Revised deferred consideration for Medichem

RNS Number : 1872S

Revolution Beauty Group PLC

07 March 2023

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For immediate release

7 March 2023

REVOLUTION BEAUTY GROUP PLC

("Revolution Beauty", the "Group" or the "Company")

Revised deferred consideration for Medichem Manufacturing Limited

Revolution Beauty Group plc (AIM: REVB), the multi-channel mass beauty innovator, today provides an update on the deferred consideration payments for Medichem Manufacturing Limited ("Medichem").

On 26 October 2021, Tom Allsworth (the "Seller") and Revolution Beauty Holdings Limited (the "Buyer") entered into an agreement for the sale and purchase of the entire issued share capital of Medichem (now called Revolution Beauty Labs Ltd) for a total consideration of £23.0 million (the "Acquisition"), of which £7.0 million has been paid to date. The deferred consideration of £16.0 million plus a completion net asset adjustment of £4.5 million were payable in equal annual instalments of £5.125 million over four years (together with an amount equivalent to interest accrued thereon at the rate of 2.5% per annum). In addition, a loan made prior to the Acquisition from Medichem to Walbrook Investments Limited ("Walbrook"), a company controlled by Tom Allsworth, of £1.5 million was to be settled by way of annual deductions of £375,000 from the annual payments due to the Seller over four years.

The Acquisition constituted a  related party transaction  under the AIM Rules as Tom Allsworth, Executive Chairman of Revolution Beauty, was the sole shareholder of Medichem.

The Buyer and the Seller have signed a Deed of Variation dated 6 March 2023 which amends the terms of the deferred consideration and completion net asset adjustment as outlined below.

·	£3.625 million payable on 21 October 2025 (being the £5.125 million consideration reduced by the £1.5 million Walbrook loan)
·	£5.125 million payable on 21 October 2026
·	£5.125 million payable on 21 October 2027
·	£5.125 million payable on 21 October 2028
·	Interest accrues on outstanding balances at a rate of 2.5% per annum

The revised terms of the deferred consideration provides the Company with additional headroom for its working capital requirements and also allows the Company to agree revised banking covenants for its debt facilities, therefore the Board believe the revised terms are in the best interests of the Company and its shareholders.

On 19 December 2022, as previously announced, Revolution Beauty commissioned a further independent valuation of Medichem. This has resulted in a new valuation which is materially lower than the original valuation. The Board are in negotiations with the Seller to reach a revised agreement on the amount of consideration due and the payment terms for any further consideration payable - the consideration currently remains unchanged with negotiations between the Buyer and Seller ongoing.

The Directors of Revolution Beauty, with the exception of Tom Allsworth, having consulted with Zeus (the Company's Nominated Adviser), consider that the revised payment terms as set out in the deed of variation are fair and reasonable insofar as its shareholders are concerned.

For further information please contact:
Revolution Beauty Investor Relations
Bob Holt / Elizabeth Lake	[e-mail]
J oint Corporate Brokers
Zeus (NOMAD): Nick Cowles / Jamie Peel / Jordan Warburton	Tel: [phone]
Liberum: Clayton Bush / Edward Thomas / Miquela Bezuidenhoudt	Tel: [phone]
Media enquiries:
Headland Consultancy Rosh Field / Will Smith / Marta Parry-Jones	Tel: [phone] [e-mail]

 

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