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Wildpack Announces Agreement to Acquire Land and Sea Packaging and C$42,000,000 Financing Transactions

11/01/2021

Transformative Transaction for Wildpack's Brokerage Operations

  • Located in the key strategic North Central region in Grand Rapids, Michigan, Land and Sea Packaging is strongly aligned with Wildpack's business plan.
  • Land and Sea generated LTM Revenue of US$21,886,000 and LTM EBITDA of US$4,670,000.
  • History of profitable operations for 20+ years.
  • Acquisition achieves Wildpack's 2021 growth strategy of 6 facilities ahead of schedule.
  • Land and Sea brokers approximately 90 million cans annually, with a diverse client base across 15 U.S. states.
  • Key leaders aligned with long-term employment contracts and a seat on Wildpack's board of directors.

VANCOUVER, BC, Nov. 1, 2021 /CNW/ - Wildpack Beverage Inc. (TSXV: CANS) ("Wildpack" or the "Company") is pleased to announce that it has entered into a binding agreement dated November 1, 2021 (the "Agreement") to acquire, through a wholly owned subsidiary Wildpack Holdings US Inc. ("Wildpack US"), all of the issued and outstanding securities of KT Murray Corporation, dba Land and Sea Packaging ("Land and Sea"), an established high-volume aluminum can brokering business based in Grand Rapids, Michigan for cash consideration of US$26.1 million and common shares of Wildpack ("Common Shares") with an aggregate value of approximately US$11.2 million, subject to certain adjustments and holdbacks (the "Acquisition").

The transaction delivers on Wildpack's strategic goal of acquiring or building six facilities by the end of 2021. Land and Sea operates in the North Central region, which offers distribution coverage to a key strategic area with no overlap on the current network of Wildpack's facilities. A leader in the rigid packaging business, Land and Sea complements Wildpack's existing operations in the areas of brokerage of aluminum cans, supply chain forecasting and procurement, enhancing all of the Company's business segments. Its owner, Kim Murray, and its Chief Operating Officer, Tim Murray, will both remain with Wildpack as employees and will be represented on the Board of Directors with a voting seat and an observer seat.

"We are extremely excited to join the Wildpack team. We have very similar customer-centric cultures that will result in a seamless transition," said Land and Sea owner Kim Murray. "The added capabilities in the areas of can decorating and contract filling will allow us to better serve our existing customers as a full-service supply chain, packaging, and manufacturing provider. We are eager to gain the resources that Wildpack has access to so that we can replicate our forecasting and procurement business across their platform of customers."

Wildpack Chief Executive Officer Mitch Barnard commented, "What Land and Sea has been able to build is nothing short of incredible. Their ability to build customer relationships and trust through meticulous forecasting and procurement services has transformed their business from just a broker to a meaningful partner. This creates significant stickiness in their existing business and provides Wildpack the internal expertise to scale a forecasting and procurement division providing value-add incremental services to our more than 400 customers. Wildpack is quickly becoming a one-stop shop for brands to operationalize their visions. As we continue to acquire slightly up and down our vertical, we unlock more value for our customers allowing them to focus on what they do best – sales and marketing – while leaving the rest to us. While in and of itself this transaction is transformative for Wildpack based solely on the business, we are equally excited to have Tim and Kim join our leadership team and to stand shoulder-to-shoulder with us as we build Wildpack into the dominant player in the middle market beverage manufacturing industry."

Financial Highlights

LTM Figures (US$mm)

Revenue

Gross Profit

EBITDA





Wildpack(1)

$22.7

$3.0

$0.7

L&S(2)

$21.9

$6.7

$4.7

Pro Forma

$44.6

$9.8

$5.4





% Contribution




Wildpack

51.0%

30.9%

13.1%

L&S

49.0%

69.1%

86.9%


(1) Wildpack LTM covers the period of July 1, 2020 to June 30, 2021. Q3 2021 financial results are not yet released.

(2) L&S LTM covers the period of October 1, 2020 to September 30, 2021.

