Author: Atrium Research November 09, 2026
Nicholas Cortellucci, CFA | Equity Research Analyst | [email protected] | 647-391-3314
Luca Perna | Equity Research Associate | [email protected] | 647-969-1027
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What you need to know:
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DWS announced that it will be converting $4.7M of its convertible debentures to equity at $0.22/share, a 69% premium to market. The Company will also convert $1.5M of accrued and unpaid interest at the market price of $0.13/share.
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Both liabilities were owned by the Lassonde Group, increasing their ownership to 66.6% and aligning the two companies further.
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The transaction decreases debt from $15.6M to $10.9M and decreases quarterly interest expense from $0.5M to $0.2M.
On Friday after market close, Diamond Estates Wines and Spirits (DWS:TSXV, DWWEF:OTC) announced that it will be converting $4.7M of its 10.0% unsecured convertible debentures into common shares at $0.22/share, a 69% premium to the $0.13/share last closing price. DWS also intends to convert $1.5M of accrued and unpaid interest at $0.13/share, equating to a blended price of $0.19/share. The debentures were held by Lassonde Industries (LAS.A:TSX) and Pierre-Paul Lassonde, which together will own ~66.6% of DWS following the conversions. We are maintaining our BUY rating and target price of $0.30/share on Diamond Estates.
The $4.7M debentures will convert into ~21.2M common shares, and the $1.5M in interest will convert into 11.3M common shares, adding to the 38.2M previously held by Lassonde Industries and 2.1M owned by Pierre-Paul Lassonde. The transaction brings down debt from $15.6M at the end of Q1 to $10.9M (interest payable was included in A/P), resulting in net debt to EBITDA decreasing from 3.8x to 2.7x on FY27E. Making these changes to our model, quarterly interest payments move down from $0.5M to $0.2M, with the full effect seen in Q4. Shares outstanding move up to 101.2M, translating to a market cap of $13.5M and enterprise value of $24.4M. As such, post-transaction, DWS is trading at 5.9x FY27E EBITDA compared to the Andrew Peller transaction at 9.5x forward EBITDA and public peers at 10.0x.
Our Take We view this transaction as a clear large positive for DWS and its minority shareholders. The principal converts at $0.22/share, a massive premium to the market price, illustrating Lassonde’s deep commitment to Diamond. Based on our math on the $4.7M, DWS is issuing ~14.6M fewer shares than it would have to do at the market price (21.2M vs. 35.8M), resulting in significantly less dilution. The transaction also cleans up the balance sheet by eliminating $6.1M in total liabilities without using any cash, which matters because the BMO covenants would not have permitted repayment and because it removes the November 9ᵗʰ maturity as an overhang.
The conversion also reduces interest expense by $0.47M annually (10% on $4.7M), equal to ~12% of FY26 adjusted EBITDA of $3.8M and frees up cash flow and balance sheet capacity for the growth initiatives stated in the three-year plan. Finally, the transaction further aligns Lassonde and Diamond. Lassonde Group is taking its ownership from 50.8% to 66.6%, choosing to deepen its equity commitment rather than seek repayment. We view the transaction as a meaningful de-risking event and a strong signal of Lassonde’s long-term conviction in the three-year plan summarized below. We believe the stock should at least re-rate to the blended conversion price of $0.19/share, with further upside to our target price as management can re-focus attention on growth initiatives and operational excellence.
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