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First Growth Announces a Joint Venture with CRAFT Beer Market

Wednesday, 01 October 2014 09:14 AM

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VANCOUVER, BC / ACCESSWIRE / October 1, 2014 / First Growth Holdings Ltd. ("First Growth" or the "Company") (TSX-V: FGH) is pleased to announce that it has entered into a binding letter of intent ("LOI") dated September 30th, 2014 with CRAFT Beer Market ("CRAFT Beer") in respect of a proposed joint venture, whereby First Growth and CRAFT Beer have agreed to jointly form a new company ("Newco") expected to be engaged in the business of establishing and operating CRAFT Beer Market restaurants in China. CRAFT Beer is a private company based in Calgary, Alberta and is engaged in the business of operating premium casual restaurants in various locations in Canada.

CRAFT Beer Market has Canada's largest selection of draft beer and has become a very successful restaurant and recognizable brands with locations in Calgary, Edmonton and Vancouver. With over 100 taps, great food, friendly staff and an open architecture CRAFT Beer offers something unique where you can enjoy fresh food and craft beers from all over the world under one roof.

CNBC reported on July 29th 2014 that China is set to overtake the U.S. as the world's largest beer market in value by 2017, according to a EuroMonitor International report. China is already the world's largest beer market by volume serving more than double the pints compared with the U.S. last year as reported by CNBC.1

Paul Guedes, President of First Growth, stated "With the draft beer sector reaching unprecedented levels in China, we feel the timing is perfect to enter the market. We are extremely excited to partner with CRAFT Beer Markets to expand its brand and operations into China through our Chinese network and connections. The proposed joint venture allows First Growth to add an additional recognized brand to our portfolio and penetrate international markets."

Under the terms of the LOI, First Growth and CRAFT Beer have, among other things, agreed:

  1. (i)to jointly develop a budget for Newco to outline, among other things, the initial capital expenditure and working capital required to establish an initial CRAFT Beer restaurant in China;

  1. (ii)that First Growth shall contribute 85% of the initial capital investment in cash and be responsible for lease and building negotiations, construction management, liquor licensing and regulatory approval and other initial start-up tasks, in exchange for 70% of the equity ownership of Newco; and

  1. (iii)that CRAFT Beer shall contribute 15% of the initial capital investment in cash and be responsible for in store training, marketing campaigns, design and construction, product sourcing and other initial operational start-up tasks, in exchange for 30% of the equity ownership of Newco.

PJ L'Heureux, Founder and President of CRAFT Beer Market said "Having local partners who understand the culture and sector was key to our expansion into international markets. Pairing the attributes of First Growth's team with our expertise of the craft beer sector and restaurant industry we believe is a successful combination and we are looking forward to growing our brand in China together. What's most exciting is growing not only our brand but introducing great Canadian Breweries, and local food suppliers to the growing restaurant scene in China"

In addition, and subject to certain conditions, CRAFT Beer agreed to grant Newco an exclusive license (the "License") to use the brand name, trade mark and any other intellectual properties of or related to CRAFT Beer for an initial term of five years (with subsequent renewal terms) to open up to five new restaurant locations in China (including Hong Kong and Macau).

It is the intention of the parties to enter into a comprehensive definitive agreement for the joint venture (the "Definitive Agreement"). In addition to the customary conditions to be set out in the Definitive Agreement, closing is subject to the satisfaction or waiver of the following closing conditions, which will be for the benefit of either and/or both parties:

  1. (i)First Growth and CRAFT Beer agree to the form of the operating agreement between CRAFT Beer and Newco under the License;

  1. (ii)board approval and shareholder approval (if necessary) of the joint venture and other matters contemplated by the LOI to be obtained by each party; and

  1. (iii)all applicable regulatory approvals with respect to the joint venture having been obtained.

1. http://www.cnbc.com/id/101874393

About CRAFT Beer Market

CRAFT Beer Market is privately Canadian company currently with 3 premium casual restaurants in Western Canada. CRAFT Beer Market opened its first location in Calgary's Beltline District in 2011. The restaurant expanded with locations opening late 2013, first in Vancouver's iconic Salt Building followed by another in Edmonton's downtown core.

With a focus on using fresh, local ingredients whenever possible, all menu items are handcrafted in house to provide the freshest food possible. CRAFT is the largest restaurant in Canada to become LEAF Certified (Leaders in Environmentally Accountable Food Service) and features a menu that is 100% Ocean Wise.

CRAFT features Canada's largest selection of draft beer, with all three locations offering over 100 beers on tap. The stunning central island bar boasts an endless fleet of tap handles and with the draft lines enclosed in two towers. The steel draught lines rise up from the towers to adorn the ceiling and cascade down into a custom built, glass-enclosed keg room. The beer lines maintain a constant temperature and correct carbonation keeping the beer consistently fresh for the perfectly chilled pint every time.

CRAFT Beer Market is currently scouting locations within Canada and is looking to open 1 -2 stores per year over the next 5 years.

About First Growth

First Growth is a Canadian-based company that identifies and develops strong brands in the Canadian and international markets. Strong brands have a global reach in today's modern world with the rapid adoption of social media and advancements in technology. First Growth recognizes the potential for certain brands to penetrate international markets and will be focused on developing each one of its brands to its fullest potential.

WineOnline is the first brand that First Growth will develop. WineOnline, through its website WineOnline.ca, allows customers to shop for great unique wines that are not readily available in most stores, and have the wine delivered to your home or office. The direct-to-customer online wine business in Canada is far behind first world peer countries. First Growth views this as an enormous opportunity for the right brand to establish itself as the industry leader. Acquiring WineOnline, which is an established brand in Ontario and has been since 2004, is the perfect opportunity to grow an existing business into a national leading online retailer.

Leveraging the relationships that WineOnline has established with some of the best wineries around the world, First Growth plans to import some of those brands into China, one of the fastest growing wine markets in the world. This emerging market is still in the infancy stage with massive potential for exponential growth. First Growth's team has intimate knowledge of the wine market in China that will assist in our rapid entry into the wine market.

First Growth will be evaluating and exploring other brands that have international opportunities for growth and investing in them in order to create increased shareholder value.

ON BEHALF OF FIRST GROWTH HOLDINGS LTD.:

"J. Paul Guedes"

J. Paul Guedes

President

FOR MORE INFORMATION, PLEASE CONTACT:

Corporate Communications

Tel: 604.688.9588

Email: [email protected]

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

Forward Looking Statements

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events such as: (a) completion of the proposed transactions; (b) the entry into and the closing of the Definitive Agreement; and (c) the establishment of the joint venture. Such forward-looking information can include statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company such as the willingness of the parties to close the transactions, the approval of the transactions by the respective company boards, shareholders (if applicable) and regulatory authorities, satisfactory results of the due diligence investigations and current economic conditions. These risks and uncertainties could cause actual results and the Company's plans and objectives to differ materially from those expressed in the forward-looking information. Due to conditions precedent to closing, and the risk that these conditions precedent will not be satisfied, the Company can offer no assurance that it will complete the proposed transactions enter into the Definitive Agreement. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change. 

SOURCE: First Growth Holdings Ltd.   

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