, 2014 16:19 ET

Groupe Bikini Village inc. Announces a $2,000,000 Private Placement of Unsecured Debentures and Share Purchase Warrants

SAINTE-JULIE, QUEBEC--(Marketwired - May 1, 2014) - Groupe Bikini Village inc. (TSX:GBV) ("Groupe Bikini Village" or the "Corporation") announces today that it has agreed with certain shareholders to a private placement (the "Private Placement") of unsecured redeemable debentures for an aggregate principal amount of not less than $2,000,000 (the "Debentures") and 1,600,000 share purchase warrants ("Warrants"). The Private Placement is expected to close on May 8, 2014. Upon closing of the Private Placement, the Corporation intends to use the proceeds to complete the reimbursement of demand notes issued on March 1, 2014 for an aggregate amount of $500,000, as additional working capital and to continue to finance its store renovation program.

The Debentures will mature 18 months after their issuance (the "Maturity"). They will bear interest at an annual rate of 7%, which is payable in three installments, the first installment to be paid on February 1, 2015, the second installment to be paid on August 1, 2015 and the final installment to be paid, along with any outstanding principal, at Maturity. The Debentures are convertible into common shares of the Corporation ("Shares"), at their holders' option, if the Corporation defaults on the Debentures. In such circumstances, the Debentures will be convertible into Shares at a price equal to the volume weighted average price of the five preceding trading days, which may be a more advantageous price than the current market price. The conversion of the Debentures is subject to the approval by the Toronto Stock Exchange (the "TSX"). In all cases, the Corporation has the option to redeem the Debentures, in whole or in part, before Maturity.

The Warrants will expire 18 months after their issuance. They may be exercised, in whole or in part, at any time until their expiry, at an exercise price of $1.25 per Share, which, as of the date of this news release, constitutes a premium over the volume weighted average price of the five preceding trading days of approximately 22.5%. Proceeds from any exercised Warrants will be used to redeem any outstanding Debentures in accordance with their terms.

Takota Premium Value Partnership LP ("Takota") (which currently has ownership or control of 329,687 Shares, representing 17.24% of all outstanding Shares) and Elmag Investments Inc. ("Elmag") (which currently has ownership or control of 380,000 Shares, representing 19.87% of all outstanding Shares) (collectively, the "Subscribers") intend to subscribe to the Debentures in amounts of $1,000,000 each, and will each receive 800,000 Warrants. In connection with the Private Placement, the Subscribers are entitled to a commitment fee of $50,000 each. It is not currently possible to determine the number of Shares into which the Debentures could be converted given the approval required by the TSX and future market price fluctuations. 1,912,230 Shares are currently issued and outstanding.

Although it is not currently possible to determine the number of Shares that each Subscriber may receive in connection with the Private Placement, the Private Placement may affect the control of the Corporation. The following table shows how the conversion of the Debentures or exercise of the Warrants could affect the control of the Corporation:

VWAP Number of expected Shares issuable to each Subscriber(1) Total aggregate number of Shares held by each Subscriber following the conversion or exercise(2)
Elmag Takota Elmag Takota
Number of
Shares
Percentage of
currently
outstanding
Shares(3)
Number of
Shares
Percentage of
currently
outstanding
Shares(3)
Number of
Shares
Percentage of
outstanding
Shares (on a
fully diluted
basis)
Number of
Shares
Percentage of
outstanding
Shares (on a
fully diluted
basis)
$1.50(4) 800,000 41.84 % 800,000 41.84 % 1,180,000 33.60 % 1,129,687 32.16 %
$1.00(5) 1,000,000 52.29 % 1,000,000 52.29 % 1,380,000 35.27 % 1,329,687 33.99 %
$0.50(5) 2,000,000 104.59 % 2,000,000 104.59 % 2,380,000 40.26 % 2,329,687 39.40 %
$0.10(5) 10,000,000 522.95 % 10,000,000 522.95 % 10,380,000 47.37 % 10,329,687 47.14 %
Notes: The examples set forth above are provided for illustrative purposes only and do not represent any prediction or anticipated conversion or exercise by the Subscribers.
1. Assumes that the terms of conversion or exercise have been met.
2. Assumes that the Subscribers have maintained their current holdings in the Corporation.
3. On a pre-Private Placement and non-diluted basis.
4. Assumes the Subscribers exercise their Warrants and the proceeds are used to redeem the Debentures in accordance with their terms.
5. Assumes no exercise of the Warrants given that the Warrants would be out of the money.

Neither the Subscribers nor the Corporation will be entering into any voting trust, similar agreements or arrangements in connection with the Private Placement.

