Russell Breweries Inc.

Russell Breweries Inc.

March 05, 2008 22:49 ET

Proposed Brokered Financing for Up to $2,500,000 in Russell Operating Subsidiary

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 5, 2008) -


Russell Breweries Inc. ("Russell") (TSX VENTURE:RB) is pleased to announce that it has arranged a brokered private placement for up to 250,000 non-transferable, exchangeable, non-voting, preferred shares of its wholly owned subsidiary Russell Brewing Company Ltd. ("RBC") at a price of $10.00 per preferred share to raise gross proceeds of up to $2,500,000 (the "Offering") subject to availability under the Province of British Columbia's "Equity Capital Program".

RBC is registered as an Eligible Business Corporation (#30-401) and is authorized under the Small Business Venture Capital Act (British Columbia) (the "Act") to raise up to $2,500,000 in capital for which British Columbian investors may be eligible for a tax credit of up to 30% of their investment.

RBC has agreed to pay a dividend of 6.0% per annum semi-annually on the preferred shares, from cumulative after tax earnings. Under the Eligible Business Corporation program, dividends on the preferred shares of RBC may only be paid out of cumulative after-tax earnings of RBC.

The preferred shares will automatically be exchanged into common shares of Russell upon the earlier of five years from the date of issuance or upon disposition of greater than 60% control of Russell (the "Exchange Date").

The Preferred Shares will be exchanged into common shares of Russell on a 1:16.67 basis, subject to adjustment on a pro rata basis: (1) for accrued and unpaid dividends; (2) if the working capital ratio of RBC falls below a ratio of 1:1 calculated at the end of each quarter and provided that the maximum number of preferred shares are sold under the Offering; (3) if RBC is unable to pay dividends after 36 months from the date of issuance of the preferred shares; and (4) if RBC is unable to pay dividends for each six month period after the 36th month from the closing of the Offering until the Exchange Date.

Canaccord Capital Corporation will act as agent in the Offering on a commercially reasonable efforts basis.

Completion of the financing is subject to the receipt of all required regulatory approvals.

Russell Brewing Company Ltd. produces premium beer in British Columbia. Products include: Russell Cream Ale, Russell Pale Ale, Russell Honey Blonde Ale, Russell Extra Special Lager plus two seasonal brews, Russell Lemon Ale and Russell Winter Porter. Fort Garry Brewing Company Ltd. is Manitoba's largest brewer and distributor of premium quality beers including Fort Garry Dark Ale, Fort Garry Pale Ale, Fort Garry Premium Light, Two Rivers Red and Stone Cold. Russell Brewing Company Ltd. and Fort Garry Brewing Company Ltd. are wholly owned subsidiaries of Russell Breweries Inc. (TSX VENTURE:RB).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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