Mill Road Capital II, L.P.

October 11, 2016 18:16 ET

Mill Road Capital II, L.P.: Additional Investment in Ten Peaks Coffee Company Inc.

GREENWICH, CONNECTICUT--(Marketwired - Oct. 11, 2016) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Mill Road Capital II, L.P. ("Mill Road") announced today that it has acquired a CAD$15,000,000 unsecured subordinated convertible debenture (the "Convertible Debenture") of Ten Peaks Coffee Company Inc. ("Ten Peaks"). The Convertible Debenture was acquired on a private placement basis under section 2.10 of National Instrument 45-106 pursuant to a subscription agreement between Mill Road and Ten Peaks dated September 30, 2016.

The Convertible Debenture has a maturity date of October 11, 2023. The Convertible Debenture bears interest at a rate of 6.85% per annum and the outstanding principal amount is convertible into common shares of Ten Peaks ("Common Shares") at a conversion price of CAD$8.25 per share. Under the Convertible Debenture, Ten Peaks has the option (the "PIK Option"), during the first two years of the Convertible Debenture's term, to satisfy its interest payment obligations by increasing the principal amount of the Convertible Debenture. The Convertible Debenture also includes a net share settlement feature that allows Ten Peaks, upon conversion of all or a portion of the Convertible Debenture, to (i) pay cash equal to the amount of principal being converted and (ii) issue that number of Common Shares having a fair market value equal to the excess fair market value of the underlying Common Shares above the converted amount.

Mill Road currently owns an aggregate of 608,500 Common Shares, representing 6.7% of the issued and outstanding Common Shares. If it elected to convert the full principal amount of the Convertible Debenture into Common Shares (assuming no exercise of the PIK Option or the net share settlement feature), Mill Road would be entitled to receive 1,818,181 Common Shares. Following such conversion of the Convertible Debenture, Mill Road would own a total of 2,426,681 Common Shares, representing 22.4% of the issued and outstanding Common Shares (assuming the full exercise of the of the Convertible Debenture but not the exercise of any other securities of Ten Peaks that are convertible into or exchangeable for Common Shares). However, under the Convertible Debenture, Mill Road may not convert any portion of the outstanding principal into Common Shares if and to the extent that the conversion of such portion of the outstanding principal would result in Mill Road beneficially owning, or exercising direction or control over, 20% or more of the issued and outstanding Common Shares at that time.

Mill Road purchased the Convertible Debenture in the ordinary course of its business based on its belief that it represents an attractive investment opportunity. Mill Road intends to review continuously its investment in Ten Peaks. Depending upon market conditions and other factors, Mill Road may from time to time increase or decrease its ownership interest in Ten Peaks.

An early warning report in respect of the transaction has been filed with SEDAR at www.sedar.com. For further information or to obtain a copy of the early warning report, please contact Scott Scharfman at 382 Greenwich Avenue, Suite One, Greenwich, Connecticut 06830.

Contact Information

  • Scott Scharfman
    382 Greenwich Avenue, Suite One
    Greenwich, Connecticut
    06830