REG - Chill Brands Group - £1m raised from issuance of convertible loan notes

Chill BrandsAnnouncement

23/05/2025 07:00

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RNS Number : 8812J  Chill Brands Group PLC  23 May 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

 

23 May 2025

Chill Brands Group plc

("Chill Brands" or the "Company")

 

£1 million raised from issuance of convertible loan notes

Extension of existing convertible loan notes

Update on lawsuit

Chill Brands, the consumer packaged-goods distribution company, is pleased to
announce that it has raised £1 million through the issue of convertible loan
notes (the "Fundraising") and has secured agreement from its largest
shareholder, Jonathan Swann, to extend the terms of convertible loan notes
entered into during 2023 (the "2023 CLNs"). The Company also provides an
update on the conclusion of legal proceedings commenced during 2024, and on
the expected timing of completion of the Company's audited accounts for the
year to 31 March 2024 (the "FY24 Accounts") and its unaudited interim accounts
for the six-month period ended 30 September 2024 (the "H1 FY25 Interim
Accounts").

Completion of £1 million Fundraising

On 11 March 2025, the company announced its intention to raise funds through
the issue of 66,666,666 new Convertible Loan Notes of 1.5 pence each (the
"CLNs"). The Company has now raised £1 million from its largest shareholder,
Jonathan Swann, and a number of other investors. The terms of the Fundraising
are as follows:

·    the CLNs have a conversion price of 1.5 pence per new ordinary share
(the "New Ordinary Shares"), being a 30.2% discount to the closing price of
the Company's shares on the day prior to the suspension of trading in the
Company's shares on 3 June 2024;

·    the CLNs shall attract interest at a rate of 10% per annum and shall
have a maturity date three years from the date of their issue;

·    under the CLNs, the principal, along with the fixed interest, may be
converted into new ordinary shares solely at the election of the subscriber
and following the suspension of trading in the Company's shares being lifted;

·    the minimum investment amount under the Fundraising was set at
£10,000. Investors subscribing for up to £50,000 of CLNs (the "Initial
Subscribers") were required to remit funds to the Company at the time of
subscription. For subscriptions in excess of £50,000, drawdown of funds will
be at the discretion of the Company and may occur at any time within 12 months
from the date of issue of the CLNs, the first drawdown having been made; and

·    the Company shall also issue to subscribers a warrant to subscribe
for one New Ordinary Share per CLN. The exercise price of each warrant shall
be equal to 1.25 times the volume-weighted average (the "VWAP") of the
Company's Ordinary Shares over the ten (10) trading days immediately preceding
the date of the relevant Drawdown Notice. As at the date of this announcement,
the Company's Ordinary Shares are suspended from trading. Accordingly, in
respect of any Drawdown made prior to the resumption of trading in the
Company's Ordinary Shares, the VWAP for the purposes of calculating the
exercise price of the associated warrants shall be deemed to be 1.5 pence per
New Ordinary Share. Warrants awarded to the Initial Subscribers, as opposed to
those resulting from future drawdowns at such time as trading in the Company's
shares has resumed, shall be deemed to be issued during the suspension. The
exercise price of warrants awarded to the Initial Subscribers shall therefore
be calculated in line with a VWAP of 1.5 pence per Ordinary Share. An initial
15,733,333 warrants shall be issued.

Jonathan Swann has participated in the Fundraising through his wholly owned
company, Denstone Investments Ltd.

As set out previously, the proceeds of the Fundraising will primarily be used
for the following: the ongoing development, launch and distribution of new,
compliant rechargeable, reuseable pod-based vaping products; the expansion of
marketing campaigns for the chill.com marketplace website to drive brand
awareness and customer acquisition; the expansion of the Company's sales and
distribution infrastructure to enable it to attract and serve additional
brands through enhanced field sales operations; and to support the Company's
general working capital requirements, including potentially examining and
pursuing synergistic and value generative bolt-on acquisitions.

