Russell Breweries Inc.

Russell Breweries Inc.

May 01, 2009 16:45 ET

Russell Breweries Inc. Announces Further Details of Rights Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 1, 2009) - Russell Breweries Inc. (the "Company") (TSX VENTURE:RB), a producer of premium craft beer, today announced that it has received approval from the applicable securities regulatory authorities and the TSX Venture Exchange for its previously announced offering of units (the "Units") by way of a rights offering.

The Company intends to issue to each shareholder of record in British Columbia, Alberta, Manitoba and Ontario, as of May 13, 2009 (the "Record Date"), one right for each common share held by such shareholder. Four rights will entitle the holder to acquire one Unit at a price of $0.15 per Unit for maximum proceeds to the Company of $999,763.05.

Each Unit will be comprised of one common share and one non-transferable share purchase warrant (a "Warrant"). Each Warrant will entitle the holder to purchase an additional common share at an exercise price of $0.25 per common share for a period of 24 months following the issuance of the Warrants, provided however that the Warrants cannot be exercised within the first 12 months of this 24 month term.

The rights, the common shares underlying the Units and the common shares issuable on the exercise of the Warrants will be listed on the TSX Venture Exchange. The rights will be listed for trading on the TSX Venture Exchange for a period of 21 days from the Record Date, at which time they will be halted from trading.

In connection with the rights offering, the Company has entered into a standby guarantee agreement with Bolder Investment Partners, Ltd. ("Bolder"), pursuant to which Bolder has agreed to provide a stand-by commitment agreement for the purchase of Units not otherwise purchased under the rights offering. As consideration for providing the standby guarantee, Bolder is entitled to receive guarantee warrants from the Company entitling Bolder to acquire up to 1,666,271 units, having the same terms as the Units. The guarantee warrants are non transferable, have an exercise price of $0.15 per Unit and will expire twelve months after issue.

The Company has also entered into a managing dealer agreement with Bolder, pursuant to which Bolder has agreed to act as managing dealer for the purpose of organizing and participating in the solicitation of the exercise of the rights in connection with the rights offering. As consideration for acting as managing dealer in the rights offering, the Company has agreed to pay to Bolder, upon the closing of the rights offering, a work fee of $15,000 plus GST, a managing dealer fee of $50,000 plus GST and a cash fee equal to $0.005 per Unit subscribed for under the rights offering, other than for Units subscribed for by directors and officers of the Company.

The estimated net proceeds of the rights offering, assuming full exercise of the rights and after deducting expenses of the rights offering estimated at $220,000, will be approximately $800,000. The net proceeds to the Company from the rights offering will be used the purchase of capital equipment, new product development and marketing and general working capital requirements of the Company.

A rights offering circular containing full details of the terms of the rights offering will be mailed to shareholders of the Company on or about May 15, 2009.

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, Fort Garry Red and Stone Cold Lager. Russell Brewing Company Ltd. and Fort Garry Brewing Company Ltd. are wholly owned subsidiaries of Russell Breweries Inc. (TSX VENTURE:RB).

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.

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