Transaction Summary

Under the terms of the Agreement, subject to certain adjustments, the total purchase price payable by Wildpack US is $37,260,000, consisting of 12,596,081 Common Shares at a price of C$1.10 per Common Share and US$26.1 million in cash. A portion of the purchase price will be subject to a customary holdback (the "Holdback"), comprised of both cash and Common Shares, as security for the adjustment and indemnification obligations of the vendor under the Agreement. The Holdback will be retained by Wildpack US and, subject to certain conditions, will be released to the vendor in accordance with the terms of the Agreement.

On closing, the Common Shares will be deposited with Computershare Investor Services Inc. to be held and released to the vendor in accordance with the terms of a pooling agreement, pursuant to which the Common Shares will be released to the vendor over a period of 24 months from the closing date, with the final 10% being released on the 24 month anniversary of the closing date. As a condition of closing, Wildpack will enter into employment agreements with each of Kim Murray and Tim Murray, and will retain all Land and Sea employees.

The transaction is subject to TSX Venture Exchange ("TSXV") and other necessary regulatory approvals, and the receipt of third-party consents, together with other customary closing conditions in a transaction of this nature. Closing of the transaction is expected to occur contemporaneously with the Offerings (defined below) on the Closing Date (as defined below).

Stifel GMP acted as the exclusive financial advisor to Wildpack in connection with the Acquisition.

Financings

C$22 Million Bought Deal of Units

Wildpack is pleased to announce that it has entered into an agreement with Stifel GMP, as sole bookrunner and lead underwriter, on behalf of a syndicate of underwriters including Roth Capital Partners LLC, PI Financial Corp., and Leede Jones Gable Inc. (collectively, the "Underwriters") pursuant to which the Underwriters have agreed to purchase on a bought deal basis, an aggregate of 22,680,412 units (the "Units") of the Company at a price of C$0.97 per Unit (the "Offering Price") for aggregate gross proceeds to the Company of C$22 million (the "Unit Offering").

Each Unit shall consist of one Common Share and one-half common share purchase warrant of the Company (each whole common share purchase warrant, a "Warrant"). Each Warrant shall be exercisable to acquire one Common Share of the Company (a "Warrant Share") for a period of 36 months from the closing of the Unit Offering at an exercise price of C$1.26 per Warrant, subject to adjustment in certain events.

The Company has granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 3,402,061 Units at the Offering Price, which Over-Allotment Option will be exercisable at any time and from time-to-time, for a period of 30 days following the Closing Date (as defined below), which would result in additional gross proceeds of up to C$3.3 million. The Over-Allotment Option is exercisable to acquire Units, Common Shares or Warrants (or any combination thereof) at the discretion of the Underwriters.

The Units will be offered by way of a short form prospectus to be filed in all provinces of Canada except Québec. The Unit Offering is expected to close on or about November 23, 2021 (the "Closing Date") and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSXV and the applicable securities regulatory authorities.

The Company intends to use the net proceeds of the Unit Offering to fund a portion of the Purchase Price of the Acquisition and for general corporate purposes.

Concurrent C$20 Million Private Placement of Debenture Units

Wildpack is pleased to announce that in conjunction with the Unit Offering, it has entered into an agreement with Stifel GMP as sole bookrunner and lead underwriter, on behalf of the Underwriters, pursuant to which the Underwriters have agreed to purchase 20,000 convertible debenture units of the Company (the "Debenture Units"), on a bought deal private placement basis, subject to all required regulatory approvals, at a price of $1,000 (the "Issue Price") per Debenture Unit, for gross proceeds of C$20,000,000 (the "Debenture Unit Offering" and together with the Unit Offering, the "Offerings"). Each Debenture Unit consists of (i) one 8% senior unsecured convertible debenture (the "Convertible Debentures") having a face value of $1,000 and convertible into Common Shares at a conversion price of C$1.51 per Common Share (the "Conversion Price") and maturing four years from the Closing Date (the "Maturity Date"); and (ii) 332 Warrants of the Company (the "PP Warrants" and, together with the Convertible Debentures, the "Underlying Securities"). Each PP Warrant entitles the holder thereof to purchase one Common Share at an exercise price of $1.81 for a period of two years following the Closing Date.

