Funding Update

RNS Number : 3054P

Gusbourne PLC

18 October 2021

 

18 October 2021

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. THIS ANNOUNCEMENT SHOULD BE READ IN ITS ENTIRETY.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Gusbourne Plc

("Gusbourne" or the "Company")

Funding Update

Following the recent strong interim trading results, Gusbourne Plc, the English sparkling wine producer, is pleased to announce the following capital structure and funding plans to support the further development and growth of the Gusbourne business as follows:

· Exercise of warrants:

The Company's largest shareholder, Belize Finance Limited ("BFL"), a related party of Lord Ashcroft who is classified as a substantial shareholder under the AIM Rules, has irrevocably agreed to exercise all its outstanding warrants (the "BFL Warrants") to subscribe for ordinary shares of 1 pence each in the Company ("Shares"). Pursuant to the exercise of the BFL Warrants, BFL subscribes conditional only the release of this announcement for 1,311,517 Shares at 75p per Share (the "Issue Price") which will provide cash proceeds to Gusbourne of £983,638.

Following this exercise, other warrant holders will hold outstanding warrants (the "Warrants") to subscribe for a further 707,500 Shares at the Issue Price. Any Warrants remaining unexercised will expire on 29 October 2021.

· Conversion of short term debt into Shares

The majority holder of the Company's deep discount bonds issued in 2016 and 2020 (together the "DDBs") and the holder of the short-term loan have agreed to extend the repayment date of these debts to 29 October 2021. The total amount of the DDBs and the short-term loan as at 29 October 2021 amounts to £6,192,252.

BFL has irrevocably agreed to convert its interest in the DDBs into Shares at the Issue Price on 29 October 2021 (the "BFL Conversion"). In total BFL will convert its DDBs into 2,838,765 Shares at the Issue Price in respect of money owed in respect of the 2020 DDB amounting to £2,129,074 and 2,306,314 Shares at the Issue Price in respect of money owed in respect of the 2016 DDB amounting to £1,729,735. 

Franove Holdings Limited ("Franove"), a related party of Paul Bentham, a director of the Company, the sole holder of the short-term loan, has irrevocably agreed to convert its short-term loan amounting to £610,445 into 813,926 Shares at the Issue Price on 29 October 2021 (the "Franove Conversion"). 

A letter will be sent today to all other holders of DDBs inviting them to convert amounts owed to them by the Company via the DDBs into Shares. The conversion price is 75p per share, up to the total value of the proceeds of DDBs. The total amount of the DDBs held other than by BFL as at 29 October 2021 will amount to £1,722,998.

The extension for the repayment date of the DDBs and the short term loan and the two subscriptions described above by BFL and Franove constitute related party transactions. Neither BFL nor Franove will have any interest in the DDBs following the above conversion.

The Company will not receive any cash proceeds from the conversion of the DDB's and the short-term loan into Shares.

The balance of the short-term debt on 29 October 2021 not held by BFL and Franove is held by the remaining holders of the 2016 DDBs and will amount to £1,722,998, before offsetting any further conversion into Shares under the terms noted above. 

· Placing and Subscription

The Company intends to undertake a placing of Shares to raise approximately £2,125,000 (the "Placing") .  The Placing is intended to be undertaken by way of an accelerated bookbuild (the "Bookbuild") to new investors at an issue price of 75p per share .

In addition to the Placing, the Company has entered into two subscription letters: one with Jim Ormonde (through his nominee Company), a related party, who is a Director of the Company and its Chairman, and a second with an existing investor who is not a related party, under which they will subscribe £225,000 and £150,000 for Shares respectively at 75p per share (the "Subscriptions" and together the "Subscription"). A separate announcement will be made shortly regarding the Placing and Subscription.

· Open Offer

The Company intends, shortly after 29 October 2021, to make an open offer ("Open Offer") to raise approximately £2,000,000 to be made to all shareholders of the Company ("Shareholders"), excluding BFL, at 75p per share.

It is intended that the Open Offer will be made to all Shareholders, excluding BFL, in November 2021, after additional subscriptions (if any) for Shares from the exercise of outstanding Warrants, conversions of the DDBs and the short-term loan into Shares, and the completion of the Placing and Subscription.  The Open Offer will include an opportunity to apply for additional Shares in excess of each Shareholder's entitlements.

The Company has entered into an agreement with BFL whereby BFL will commit to underwrite the Open Offer in full in the event that Shares are not taken up by Shareholders as part of the Open Offer (the "BFL Underwrite"). BFL will receive a fee of £100,000 for agreeing to underwrite the Open Offer. Further details of the Open Offer will be provided in a separate announcement when it is made.

Benefit of these transactions for the Company

Following the completion of the Placing and Subscription, the exercise of the BFL Warrants by BFL, the BFL conversion and the Franove Conversion,  any exercise of the Warrants, the repayment or conversion of the remaining DDBs, and the Open Offer (together "the Transactions"), the Directors expect that all remaining  short-term debt on the Company's balance sheet will be eliminated, thereby strengthening the Company's balance sheet. Furthermore it is intended that the Placing will broaden the shareholder base of the Company.

