Big Rock keeps taps pouring with debt restructuring and equity raise

Calgary-based Big Rock brewing, has avoided last call with a “significant financial restructuring” that it says will ensure another round for fans of Alberta’s preeminent craft brewery. 

The company announced last week a multi-pronged restructuring that will see it retire about $11 million of debt and issue $8 million worth of shares to recapitalize the company and continue as a going concern.

Under the agreement, Big Rock will settle approximately $11.3 million in debt owed to VN Capital through a combination of equity conversion and repayment. VN Capital, which holds a 28.8% stake in the company, will see $9 million of its debt converted into 9 million common shares at $1 per share. The remaining balance will be repaid using proceeds from a concurrent private placement.

The offering is expected to raise between $6.3 million and $8 million. To date, Big Rock has secured binding commitments for approximately $4.5 million from investors, with the remaining funds earmarked for debt repayment, capital projects and working capital, it said in a news release.

Big Rock said it expects to issue as many as 15.3 million shares through the combined debt settlement and private placement, “significantly bolstering its balance sheet and positioning the brewery for future growth.” 

The biggest buyer of the private placement is reported to be Jim Riddell, the present president and CEO of Calgary-based Paramount Resources and son of local philanthropist oilman Clay Riddell. 

Following the transactions, the brewery’s only remaining long-term debt will be its senior credit facility with ATB Financial.

“This is a transformative moment for Big Rock Brewery,” the company said in a statement. “As Alberta’s original craft brewer, we are committed to delivering exceptional beers while benefiting our shareholders, employees, and loyal customers.”

Big Rock has long been celebrated as a trailblazer in Alberta’s craft brewing scene, producing iconic brews that have defined the local beer culture. 

It was founded in 1984 by Ed McNally, who was disappointed in the beer available to buy in Calgary. 

A lawyer by trade, McNally was representing a group of barley growers in a legal action against the Alberta Wheat Board in the 1980s. 

Through the course of the legal action, McNally learned that the Alberta climate produces 2-row barley that is ideally suited for malting. At the time, most Alberta barley production was used as cattle feed. 

The name ‘Big Rock’ was chosen after the Okotoks Erratic, a 16,500-tonne glacial boulder located on Highway 7 near Diamond Valley.

He passed away in 2014 at the age of 89.

The restructuring will allow the company to focus on innovation, operational efficiency, and its mission to remain a leader in Canada’s craft beer industry.

Big Rock shares are up more than 13% since the deal was announced. On Monday they were up four cents to $1.20 on the Toronto Stock Exchange.