VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 3, 2016) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Ten Peaks Coffee Company Inc. (TSX:TPK) ("the Company" or "Ten Peaks") today announced that it has entered into a subscription agreement with Mill Road Capital II, L.P. ("Mill Road Capital") pursuant to which Mill Road Capital will purchase, and Ten Peaks will sell, an unsecured subordinated convertible debenture ("Convertible Debenture") in the amount of $15,000,000.
The Convertible Debenture will bear interest at a rate of 6.85% over its 7-year term and will be convertible into Common Shares of the Company at a conversion price of $8.25 per Common Share. Under the terms of the agreement, Ten Peaks will have the option to pay interest-in-kind for the first two years. If elected, this option will increase the principal sum by the interest owing. The Convertible Debenture will also include a net share settlement feature ("Net Share Settlement") that allows Ten Peaks, upon conversion, to elect to pay cash equal to the face value of the Convertible Debenture and to issue Common Shares equal to the excess value of the underlying equity above the face value of the Convertible Debenture. If the Net Share Settlement option is elected, it will result in fewer Common Shares being issued.
The net proceeds of the Offering will be used for growth opportunities including the construction of a new production line.
"We are pleased to enter this transaction with Mill Road Capital, which has been an investor in Ten Peaks for several years," said Frank Dennis, President and CEO of Ten Peaks. "This convertible sub-debt will provide us with the long-term capital we need to fund the next stage of our expansion plans, while maintaining a prudent capital structure. We are now well positioned to finance construction of the new production line we need to meet growing global demand for our SWISS WATER® Process coffees. The new capacity is expected to come on line in mid-2018."
"As a longtime shareholder, we are pleased to be able to support Ten Peaks as it invests in a new, state of the art facility," said Scott Scharfman, a Managing Director at Mill Road Capital. "This significant increase in our investment in Ten Peaks demonstrates our confidence in the Ten Peaks management team and the high quality, chemical free SWISS WATER® Process they have spent decades perfecting."
Closing of this transaction is expected to occur on or about October 11, 2016 and is subject to regulatory approval including that of the Toronto Stock Exchange.
This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.
Ten Peaks is a publicly traded company that owns all of the interests of the Swiss Water Decaffeinated Coffee Company Inc. (SWDCC), a premium green coffee decaffeinator located in Burnaby, BC. It also owns and operates Seaforth Supply Chain Solutions Inc. (Seaforth), a green coffee handling and storage business located in Metro Vancouver.
SWDCC employs the proprietary SWISS WATER® Process to decaffeinate green coffee without the use of chemicals, leveraging science-based systems and controls to produce coffee that is 99.9% caffeine free. The SWISS WATER® Process is a 100% chemical free water process for coffee decaffeination, as well as the world's only consumer-branded decaffeination process. It is certified organic by the Organic Crop Improvement Association.
SWISS WATER® Process decaffeinated green coffees are sold to many of North America's leading specialty roaster retailers, specialty coffee importers and commercial coffee roasters. SWDCC also sells coffees internationally through regional distributors.
Seaforth provides a complete range of green coffee handling and storage services, including devanning coffee received from origin; inspecting, weighing and sampling coffees; and storing, handling and preparing green coffee for outbound shipments. Seaforth's warehouse and handling operation is certified organic by Ecocert Canada.
About Mill Road Capital
The following information has been provided by Mill Road Capital: Mill Road Capital is a private investment firm focused on investing in and partnering with publicly traded micro-cap companies in the U.S. and Canada. Among its investments are PRT Growing Services Ltd., the British Columbia based leader in container grown tree seedlings for replanting forests, and Mother's Market & Kitchen, Inc., a pioneer in the natural and organic grocery retail industry. The firm has flexible, long-term capital with the ability to purchase shares in the open market, buy large block positions from existing shareholders, provide capital for growth or acquisition opportunities, or execute going-private transactions. The firm has raised approximately $875 million of aggregate equity capital commitments and has offices in Greenwich, CT and the San Francisco Bay Area. More information can be found at http://www.millroadcapital.com.
Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual events or achievements to be materially different from any future events or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements may include such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties, including, but not limited to, risks related to (a) obtaining the approval of the Toronto Stock Exchange for the transaction announced by this press release, including the issue of Common Shares upon conversion of the Convertible Debenture and the exercise of the option to pay interest in kind and increase the principal sum owing under the Convertible Debentures, (b) completion of all conditions precedent to the closing of the issue of the Convertible Debenture and (c) whether or not the holder of the Convertible Debenture exercises the conversion feature in whole or in part. Except to the extent required by applicable securities law, Ten Peaks Coffee Company Inc. undertakes no obligation to publicly update or revise any such statements to reflect any change in management's expectations or in events or circumstances on which any such statements may be based.