BR Big Rock Brewery Inc

Highlights: 

• VN Capital and Big Rock have agreed and closed on additional $4.2 million in borrowings with funds to be used to provide short term liquidity and grow the business through the introduction of new technology including eco-friendly packaging and alternate packaging formats;
  
  
• The combined $8.5 million second lien financing facility has a maturity date of December 31, 2024; and
  
  
• Big Rock looks forward to continuing its relationship with ATB Financial (who provides its senior financing facility) and VN Capital.

CALGARY, AB, Jan. 17, 2024 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation"), is pleased to announce it has added a $4.2 million tranche to its existing $4.3 million second lien financing (the "Second Lien Financing") with VN Capital Fund I, LP ("VN Capital"). This facility is subordinate to the existing credit arrangement with ATB Financial ("ATB") which provides a $6 million revolving operating loan facility and $10 million evergreen term loan facility (collectively the "Senior Credit Facilities"). 

VN Capital and Big Rock have agreed that the additional funds available from the Second Lien Financing will be used to finance working capital and the replacement of packaging equipment allowing its beverages to be packaged in more environmentally-friendly and flexible formats. The parties agreed to extend the maturity date of the Second Lien Financing facility from June 30, 2024 to December 31, 2024.  

"We are very excited to secure this new investment which will assist us with expanding our business and our production capacity.  This new equipment will sharpen our competitive advantage in multiple markets and assist with our operating margins," noted President & CEO David Kinder. "This is a major step forward for Big Rock."  

VN Capital is a principal shareholder and "insider" of the Corporation and P. Donnell Noone, a director of Big Rock, is a co-founder, principal and managing partner of VN Capital Management, LLC, the manager of VN Capital. The Board of Directors of Big Rock approved the Second Lien Financing (with Mr. Noone abstaining) on the recommendation of the directors independent of VN Capital, and determined that the Second Lien Financing is on reasonable commercial terms that are not less advantageous to Big Rock than if the loan thereunder was obtained from a person dealing at arm's length with Big Rock. 

Big Rock also announces that it has concluded the process initiated in March 2023 where it evaluated potential strategic alternatives with a view to enhancing shareholder value (the "Strategic Review").  The Strategic Review was led by a special committee (the "Special Committee") of the Board of Directors of the Corporation who worked with Acumen Capital Finance Partners Limited who acted as a strategic advisor to the Special Committee. The Special Committee reviewed the Corporation's operations and investigated alternative courses of actions including, but not limited to, cost reductions, restructuring, refinancing and potential business combinations.

"We would like to thank members of the Special Committee as well as our executive group and our strategic advisor, Acumen Capital Finance Partners Limited for their contributions to the Strategic Review," said Chairman Stephen Giblin.  "The organizational adjustments and commitment to continuing to develop and improve results from both our branded and co-packing businesses should continue to deliver growth in profitability moving forward."

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events or Big Rock's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking information are not facts, but only predictions and generally can be identified by the use of statements that include words or phrases such as, "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "likely" "may", "project", "predict", "propose", "potential", "might", "plan", "seek", "should", "targeting", "will", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Big Rock believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon by readers, as actual results may vary materially from such forward-looking statements. These statements speak only as of the date of this news release and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this news release contains forward-looking statements pertaining to the following:

• Big Rock's business plans, outlook and strategy;
• the anticipated use of proceeds of the Second Lien Financing;
• the anticipated benefits to be derived from the expanded Second Lien Financing, including the Corporation's expectation that the Second Lien Financing will assist us with expanding our business and our production capacity, that the new equipment will sharpen our competitive advantage in multiple markets and assist with our operating margins, and that it will continue to backstop the Corporation's access to liquidity and provide equipment that will allow its beverages to be packaged in more environmentally-friendly and flexible formats;
• that the implementation of organizational adjustments will position the Corporation to develop and improve results from both our branded and co-packing businesses and deliver growth in profitability moving forward; and
• that Big Rock will generate sufficient cashflow to meet the needs of the business.

With respect to the forward-looking statements listed above and FOFI (as defined below) contained in this news release, management has made assumptions regarding, among other things:

• volumes in the current fiscal year will remain sufficient to finance ongoing operations;
• there will be no material change to the regulatory environment in which Big Rock operates;
• the packaging equipment referenced herein can be procured and delivered in a timely manner; and
• there will be no material supply issues with Big Rock's vendors.

Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking information and statements and FOFI contained herein include the risk factors set out in the Corporation's annual information form and also include, but are not limited to:

• that Big Rock may not ensure that sufficient working capital remains in the business;
• that the expanded Second Lien Financing may not provide Big Rock with the benefits anticipated;
• that the expanded Second Lien Financing may not backstop the Corporation's access to liquidity;
• that the Corporation may not have a successful fiscal 2024;
• that organizational adjustments and commitment to continuing to develop and improve results from both our branded and co-packing businesses may not deliver growth in profitability;
• that Big Rock may not generate sufficient cashflow to meet the needs of the business; and
• the inability to grow demand for Big Rock's products.

Any financial outlook or future oriented financial information (in each case "FOFI") contained in this news release regarding prospective financial position, including, but not limited to: Big Rock's expectations regarding operating margins and that organizational adjustments and commitment to continuing to develop and improve results from both our branded and co-packing businesses should continue to deliver growth in profitability, is based on reasonable assumptions about future events, including those described above, based on an assessment by management of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material. Readers are cautioned that any such FOFI contained herein should not be used for purposes other than those for which it is disclosed herein. Such information was made as of the date of this news release and the Corporation disclaims any intention or obligation to update or revise any such information, whether as a result of new information, future events, or otherwise, unless required pursuant to applicable law.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking information and statements and FOFI contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements and FOFI included in this news release are made as of the date hereof and Big Rock does not undertake any obligation to publicly update such forward-looking information and statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, six ciders (Rock Creek Cider® series), custom-crafted private label products and other notable, licensed alcoholic beverages keeps us at the forefront of the craft beer revolution and still proudly contesting the beer and alcoholic beverage trends of today. Big Rock has brewing operations in Calgary, Alberta, Vancouver, British Columbia, and Toronto, Ontario. Big Rock trades on the TSX under the symbol "BR". For more information on Big Rock visit www.bigrockbeer.com 

SOURCE Big Rock Brewery Inc.