Liquidation World Inc.

Liquidation World Inc.

March 01, 2011 08:54 ET

Liquidation World Closes First Tranche of Private Placement and Corrects Bank Issues

BRANTFORD, ONTARIO--(Marketwire - March 1, 2011) - Liquidation World Inc. (TSX:LQW) (the "Company") announced today that the Company has successfully closed the first tranche of a private placement financing which is anticipated to generate in excess of $7 million for the Company.

Today the Company issued 595 Units at $10,000 per Unit, generating aggregate gross proceeds of $5.95 million to the Company. This initial closing has also allowed the Company to revise banking arrangements with its senior lender, providing additional flexibility and resolving non-compliance with certain financial maintenance covenants, which were previously reported in the Company's financial statements. The Company anticipates the full amount of the offering will be in excess of $7 million (up to a maximum of $9.2 million).

Each Unit consists of (i) $10,000 principal amount of newly issued, junior secured subordinated promissory notes of the Company with a three-year term (the "Notes") and (ii) 8,000 common share purchase warrants exercisable into a like number of common shares of the Company, with a five-year term and an exercise price of $0.64 per share. The Notes pay interest semi annually, at an 11% annual rate. The Notes may be prepaid in year one at 110% of par value; in years two and three they may be prepaid at par.

"After working with our senior lender, management and prospective investors in this financing, it became clear that the structure of the financing announced today allows LW to resolve its immediate banking issues and at the same time incur less dilution per dollar of debt raised than the previously announced convertible debt structure", commented Chairman of the Board of the Company, Bill Wolf, who is the manager of Talon Mezzanine Partners, an entity that participated in this financing.

"While additional closings may take place in the near future, we closed today on this initial tranche of Units to satisfy senior lender requirements and allow the Company to reengage with its vendor base so it can refresh the flow of inventory into its stores. This financing puts LW in a stronger financial position, allowing it to source exciting new deals for its customers and continue to convert legacy stores to the new "LW – Everybody's Outlet Store" brand."

About Liquidation World

Liquidation World operates 92 stores in Canada and one in the United States. Liquidation World is based in Brantford, Ontario. The Company opened its first store in Calgary, Alberta in 1986 and today, with more than 1,500 employees, is Canada's largest operator of closeout retail stores.

Contact Information

  • Liquidation World Inc.
    Seth Marks
    President & CEO
    866-237-3778 (FAX)
    Liquidation World Inc.
    David Becker
    Interim CFO
    866-237-3778 (FAX)