The funding raised is expected to amount to approximately £3.8 million before transaction expenses and before any exercise of the Warrants and conversion of 2016 DDBs, over and above those irrevocably committed above. This funding will be used to support the ongoing business growth across all distribution channels (Direct to Consumer, UK Trade and International) and further development of the Company, including:

· Increasing visitor capacity at the Company's cellar door operations ("The NEST") in Appledore

· Increasing sales and marketing expenditure to promote further sales growth

· Investing in further digital promotion and sales optimisation across all channels

· Supporting future growth potential by increasing production efficiency and capacity

Bonus issue of warrants to all shareholders :

The Company will make a bonus issue of transferrable one-year warrants to subscribe for approximately 4 million (c.£3million) ordinary shares at 75p per share to all Shareholders on the register following completion of the Open Offer, pro rata to their shareholdings. 

Related Party Transactions

The extension of the repayment date of the DBBs held by BFL, the BFL Conversion and the BFL Underwrite each constitute a related party transaction, as BFL is a related party of Lord Ashcroft who is classified as a substantial shareholder under the AIM Rules. Further, the extension of the repayment date of the short-term loan (set out above) provided by Franove and the Franove Conversion are also considered a related party transaction as Franove is a related party of Paul Bentham, a director of the Company. The independent directors of the Company (being all the directors, excluding Paul Bentham), having consulted with Canaccord Genuity Limited in its capacity as the Company's nominated adviser for the purposes of the AIM Rules, consider the terms of the related party transactions, set out above, to be fair and reasonable insofar as the Company's Shareholders are concerned.

Charlie Holland, Chief Winemaker and Chief Executive Officer, commented:

"We are delighted to announce our funding plans, which will include a broadening of our shareholder base and the conversion of most of our short-term debt into equity. This will provide significant support for the Company's ambitious plans to grow sales of our expanding range of luxury wines.

We also look forward to welcoming new investors to join us on this exciting journey, as we remain focused on building a lighthouse brand at the forefront of English winemaking. We are grateful to all our Shareholders and other stakeholders in the business for their continued and valued support".

Enquiries:

Gusbourne Plc

Charlie Holland    [phone]

Canaccord Genuity Limited (Nomad and Joint Broker)

Bobbie Hilliam  [phone]

Georgina McCooke

Panmure Gordon (UK) Limited (Joint Broker)   

Oliver Cardigan  + 44 (0)20 7886 2500

Hugh Rich

Ailsa Macmaster

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014, which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). In addition, market soundings (as defined in MAR) were taken in connection with the matters referred to above as a result of which certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received such inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

Note: This and other press releases are available at the Company's website: www.gusbourneplc.com

Note to Editors

Gusbourne produces and distributes a range of high quality and award winning vintage English sparkling wines from grapes grown in its own vineyards in Kent and West Sussex.

The Gusbourne business was founded by Andrew Weeber in 2004 with the first vineyard plantings at Appledore in Kent. The first wines were released in 2010 to critical acclaim. Following additional vineyard plantings in 2013 and 2015 in both Kent and West Sussex, Gusbourne now has 231 acres of mature vineyards. The NEST visitor centre was opened next to the winery in Appledore in 2017, providing tours, tastings and a direct outlet for our wines.

Right from the beginning, Gusbourne's intention has always been to produce the finest English sparkling wines. Starting with carefully chosen sites, we use best practice in establishing and maintaining the vineyards and conduct green harvests to ensure we achieve the highest quality grapes for each vintage. A quest for excellence is at the heart of everything we do. We blind taste hundreds of samples before finalising our blends and even after the wines are bottled, they spend extended time on their lees to add depth and flavour. Once disgorged, extra cork ageing further enhances complexity. Our winemaking process remains traditional, but one that is open to innovation where appropriate. It takes four years to bring a vineyard into full production and a further four years to transform those grapes into Gusbourne's premium sparkling wine.

We are one of England's most awarded wine producers. Highlights include:

· Three times winner of the International Wine & Spirits Challenge (IWSC) English Wine Producer of the Year, having won the award in 2013, 2015 and 2017- a unique achievement

· Winner of 'Winery of the Year' trophy at the WineGB competition

· Highest rated English sparkling wine by the Wine Enthusiast in 2020

· Trophy for best English Still Red Wine at Wine GB awards 2018-2020

· Best in Class trophies at the Champagne & Sparkling World Championships in both 2018 and 2019

· 'Best English Sparkling Wine' as well as overall 'IWC China Champion Sparkling Wine 2019' at the International Wine Challenge held in Shanghai

Gusbourne's luxury brand enjoys premium price positioning, and its wines are  distributed in some of the finest establishments both in the UK and abroad. Our wines can be found in leading luxury retailers, restaurants, hotels and stockists, always being aware that where we are says a lot about who we are.

 

 

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