Diamond Estates Wines and Spirits Announces Brokered Private Placement and Planned Expansion of Wine Production Capacity

/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

NIAGARA-ON-THE-LAKE, ON, Dec. 2, 2016 /CNW/ - Diamond Estates Wines & Spirits Inc. (the "Company" or "Diamond Estates") (http://www.diamondestates.ca) (TSXV: DWS), is pleased to announce that it has entered into an agreement with Paradigm Capital Inc. ("Paradigm") and GMP Securities L.P. ("GMP") pursuant to which Paradigm and GMP will act as co-lead agents (the "Agents") to sell, by way of private placement on a marketed best efforts basis, up to 22,727,300 common shares (the "Common Shares") of the Company at a purchase price of $0.22 per Common Share for aggregate gross proceeds of up to $5.0 million (the "Offering").  The Agents have also been granted an option (the "Agent's Option") to sell up to an additional 10% of the number of Common Shares issuable under the  Offering, exercisable in whole or in part any time up to 48 hours prior to closing of the Offering for additional gross proceeds of up to $0.5 million

The Company intends to employ the proceeds of the Offering to expand its principal wine production facility to add cooperage (barrel storage), warehouse and bottling space.  When complete, Diamond Estates will increase its wine processing, ageing and bottling operations by approximately 50%, due to a mix of operational efficiency and increased capacity.  The resulting economies of scale are expected to produce significant operating leverage that is anticipated to translate into higher margins on incremental sales volume. 

"Our planned capacity expansion will provide the Company with sufficient production to meet the expected growth in our business," said Murray Souter, President and CEO of Diamond Estates. "Our business is benefitting from a number of very positive factors including our strong brand lineup, broad industry growth, particular strength in the VQA segment, the introduction of wine into the Ontario grocery channel and robust export growth. With the increased capacity, we will be well positioned to meet market demand that will generate stronger returns for shareholders."

The Agents shall receive a cash commission equal to 6% of the aggregate gross proceeds raised in the Offering from non-president's list subscribers, and 3% of the aggregate gross proceeds raised in the Offering from president's list subscribers (up to a maximum of $1.0 million).  The Offering is subject to TSX Venture Exchange (the "Exchange") acceptance.  The Offering is not subject to any minimum aggregate subscription.

The Offering is expected to close on or about December 20, 2016.  The Common Shares issued pursuant to the Offering will be subject to a hold period expiring four months and one day from the date of issuance of such securities. 

Existing Shareholder Exemption

Depending on demand and regulatory requirements, a portion of the Offering may be made in accordance with the provisions of the existing shareholder exemption (the "Existing Shareholder Exemption") contained in Multilateral CSA Notice 45-313 and the various corresponding blanket orders and rules of participating jurisdictions, as well as the amendments to Rule 45-501- Ontario Prospectus and Registration Exemptions in Ontario.  The Existing Shareholder Exemption is not available in Newfoundland and Labrador.  In addition to conducting the Offering pursuant to the Existing Shareholder Exemption, the Offering will also be conducted pursuant to other available prospectus exemptions, including sales to accredited investors.

Diamond Estates has set November 30, 2016 as the record date (the "Record Date") for the purpose of determining existing shareholders entitled to purchase Common Shares pursuant to the Existing Shareholder Exemption. Subscribers purchasing Common Shares under the Existing Shareholder Exemption will need to complete a subscription agreement and represent in writing that they meet certain requirements of the Existing Shareholder Exemption, including that they were, on the Record Date, a shareholder of Diamond Estates, and will continue to be a shareholder of Diamond Estates until the closing of the Offering.  The aggregate acquisition cost to a subscriber under the Existing Shareholder Exemption cannot exceed $15,000 in a twelve-month period unless the subscriber has obtained advice from a registered investment dealer in their jurisdiction regarding the suitability of the investment, and subscribers relying on the Existing Shareholder Exemption will make a representation to Diamond Estates of this in writing. In the event that subscriptions received for the Offering based on available exemptions exceed the maximum Offering size of $5.0 million, Diamond Estates may seek to increase the size of the Offering and obtain Exchange approval for such an increase. In the alternative, should Diamond Estates not seek to increase the size of the Offering, the Common Shares will be allocated pro rata amongst all subscribers qualifying under the Existing Shareholder Exemption.

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.

About Diamond Estates Wines and Spirits Inc.

Diamond Estates Wines and Spirits Inc. is a producer of high quality wines and a sales agent for over 120 beverage alcohol brands across Canada.  The company operates two wineries in the Niagara region of Ontario producing VQA and blended wines under such well-known brand names as 20 Bees, EastDell Estates, Lakeview Cellars, Dois Amigos, Dan Aykroyd, Benchmark and Seasons. Through its partnership, Kirkwood Diamond Canada, the Company is the sales agent for top selling international brands in all regions of the country as well as being a distributor in the western provinces.  These recognizable brands include Fat Bastard wines from France, Kaiken wines from Argentina, Charles Wells beers from England, Hpnotiq Liqueur from France, Anciano wines from Spain, Francois Lurton wines from France and Argentina, Blue Nun wines from Germany, coolers and spirits from Independent Distillers in New Zealand, Brick Brewing from Canada, Evan Williams Bourbon from USA, Flor de Cana rum from Nicaragua, Iceberg Vodka from Canada and many others. For further information on the company, please visit the company's SEDAR profile at www.sedar.com.

Diamond Estates Wines & Spirits Inc. common shares trade on the TSX Venture Exchange (symbol: DWS).

Neither the 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.

Forward Looking Statements

This press release contains forward-looking statements.  Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Diamond Estates Wines and Spirits Inc. to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release.  Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the increased operations and efficiencies from expanding the wine production facility; higher margins on incremental sales volume from expanded wine production facility; the economy generally; consumer interest in the services and products of the Company; financing; competition; and anticipated and unanticipated costs. While the Company acknowledges that subsequent events and developments may cause its views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the views of the Company as of any date subsequent to the date of this press release. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

SOURCE Diamond Estates Wines & Spirits Inc.

For further information: Murray Souter, President & CEO, Diamond Estates Wines & Spirits Inc., jmurraysouter@diamondwines.com, 905.641.1042 Ext 234; Alan Stratton, CPA, CA, Chief Financial Officer, Diamond Estates Wines & Spirits Inc., astratton@diamondwines.com, 905.641.1042 Ext. 225

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