WATERLOO, ONTARIO--(Marketwire - Oct. 24, 2008) - BRICK BREWING CO. LIMITED (the "Corporation") (TSX: BRB.TO) announced today that it is proceeding with a non-brokered, non-arms' length private placement (the "Offering") of 5,208,334 units (the "Units"), with each Unit consisting of one common share ("Common Share") and one common share purchase warrant (a "Warrant"). The Offering will be priced at $0.48 per Unit for aggregate gross proceeds of $2,500,000. Each Warrant will entitle the holder to purchase one additional common share of the Corporation at a price of $0.71 for a five-year period from the date of the closing of the Offering and will contain standard anti-dilution provisions. The subscribers to the Offering will have a right to increase the Offering size by 10%, or 520,833 Units, at an issue price of $0.48 per Unit, for a period of 30 days from the date of the closing of the Offering (the "Option"). As a result, up to 11,458,334 Common Shares are issuable upon completion of the Offering (assuming the full exercise of the Option and the maximum number of Warrants issuable), which represents approximately 51% of the currently issued and outstanding Common Shares of the Corporation.
The Offering is being made entirely to non-arm's length parties to the Corporation and will constitute a related party transaction. Benbrick Holdings Inc., George Croft and Kernwood Limited are currently insiders of the Corporation and will be the subscribers to the Offering. Benbrick Holdings Inc. ("Benbrick"), a significant shareholder of the Corporation, currently holds 4,042,970 Common Shares representing 18.12% of the Corporation's currently issued and outstanding Common Shares and as a result of the Offering will hold up to 7,480,470 Common Shares and 3,437,500 Warrants representing, assuming the full exercise of the Warrants, approximately 35% of the issued and outstanding Common Shares. Benbrick has also agreed with Laurence Capital Fund III L.P. ("LCF") that LCF will concurrently subscribe for up to $1,750,000 of additional shares of Benbrick and Stan Dunford and Peter Schwartz, each directors of the Corporation, will concurrently be subscribing for $800,000 and up to $600,000, respectively, of additional units in LCF. Peter Schwartz indirectly controls Benbrick and the aforementioned Common Shares currently held and to be acquired by Benbrick. George Croft, the President and Chief Executive Officer of the Corporation, currently holds no Common Shares and as a result of the Offering will hold up to 1,041,667 Common Shares and 1,041,667 Warrants representing, assuming the full exercise of the Warrants and the maximum Offering, approximately 7% of the issued and outstanding Common Shares. Kernwood Limited, an associate of Edward H. Kernaghan who is a director of the Corporation, currently holds 2,650,000 Common Shares representing 11.87% of the Corporation's currently issued and outstanding Common Shares and as a result of the Offering will hold up to 3,691,667 Common Shares and 1,041,667 Warrants representing, assuming the full exercise of the Warrants, 16.2% of the issued and outstanding Common Shares. The Corporation does not intend to obtain a valuation or majority of the minority shareholder approval but will instead rely on exemptions from such requirements available under Multilateral Instrument 61-101 ("MI 61-101") and from the security holder approval requirements of the TSX in Subsection 604(e) of the TSX Company Manual in cases of financial hardship. In this regard, the Corporation's board of directors, and its independent directors, acting in good faith, have determined that the Corporation faces serious financial difficulty and the proposed transaction has been designed to improve the financial position of the Corporation. As a consequence of relying upon these financial hardship exemptions, the TSX has informed the Corporation that it will, in the ordinary course, commence a delisting review. The Corporation believes that, upon completion of the Offering, it will be in compliance with TSX listing requirements. The Offering will result in insiders of the Corporation being issued common shares of the Corporation greater than 25% of the number of common shares currently issued and outstanding and will materially affect control of the Corporation as a result of Benbrick Holdings Inc. increasing its holding of common shares from 18.12% to approximately 26% (not including the exercise of the Warrants or the Option). Benbrick and Jim Brickman, the minority shareholder in Benbrick, will as a result of these transactions, jointly own or exercise control or direction over, in the aggregate, 7,472,840 issued common shares of the Corporation, which represent approximately 27% of the issued and outstanding common shares (not including the Warrants or exercise of the Option). The Corporation intends to rely on the exemption in Subsection 604(e) of the TSX Company Manual from obtaining security holder approval of the Offering in each of the foregoing situations available in cases of serious financial difficulty. The completion of the transaction is subject to the approval of the TSX and all other necessary regulatory approvals. The securities issuable pursuant to the Offering will be subject to applicable regulatory hold periods. Proceeds of the Offering will be used for working capital and general corporate purposes. About Brick Brewing Brick Brewing Co. Limited is Ontario's largest Canadian-owned and Canadian-based publicly held brewery. The Company is a regional brewer of award winning premium quality and value beers. The Company, founded by Jim Brickman in 1984, was the first craft brewery to start up in Ontario, and is credited with pioneering the present day craft brewing renaissance in Canada. Brick has complemented its J. R. Brickman Founder's Series and Waterloo Dark premium craft beers with other popular brands such as Laker, Red Cap and Formosa Springs Draft. Brick trades on the TSX under the symbol BRB. Visit us at www.brickbeer.com. Forward-Looking Statements All statements in this press release that do not directly and exclusively relate to historical facts constitute forward-looking statements as of the date of this press release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "anticipate", "seek", "plan", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although the Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, undue reliance should not be placed on these forward-looking statements, which are not guarantees and are subject to certain risks, uncertainties and assumptions, which may cause actual performance and financial results to differ materially from such forward-looking statements. The forward-looking statements included in this press release are made only at the date of this press release and, except as required by applicable securities laws, the Corporation does not undertake to publicly update such forward-looking statements to reflect new information, future events or otherwise. ContactsGeorge CroftBrick Brewing Co. Limited
President and Chief Executive Officer
(519) 576-9519 Ext. 247
Email: info@brickbeer.com
Website: www.brickbeer.com
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