Birks & Mayors Inc. (the “Company” or “Birks & Mayors”) (NYSE MKT:BMJ), executed a subscription agreement with Montrovest B.V., its controlling shareholder (the “Investor”) to provide US$4.8 million to the Company in the form of a debenture convertible into Class A voting shares (the “Debenture”). The Company plans to close and receive the funding on the transaction on or before August 16, 2013. The Debenture will be sold to the Investor in a private placement. The funds will be used to finance the Company’s expansion into China. The Debenture bears interest at an annual interest rate of 6%. The Investor has the option to convert the Debenture before December 31, 2015 if a third party investor invests in the Company, on the same terms as the investment by a third party.
In addition, the Investor also has the option, at any time prior to December 31, 2015 to convert the Debenture at a conversion price equal to the greater of:
(ii) the market closing price on the last trading day prior to the conversion; and(iii) the Company’s book value per share. If the Debenture is not converted prior to December 31, 2015, then the Debenture will automatically be converted on December 31, 2015 into Class A voting shares at a conversion price equal to the greater of: (i) $1.30 (ii) the market closing price on the last trading day prior to the conversion; and (iii) the Company’s book value per share. Interest on the Debenture will be paid in the form of additional Class A voting shares at the time of conversion of the Debenture at the same conversion price of the Debenture. Jean-Christophe Bédos, President and Chief Executive Officer of Birks & Mayors, commented: “I appreciate the confidence demonstrated by this investment from our controlling shareholder in our strategic expansion into China and I look forward to this next chapter in the Birks brand international development.”