At any time and from time to time following the expiry of 36 months after the Closing Date, the Company may, at its option, redeem pro rata all or part of the Convertible Debentures, upon not less than 30 nor more than 60 days' prior written notice, at a redemption price which is equal to 110% of the principal amount thereof, plus any accrued and unpaid interest that would otherwise by payable to the holder from the time of the optional redemption until the Maturity Date.

The Company may force the conversion of all but not less than all of the principal amount of the then outstanding Convertible Debentures at the Conversion Price if the volume weighted average trading price of the Common Shares on the TSXV is greater than a 45% premium to the Conversion Price for the preceding twenty (20) consecutive trading days. Holders having their Convertible Debentures converted will receive accrued and unpaid interest thereon in cash.

The Debenture Units will be offered on a private placement basis in all provinces of Canada (except Québec) and will be subject to a four month hold period pursuant to applicable securities laws. The Company intends to use the net proceeds of the Debenture Unit Offering to fund a portion of the Purchase Price of the Acquisition and for general corporate purposes.

The Debenture Unit Offering is expected to close concurrently with the Unit Offering on Closing Date. The Debenture Unit Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSXV and the applicable securities regulatory authorities.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Per: "Mitch Barnard"
Mitch Barnard
Chief Executive Officer and Director

Advisors

Stifel GMP is financial advisor to Wildpack Beverage, Inc., Fasken Martineau DuMoulin LLP is its legal advisor. Wildeboer Dellelce LLP is acting as legal counsel for the Underwriters.

Visit our investor website at:

https://investor.wildpackbev.com

About Wildpack

Wildpack is engaged in beverage manufacturing and packaging, operating in the middle market by providing sustainable aluminum can filling and ecofriendly decorating services to brands throughout the United States. Wildpack currently operates indirectly through its wholly owned subsidiaries and out of facilities in Baltimore, Maryland, Atlanta, Georgia, Longmont, Colorado, Sacramento, California and Las Vegas, Nevada with a focus on digital innovation and green ready-to-drink packaging. Wildpack commenced trading on May 19, 2021 on the TSX Venture Exchange under the symbol "CANS.V".

Forward-Looking Statements

This news release may contain "forward-looking statements" within the meaning of applicable Canadian securities laws, including, without limitation, our statements related to: the completion of the Acquisition; the completion of the Offerings; the impact of the Acquisition on the Company's business and its growth plans; the costs savings and synergies anticipated from the Acquisition, and the Company's growth and acquisition plans in general. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. These statements generally can be identified by the use of forward-looking words such as "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe" or "continue", or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Wildpack's statements expressed or implied by these forward-looking statements are subject to a number of risks, uncertainties, and conditions, many of which are outside of Wildpack's control, and undue reliance should not be placed on such statements. Forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding the Transaction, including: that Wildpack will not be able to complete the Acquisition (or either of the Offerings) on the anticipated timeline, if at all; that the actual impact of the Acquisition on Wildpack's business and growth strategy will not be as currently anticipated; that Wildpack's other assumptions in making forward-looking statements may prove to be incorrect; adverse market conditions; risks inherent in the beverage manufacturing and packaging sector in general; that future results may vary from historical results; and competition in the markets where Wildpack operates. Except as required by securities law, Wildpack does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Wildpack Beverage Inc.

For further information: invest@wildpackbev.com or Elijah Clare, Vice President, Investor Relations, elijah@wildpackbev.com


(1) Wildpack LTM covers the period of July 1, 2020 to June 30, 2021. Q3 2021 financial results are not yet released.

(2) L&S LTM covers the period of October 1, 2020 to September 30, 2021.

(1) Wildpack LTM covers the period of July 1, 2020 to June 30, 2021. Q3 2021 financial results are not yet released.

(2) L&S LTM covers the period of October 1, 2020 to September 30, 2021.

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