Big Rock Brewery Announces Divestiture of Etobicoke Brewery & Increased 2021 Capital Budget

Highlights:

• Sale of its Etobicoke brewery for total cash consideration of $2.1 million, net of transaction costs;
• Optimizes balance sheet by use of cash consideration to reduce lease liabilities by $1.4 million;
• Continued ability to service Ontario demand through Liberty Commons location;
• Annual operating cash cost savings of $0.2 million, resultant margin expansion; and
• Upsizing of information technology ("IT") and digital transformation budget to $1.25 million, from $0.6 million.

CALGARY, AB, May 3, 2021 /CNW/ - Big Rock Brewery Inc. (TSX: BR) ("Big Rock" or the "Corporation") is pleased to announce the signing of a definitive agreement for the sale of its Etobicoke brewery for total cash consideration of approximately $2.1 million, net of transaction costs (the "Transaction"). The Transaction includes all brewing and packaging equipment, excluding the bottling line which has been transferred for use at the Corporation's Calgary facility. The purchaser has also agreed to assume the Corporation's Etobicoke brewery building lease. The Transaction is expected to close on or before June 14, 2021.

The Transaction is expected to result in a reduction of lease liabilities totalling $1.4 million, consisting of $1.1 million of the cash proceeds being applied as a full repayment of equipment lease liabilities associated with the divested assets and a reduction of $0.3 million upon assignment of the building lease to the purchaser.

In addition, Big Rock is pleased to announce that its board of directors has approved an increase to the Corporation's 2021 capital budget, upsizing the IT and digital transformation plan by $0.65 million, bringing the total 2021 capital plan to $9.5 million.

"The divestiture and redeployment of capital are aligned with Big Rock's asset optimization initiatives and strategic growth plans," said Chief Financial Officer Don Sewell. "The Transaction not only enhances our margins, but also enables us to maintain a clean balance sheet while we make significant capital investments in 2021 to support our growth in future years. Additionally, the upsizing of the IT and digital transformation budget will amplify our ability to maximize future returns from both organic and inorganic growth, while enhancing our cybersecurity and the overall productivity of our organization."

Despite the Transaction, management has no concerns in its ability to meet market demand in Ontario and will continue to utilize the brewing assets at its Toronto Liberty Commons operations.

Forward-Looking Information

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events or Big Rock's future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking information are not facts, but only predictions and generally can be identified by the use of statements that include words or phrases such as, "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "likely" "may", "project", "predict", "propose", "potential", "might", "plan", "seek", "should", "targeting", "will", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Big Rock believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon by readers, as actual results may vary materially from such forward-looking statements. These statements speak only as of the date of this news release and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this news release contains forward-looking statements pertaining to the following:

• the anticipated closing date of the Transaction and anticipated total cash consideration net of transaction costs;
• the anticipated reduction in lease liabilities resulting from the Transaction, including each of the components thereof;
• anticipated annual cost savings, margin expansion, and resultant net income benefit to be realized as a result of the Transaction;
• Big Rock's expectations regarding its ability to continue to serve the Ontario market;
• the Corporation's 2021 capital plan, including the results and focus thereof; and
• Big Rock's expectations with respect to its future financial position and its ability to take advantage of future opportunities.

With respect to the forward-looking statements listed above and contained in this news release, management has made assumptions regarding, among other things:

• all conditions to the completion of the Transaction will be met on a timely basis;
• the Corporation will be able to complete its 2021 capital plan on budget;
• volumes in the current fiscal year will remain constant or will increase;
• input costs for brewing and packaging materials will not materially increase or decrease;
• there will be no material change to the regulatory environment in which Big Rock operates;
• there will be no material supply issues with Big Rock's vendors; and
• that the duration and extent of the COVID-19 pandemic will not be long-term.

Some of the risks which could affect future results and could cause results to differ materially from those expressed in the forward-looking information and statements contained herein include the risk factors set out in the Corporation's annual information form and also include, but are not limited to:

• inability to meet closing conditions to the Transaction;
• delays or cost overruns in implementation of the 2021 capital program and failure to realize the benefits of the same;
• the inability to grow demand for Big Rock's products;
• the worldwide economic and social impact of the COVID-19 pandemic; and
• the duration and extent of the COVID-19 pandemic.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information and statements included in this news release are made as of the date hereof and Big Rock does not undertake any obligation to publicly update such forward-looking information and statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

About Big Rock Brewery Inc.

In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, six ciders (Rock Creek Cider® series), custom-crafted private label products and other notable, licensed alcoholic beverages keeps us at the forefront of the craft beer revolution and still proudly contesting the beer and alcoholic beverage trends of today. Big Rock has brewing operations in Calgary, Alberta, Vancouver, British Columbia, and Toronto, Ontario. Big Rock trades on the TSX under the symbol "BR". For more information on Big Rock visit www.bigrockbeer.com.

SOURCE Big Rock Brewery Inc.