Equity Fundraising

Chill Brands Group PLC

26 January 2024

 

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE INFORMATION IN IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, NEW ZEALAND, SINGAPORE OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("EUWA")) ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

26 January 2024

Chill Brands Plc

("Chill Brands", "Chill" or the "Company")

Equity Fundraising

Chill Brands (LSE: CHLL), the consumer packaged-goods distribution company, is pleased to announce a new equity fundraising of approximately £2.4m.

The Company has undertaken the conditional placing of 28,533,800 new ordinary shares of 1p each ("Ordinary Shares") in the Company (the "Placing Shares") at a price of 3.75 pence per share (the "Issue Price") by Allenby Capital Limited ("Allenby Capital") (the "Placing"), and conditional subscription of 3,466,700 new Ordinary Shares (the "Subscription") at the Issue Price, together raising approximately £1.20 million before expenses for the Company. The Company also announces the capitalisation of £1.20 million of liabilities predominantly comprised of inventory debt financing by existing significant shareholder, Mr Jonathan Swann for 32,000,000 new Ordinary Shares (the "Capitalisation", together with the Placing and Subscription, the "Fundraise"), in aggregate 64,000,500 new Ordinary Shares (the "Fundraise Shares"), at the Issue Price.

Sales and distribution of the Company's vape products have expanded rapidly since their launch in August 2023. The funds raised will be deployed to support further growth as Chill Brands continues to record increasing demand for its products from customers and additional retail store chains.

Callum Sommerton, Chief Executive Officer of Chill, commented:

"We are very pleased to have secured funding to fuel the next chapter of our growth. These resources will be deployed to procure the ever increasing number of products ordered by new and existing customers and to further expand Chill Brands' distribution network of major retailers. 

Uptake of our Chill vape products continues to exceed expectations and sustained demand for reorders from our current independent retailers is a clear indicator that our products are resonating well with consumers. 

We are now equipped to scale the Company's operations to meet the growing appetite for our products. Over the coming months we will engage with further leading stores and drive brand awareness through targeted marketing campaigns as Chill ZERO launches into mainstream retail."

Background to the Fundraise and Indicative use of Net Proceeds

The Directors anticipate utilising the net proceeds of the Fundraise during 2024 to accelerate sales and distribution of Chill ZERO nicotine-free vape products, which are already being launched into initial WH Smith travel locations, Morrisons stores and roadside retail stores operating on Shell, BP and Esso branded forecourts during January 2024 with the roll out continuing incrementally throughout Q1. The products are also being launched into Smoker Friendly stores in nine US states with in-store sampling activations.

The Company will further develop its distribution network of independent stores while continuing to service existing accounts, supporting sales rates with new point of sale displays, out-of-home advertising and other marketing campaigns. 

Details of the Fundraise

The Fundraise consists of three parts. 

·    The Placing to raise approximately £1.07m through the issue of 28,533,800 new Ordinary Shares at the Issue Price;

·    The Subscription to raise approximately £0.13m through the issue of 3,466,700 new Ordinary Shares at the Issue Price;

·    The Capitalisation, replacing £1.20m of short-term debt liabilities through the issue of 32,000,000 new Ordinary Shares at the Issue Price

The Placing and Subscription has been made to a number of new financial institutions, high-net-worth and professional individual investors. Callum Sommerton, the CEO of Chill, has subscribed for 266,668 new Ordinary Shares under the Subscription. Mr Sommerton does not currently hold any Ordinary Shares, so following the Fundraise, he will hold 266,668 Ordinary Shares, equivalent to 0.05% of the Ordinary Shares as enlarged by the Fundraise. The FCA notification, made in accordance with the requirements of UK MAR is appended further below.

The Fundraise Shares are to be issued pursuant to the authorities granted to the Board at the Company's 2023 annual general meeting.

Jonathan Swann has continued to demonstrate his significant support of the Company by agreeing to capitalise the current balance of the supply chain finance facility announced on 20 December 2023 (the "Facility"), which currently stands at £1,000,000 at the Issue Price. In addition, the first annual interest coupon on the £1.6m convertible loan note (announced on 3 April 2023), amounting to £192,000 and £8,000 of accrued interest on the Facility will also be capitalised at the Issue Price. As a result, Mr Swann will be issued a total of 32,000,000 new Ordinary Shares.

The Facility will remain available in full (£1m) and on the same terms for future stock purchase requirements, with a balance of zero on completion of the Capitalisation.

