Vancouver—B.C.-based Russell Breweries, Inc., (RBI) has agreed to terms with FVI Capital, Inc., to license and produce Russell brands and branded merchandise in China.
The private equity firm will hold the initial non-exclusive rights to import, produce, package, use, market, sell and distribute Russell brands in China, according to the company.
The letter specifies the principal terms of a technology and trade mark license agreement, which includes an initial up-front licensing fee by FVI to hold the license and ongoing royalties based on volume of beer produced up to 50,000 hectolitres.
This initial royalty stream will produce initial gross royalty payments to Russell Breweries of over $1-million.
As part of the agreement, the new company has a 48-month first matching option to acquire an exclusive license for the entire Chinese market.
With an initial stake of 20 per cent in the licensee, RBI has an option to increase its stake to 25 per cent at fair market value within the same 48 month term, it was announced.
A definitive agreement is expected to be completed within 30 days, which will be subject to TSX Venture Exchange approval.