Sepp's Gourmet Foods Ltd.

Sepp's Gourmet Foods Ltd.

May 26, 2005 13:16 ET

Sepp's Announces Convertible Debenture Financing

SURREY, BRITISH COLUMBIA--(CCNMatthews - May 26, 2005) - Sepp's Gourmet Foods Ltd. (TSX:SGO) ("Sepp's" or the "Company") announces that, subject to regulatory approval, it will be completing a non brokered private placement of secured convertible debentures for total proceeds of $2,000,000.

The debentures will mature five years plus one day after the date of closing and pay 9% interest per annum, payable quarterly. Each $0.25 of face value is convertible into one common share of Sepp's at any time while the debentures remain outstanding. The debentures may be redeemed by Sepp's at any time after May 31, 2008, so long as the market price of Sepp's common shares is not less than $0.50 in the twenty trading days prior to redemption.

The debentures will be secured by a floating charge on all of Sepp's assets that is subordinate to existing security and subordinate to future security given in connection with purchases of property, plant and equipment or in connection with line of credit financing.

The proceeds of this financing will be used to purchase food manufacturing equipment and general working capital purposes.

Certain insiders and a director of the Company will be participating in this transaction as purchasers of debentures. As insiders and directors of the Company could acquire greater than 10% of the number of issued shares upon the conversion of the debentures, one insider could acquire more that 20% of the issued shares upon the conversion of the debentures and the number of shares that could be issued upon the conversion of the debentures exceeds 25% of the number of shares currently outstanding, shareholder approval will be obtained by written consent from the majority of disinterested shareholders in accordance with section 604(d) of the TSX Company Manual. This section provides that shareholders holding more than 50% of the voting securities, other than those shares held by parties interested in the transaction, and who are familiar with the terms of the transaction, may approve of the transaction by written consent without holding a shareholders' meeting. For the purposes of this approval, 7,365,591 shares are held by parties who are interested in the transaction.

Sepp's Gourmet Foods ( is a producer and marketer of specialty prepared foods in North and South America, and Southeast Asia. Sepp's is a publicly traded company listed on the Toronto Stock Exchange under the symbol SGO.

The Toronto Stock Exchange has not reviewed nor has accepted the responsibility for the accuracy and adequacy of this news release.

Contact Information

  • Sepp's Gourmet Foods Ltd.
    Tom Poole
    President and CEO
    (604) 535-5457
    Sepp's Gourmet Foods Ltd.
    Jim Pratt
    Chief Financial Officer
    (604) 574-2166