Mr Swann is considered a related party as a result of his current shareholding in the Company of 29,000,000 Ordinary Shares, equivalent to 6.56% of the current Ordinary Shares. The board of directors of Chill Brands consider the terms of the Facility to be fair and reasonable and in the best interests of all shareholders. The funds will support the acquisition of inventory and the roll-out of products to new stores, reducing the cashflow impact of the Company's rapid expansion.  Following the Fundraise, Mr Swann will hold 61,000,000 Ordinary Shares, equivalent to 12.05% of the Ordinary Shares as enlarged by the Fundraise.

Admission and Total Voting Rights

Applications will be made for the Fundraise Shares to be admitted to trading on the Main Market of the London Stock Exchange and to listing in the Standard Segment of the FCA Official List ("Admission").  It is expected that the issue will take place, Admission will become effective and that dealings in the New Shares on the Main Market of the London Stock Exchange will commence on or around 31 January 2024.

On Admission, the Company will have 506,291,025 Ordinary Shares in issue, each with one voting right.  There are no shares held in treasury.  Therefore, the Company's total number of Ordinary Shares and voting rights will be 506,291,025 and this figure may be used by shareholders from Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules. 

Publication on website

A copy of this announcement is also available on the Group's website at:

http://www.chillbrandsgroup.com 

Media Enquiries

Chill Brands plc

Callum Sommerton, CEO                                                              [e-mail]

Allenby Capital Limited (Financial Adviser and Broker) [phone]

Nick Harriss/Nick Naylor/Lauren Wright (Corporate Finance)

Kelly Gardiner/Guy McDougall (Equity Sales)

About Chill Brands

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an international consumer packaged goods company focused on the development, marketing and distribution of wellness and recreational products. The Company's proprietary nicotine-free vape products cater to the rapidly growing market for tobacco alternatives and are distributed by some of leading retail stores in the US and UK. Chill Brands also operates the chill.com e-commerce website, on which it is building a marketplace of products from third-party brands.

PDMR Table

Notifications and public disclosure of transactions by persons discharging managerial responsibilities ("PDMR") and persons closely associated ("PCA") with them.
1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Callum Sommerton
2	Reason for the notification
a)	Position/status	Chief Executive Officer
b)	Initial notification /Amendment	Initial
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chill Brands Group plc
b)	LEI	213800RGK8LNU9RGMT89
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument Identification code	Ordinary shares of 1p each ISIN: GB00BWC4X262
b)	Nature of the transaction	Purchase of shares
c)	Price(s) and volume(s)	Price(s) Volume(s) 3.75p 266,668
d)	Aggregated information - Aggregated volume - Price	Not applicable - single transaction
e)	Date of the transaction	26/01/2024
f)	Place of the transaction	Off Market

Other

Notice to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended and as this is applied in the United Kingdom ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II and Regulation (EU) No 600/2014 of the European Parliament, as they form part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Fundraise Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors who do not need a guaranteed income or capital protection and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). The Fundraise Shares are not appropriate for a target market of investors whose objectives include no capital loss.  Notwithstanding the Target Market Assessment, distributors should note that: the price of the Fundraise Shares may decline and investors could lose all or part of their investment; the Fundraise Shares offer no guaranteed income and no capital protection; and an investment in the Fundraise Shares is compatible only with investors who do not need a guaranteed income or capital projection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraise. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Allenby Capital will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Fundraise Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the shares and determining appropriate distribution channels.

Forward Looking Statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' beliefs or current expectations. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

Notice to overseas persons

This announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company.

This announcement is not for release, publication or distribution, in whole or in part, directly or indirectly, in or into Australia, Canada, Japan or the Republic of South Africa or any jurisdiction into which the publication or distribution would be unlawful. This announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire shares in the capital of the Company in  Australia, Canada, Japan, New Zealand, the Republic of South Africa or any jurisdiction in which such offer or solicitation would be unlawful or require preparation of any prospectus or other offer documentation or would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.  Persons into whose possession this announcement comes are required by the Company to inform themselves about, and to observe, such restrictions.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration.  No public offering of securities is being made in the United States.

General

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) or any previous announcement made by the Company is incorporated into, or forms part of, this announcement.

Allenby Capital, which is authorised and regulated by the FCA in the United Kingdom, is acting as nominated adviser and joint broker to the Company in connection with the Placing and Subscription. Allenby Capital will not be responsible to any person other than the Company for providing the protections afforded to clients of Allenby Capital or for providing advice to any other person in connection with the Fundraise. Allenby Capital has not authorised the contents of, or any part of, this announcement, and no liability whatsoever is accepted by Allenby Capital for the accuracy of any information or opinions contained in this announcement or for the omission of any material information.

 

END