Mr. Scott Leckie, chairman of the board of directors of the Corporation (the "Board"), is a principal at Takota. Mr. Leckie disclosed his interest in this Private Placement to the Board and abstained from any further discussions on the matter. Takota is an insider of the Corporation by virtue of its current holding of 17.24% of all outstanding Shares. Elmag is also an insider of the Corporation by virtue of its current holding of 19.87% of all outstanding Shares. To the best knowledge of the Corporation, the Subscribers do not act in concert.

Mr. Joe Marsilii, an independent director, lead the negotiations on the terms and conditions of the Private Placement on behalf of the Corporation. The terms of the Private Placement have not been negotiated at arm's length. The Private Placement was unanimously approved by the Board. The Corporation did not file a material change report less than 21 days before the closing of the Private Placement given its purpose.

The Private Placement constitutes a "related party transaction" as defined under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") but is, however, exempt from the valuation and minority shareholder approval requirements of MI 61-101 given its purpose, as discussed below. The Corporation has made an application to the TSX to rely on the exemption from the requirement to obtain shareholder approval pursuant to Section 604(e) of the TSX Company Manual. The Private Placement would otherwise be subject to disinterested shareholder approval pursuant to sections 604(a)(i), 607(g)(i) and 607(g)(ii) of the TSX Company Manual as a result of: (i) the potential of the Private Placement to materially affect the control of the Corporation; (ii) the potential that an aggregate number of Shares issuable will be greater than 25% of the number of Shares that are outstanding on a non-diluted basis; and (iii) the potential that an aggregate number of Shares issuable to insiders during any 6-month period will be greater than 10% of the number of Shares that are outstanding on a non-diluted basis. The Private Placement is designed to improve the financial position of the Corporation and addresses the Corporation's serious financial difficulty. The application to rely on the financial difficulty exemption was made upon the recommendation by the members of the Board who are free from any interest in the Private Placement and unrelated to the parties involved in the transaction. The Board determined that the issuance is reasonable for the Corporation under the circumstances.

A copy of the Subscribers' reports under National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues will be available on SEDAR at www.sedar.com or by contacting Ms. Chantal Létourneau, Interim President and Chief Executive Officer at 450 449-1310.

The Subscribers have purchased the Debentures solely for investment purposes and the Private Placement is exempt from prospectus requirements in respect of Takota and Elmag under section 2.10 of NI 45-106.

On March 26, 2014, the TSX informed the Corporation that the Shares were under review with respect to meeting the continued listing requirements. The Corporation has been granted 120 days in which to regain compliance with these requirements, pursuant to the remedial review process of the TSX. The Corporation will be evaluating its options to address the issue within the established timeline.

Groupe Bikini Village inc.'s shareholder reports and other information of interest to investors, are available on SEDAR at www.sedar.com, and on the Corporation's website at www.bikinivillage.com.

The issuance of this news release is not an admission that an entity named in this news release owns or controls any described securities or is a joint actor with another named entity.

"Group Bikini Village would like to take this opportunity to thank our shareholders for their continued support of the Corporation," said Chantal Letourneau, Interim President and Chief Executive Officer.

About Groupe Bikini Village

Groupe Bikini Village inc., serving Canadians for more than a quarter-century, is a leader in the retail sale of beachwear products, with a network of boutiques across Eastern Canada. In its bright and inviting stores with comfortable change rooms and knowledgeable staff, Groupe Bikini Village helps its customers choose from among Canada's widest selection of swimsuits, beach and cruise wear and accessories, in the most popular brands the industry has to offer and in styles to suit every figure. Headquartered in Sainte-Julie, Quebec, Groupe Bikini Village operates 53 stores and employs approximately 425 people; its securities trade on the Toronto Stock Exchange under the stock symbol GBV. For more information about Groupe Bikini Village, please visit our website at www.bikinivillage.com.

Forward-looking statements

This news release contains certain forward-looking statements concerning Groupe Bikini Village inc.'s future operations, economic performance, financial conditions and financing plans. These statements are based on certain assumptions and analyses made by management in light of their experience and their perception of historical trends, current conditions and expected future developments, as well as other factors they believe are appropriate under the circumstances. However, whether actual results and developments will conform to management's expectations and predictions is subject to a number of risks, uncertainties and assumptions. For example, the Private Placement remains subject to the TSX's approval and there is no certainty that the TSX will approve it. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences or effects on the Corporation. Management undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable law.

The addresses of the Subscribers are the following: (i) Canaccord Genuity Corp. In trust for Takota Premium Value Partnership LP, 161 Bay Street, Suite 2800 Toronto, Ontario M5J 2S1; and (ii) Investissements Elmag Inc., 3678 de la Montagne, Montreal, Quebec H3G 2A8.

Contact Information