Al­canna signs LOI with Ace Liquor

Stockwatch Daily - - CONSUMER GOODS - Mr. James Burns re­ports

AL­CANNA INC. in­tends to es­tab­lish a new dis­count liquor part­ner­ship and open new Wine and Be­yond lo­ca­tions, and has launched home de­liv­ery in the greater Van­cou­ver area.


Al­canna has en­tered into a non-bind­ing let­ter of in­tent (“LOI”) with a dis­count liquor store op­er­a­tor in Al­berta, Ace Liquor Cor­po­ra­tion (“Ace”), to form a new part­ner­ship in the dis­count liquor store busi­ness. Al­canna and Ace ex­pect to en­ter into de­fin­i­tive agree­ments with the trans­ac­tion clos­ing in early 2019 sub­ject to cus­tom­ary clos­ing con­di­tions, in­clud­ing re­ceipt of all nec­es­sary third party and reg­u­la­tory con­sents and ap­provals. The pro­posed part­ner­ship — Cana­dian Liquor Re­tail­ers Al­liance (“the Al­liance”) — is an­tic­i­pated to in­clude all of Ace’s cur­rent 12 lo­ca­tions and 3 ad­di­tional lo­ca­tions un­der con­struc­tion. The Al­liance is an­tic­i­pated to also ac­quire 50 re­tail stores from a sub­sidiary of Al­canna and which we an­tic­i­pate the ma­jor­ity of which will be con­verted to the “Ace Liquor Dis­counter” brand. The LOI pro­vides that Tank Van­der, CEO of Ace, will be­come CEO of the Al­liance and Don­ald Bobey, cur­rently Vice Pres­i­dent, Mer­chan­dis­ing at Al­canna will be­come Pres­i­dent and COO. The ini­tial own­er­ship of the Al­liance part­ner­ship units is ex­pected to be ap­prox­i­mately 72% held di­rectly or in­di­rectly by Al­canna and 28% held by Ace.

The pro­posed ma­te­rial terms of the trans­ac­tion are con­tained in the LOI; how­ever, the de­fin­i­tive agree­ments have not been fi­nal­ized, and these agree­ments will be sub­ject to ob­tain­ing the nec­es­sary ap­provals and con­sents. Ac­cord­ingly, there is no as­sur­ance that de­fin­i­tive agree­ments in con­nec­tion with the pro­posed trans­ac­tion will be agreed to nor that the trans­ac­tion will be com­pleted. The com­ple­tion of the trans­ac­tion will re­quire, amongst other things, the ap­proval of the trans­fer of liquor li­censes to the Al­liance by the ap­pli­ca­ble reg­u­la­tory au­thor­i­ties, trans­fers of in­ter­ests in leases as ap­pli­ca­ble; some of which will re­quire third party con­sents, ap­proval by Al­canna’s len­ders and other reg­u­la­tory ap­provals as the case may be.

“Ace Liquor Dis­counter is an in­no­va­tive and re­spected dis­count liquor store chain in Al­berta and we are ex­cited to part­ner with them in this Al­liance,” stated James Burns, Vice Chair and CEO of Al­canna. “The for­ma­tion of the Al­liance is a con­tin­u­a­tion of our pre­vi­ously an­nounced strat­egy to en­ter the dis­count liquor seg­ment and is ex­pected to achieve sig­nif­i­cant syn­er­gies. We be­lieve that the com­bined strengths of Al­canna and Ace will make the Al­liance a strong com­peti­tor in the dis­count liquor seg­ment in Al­berta and will fa­cil­i­tate our growth in West­ern Canada. We be­lieve that Al­berta has by far the best liquor re­tail regime in Canada for con­sumers and the Al­liance will only serve to strengthen our in­dus­try go­ing for­ward.”


James Burns con­tin­ued: “We have also been ag­gres­sively seek­ing new lo­ca­tions to ex­pand our highly prof­itable Wine and Be­yond brand. We have signed or are in ne­go­ti­a­tions with land­lords to al­low for a fur­ther six (6) to nine (9) lo­ca­tions in Al­berta within 2 years. We have com­mit­ments for sites in Leth­bridge and St. Al­bert (part of the greater Ed­mon­ton re­gion), Al­berta, which are sched­uled to open in Q2 2019 and late Q3 2019, re­spec­tively. We an­tic­i­pate open­ing 4 ad­di­tional Wine and Be­yond lo­ca­tions in Cal­gary be­tween mid-2019 and mid-2020 as well as lo­ca­tions in Red Deer, Grand Prairie and Fort McMur­ray. The cur­rent Wine and Be­yond stores av­er­age at least 4 times the rev­enue of a Liquor De­pot and pro­duce ap­prox­i­mately 5 times the EBITDA. We be­lieve that Wine and Be­yond stores have the largest prod­uct se­lec­tion in Canada and of­fer an un­par­al­leled cus­tomer ex­pe­ri­ence to that of­fered else­where in Al­berta or across Canada.”


Ef­fec­tive to­day, the Com­pany has launched on-de­mand, con­ve­nient home de­liv­ery of beer, wine and liquor to the greater Van­cou­ver area through its Liquor De­pot brand. The on-de­mand ser­vice al­lows le­gal-age con­sumers to use an app or web­site to shop thou­sands of prod­ucts from the vir­tual shelves of Liquor De­pot and or­der with de­liv­ery com­plete in less than one hour. Con­sumers are able to sched­ule de­liv­er­ies when it is most con­ve­nient for them.


Al­canna is one of the largest pri­vate sec­tor re­tail­ers of al­co­hol in North Amer­ica and the largest in Canada {A –} own­ing and op­er­at­ing 227 lo­ca­tions in Al­berta, B.C. and Alaska. With rev­enues in ex­cess of $600 mil­lion per year, Al­canna pro­cesses over 20 mil­lion in­di­vid­ual re­tail trans­ac­tions of bev­er­age al­co­hol. As of Oc­to­ber 17, 2018 Al­canna, opened the first five of its new re­tail cannabis stores un­der the “Nova Cannabis” brand in the Prov­ince of Al­berta.

We seek Safe Har­bor.

John Robert Bar­nett, Terry Dale Booth, Derek Hud­son Bur­ney, James Franklin Charles Burns, Gary Michael Collins, Ber­nadette Koll­man, Peter L Lynch, Karen A Pren­tice, De­nis Ryan

(CLIQ) Shares: 37,075,167

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