Royalty North Partners Ltd.
TSX VENTURE : RNP

Royalty North Partners Ltd.

August 11, 2016 09:51 ET

Royalty North Enters Into Inaugural Loan and Royalty Agreement and Announces Private Placement Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 11, 2016) -

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

Royalty North Partners Ltd. (TSX VENTURE:RNP) ("RNP" or the "Company") is pleased to announce that it has entered into a loan and royalty agreement (the "Agreement") with Country Wine & Spirits, Inc. ("CWS"), a leading San Diego retailer of wine, beer & liquor.

Under the terms of the Agreement, RNP will loan US$5,500,000 to CWS upon the signing of the Agreement (the "Loan") and, as partial consideration for the Loan, CWS will grant RNP a royalty (the "Royalty") calculated on the gross sales of CWS. The initial royalty rate will be 5.5% of gross sales until the Loan has been repaid at which point a reduced royalty rate will be payable thereafter. CWS has guaranteed that the Royalty will return a minimum of US$770,000 per year for the first two years.

Founded in 2003 and headquartered in San Diego, California, CWS is the only multi-unit broad market alcohol retailer in San Diego County and serves a diverse set of clientele across its seven locations. Led by a seasoned management team CWS has experienced steady and impressive growth since inception and successfully fills the demand left by larger retailers with poor selection and independently owned retailers with high pricing. In addition to wine, beer and liquor retail CWS offers groceries, gasoline and other supermarket products further diversifying its product offering.

Justin Currie, Chief Executive Officer at RNP, commented: "For our inaugural royalty transaction we are pleased to be partnering with the team at Country Wine & Spirits who has developed a successful model of purchasing and re-branding single owner operated retail operations in San Diego. They have built a great reputation through an unwavering focus on the customer experience, excellent product knowledge and community involvement. In our view, this approach to business will help achieve sustainable growth over the long term. At RNP, we are excited to commence this partnership as a means of investing in a recession resistant market with stable growth fundamentals."

CWS represents RNP's first royalty investment since inception earlier this year after evaluating more than 100 different investment opportunities. RNP is currently evaluating a number of other high-quality companies with the goal of providing attractive royalty-based financing to our partners and diversifying the Company's portfolio of royalty investments.

The transactions contemplated by the Agreement are conditional upon, among other things, the completion of the Private Placement (defined below).

Private Placement

In connection with the Agreement, RNP intends to complete a non-brokered private placement (the "Private Placement") for minimum gross proceeds of C$7,000,000 through the issuance of units (the "Units") of the Company at an issue price of C$0.15 per Unit. Each Unit shall consist of one common share in the capital of the Company and one-half of one share purchase warrant (the "Warrant"). Each full Warrant shall entitle the holder to acquire one common share in the capital of the Company at C$0.25 per share until the date that is 60 months from the closing of the Private Placement.

Proceeds from the Private Placement will be used to fund the Loan under the Agreement, transaction expenses and for working capital purposes.

The Private Placement is integral to the transactions contemplated by the Agreement, and therefore the Company will be relying on the 'part and parcel pricing' exemption contemplated by relevant TSX Venture Exchange policy.

Approvals

The Agreement and the Private Placement are subject to certain conditions, including the approval of the TSX Venture Exchange.

All securities issued pursuant to the Private Placement will be subject to a hold period of four months from the date of issuance of the securities.

On behalf of the Company,

Justin Currie, Chief Executive Officer and Director

About Country Wine & Spirits Inc.

CWS is San Diego's leading retailer of wine, beer & liquor, providing the high quality selection and service of a neighborhood boutique at the prices of a club megastore. CWS is the only multi-unit broad market alcohol retailer in San Diego County and their business model is to acquire distressed locations, revitalize them and unify them under the brand, repositioning them as premium locations. CWS is anchored by a seasoned management team led by their CEO who has over 20 years of specialty retail experience.

About Royalty North Partners Ltd.

Royalty North Partners is a Vancouver, BC based, TSX-V listed (RNP) company focused on creating a diversified portfolio of cash flowing royalties by providing financing to private businesses operating in the "mid-market". RNP is led by a seasoned board and management team with a successful track record of experience in royalty financing, capital markets transactions and private company operations. RNP is targeting royalty investments in companies with stable cash flow in non-resource based sectors looking for growth capital or succession liquidity.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release does not constitute an offer to purchase securities. The securities to be offered in the offering have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to, or for the benefit or account of, a U.S. person, except pursuant to an available exemption from such registration requirements.

Cautionary Note Regarding Forward-Looking Statements

Except for the statements of historical fact contained herein, the information presented constitutes "forward looking statements" within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. Such forward-looking statements, including but not limited to the completion of the transactions under the Agreement and the use of the proceeds of the Private Placement. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Company's expectations as of the date of this news release and accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, it does not undertake to update this information at any particular time except as required by law.

Contact Information

  • Royalty North Partners Ltd.
    Chris Buss
    Chief Investment Officer and Director
    (604) 628-1101
    www.royaltynorth.com