The Company intends to provide a more comprehensive update on its current
strategy and business model following the publication of its audited accounts
for the financial year ended 31 March 2024 and its unaudited interim accounts
for the six-month period ending 30 September 2024. This update will reflect
the Company's progress to date and outline its plans for future growth and
development.

Extension of existing convertible loan notes

In addition to the Fundraising, the Company has also reached agreement with
Jonathan Swann to vary the terms of 20,000,000 convertible loan notes issued
in 2023 with an aggregate principal value of £1.6 million, originally
announced on 3 April 2023 (the "2023 CLN"). Under the original terms, the 2023
CLN carried annual interest of 12%, were convertible into new ordinary shares
at a conversion price of 8 pence per share, and had a maturity date of 1 April
2026.

The Company has now entered into a deed of variation with Mr Swann to amend
the terms of the 2023 CLN as follows:

·    The maturity date has been extended from 1 April 2026 to 15 May 2028;

·    The conversion price has been reduced from 8 pence per share to 2.15
pence per share, being the price at which the Company's shares were suspended
on 3 June 2024;

·    Outstanding accrued interest of £215,134 will be settled by the
issue of new ordinary shares in the Company, priced at the volume-weighted
average price ("VWAP") over the ten trading days following the lifting of the
current suspension in the Company's shares;

·    The 2023 CLN have been assigned by Mr Swann to his wholly owned
company, Denstone Investments Ltd.

The Board considers these revised terms to be favourable to the Company,
particularly as they reduce near-term cash outflows at a time when available
capital is required to support trading and operational activities. The
extension of the maturity date and conversion of accrued interest into equity
further strengthen the Company's balance sheet without immediate cost.

Related Party Transactions

Mr Swann is regarded as a related party by virtue of his existing shareholding
in the Company, being 68,075,000 Ordinary Shares, representing approximately
13.45% of the Company's issued share capital. The Board of Directors, having
consulted with the Company's advisers, consider the revised terms of the 2023
CLN and the new issue of CLN to Denstone Investments Ltd to be fair and
reasonable and in the best interests of the Company and all shareholders.

Update on the publication of financial results

Further to the Company's announcement on 24 April 2025, the Company has
continued to progress towards the completion of its audit and the publication
of the FY24 Accounts, along with the H1 FY25 Interim Accounts (together, the
"Financial Results"). Based on discussions with its statutory auditors, the
Company expects to receive sign-off on its FY24 Accounts imminently.

Preparation of the Company's H1 FY25 Interim Accounts is at an advanced stage,
and the Company expects to publish these interim accounts shortly following
the publication of the FY24 Accounts. The Company will then lodge a request
with the Financial Conduct Authority (FCA) seeking the lifting of the
suspension of trading in its shares.

Update on lawsuit

As announced on 25 July 2024, the Company initiated legal proceedings in the
United States against certain former directors in connection with assets
belonging to the Company, including the Chill.com domain, various intellectual
property assets, and a sum of cash. On 19 December 2024, the Company announced
that it had reached an out-of-court settlement with those individuals. As a
result of the settlement, the Chill.com domain and associated trademarks have
been under the Company's ownership and control since the time of that
settlement.

As stated in the December announcement, the former directors retained the
funds that had been received by them prior to the general meeting held on 4
June 2024. The settlement avoided the need to expend further time and
financial resources on prolonged litigation in the US, enabling the Company to
redirect its resources towards operational execution and strategic growth.

Following a federal court settlement conference, all remaining matters in the
case have now been resolved. The Company has made the necessary filings and
the claim has been formally dismissed with prejudice. This brings the legal
proceedings to a definitive conclusion. The Board is pleased to put this
chapter behind the Company and is focused on moving forward with the execution
of its strategy.

-ENDS-

 

Media enquiries:

 Chill Brands Group plc                                      contact@chillbrandsgroup.com

+44 (0)20 4582 3500
 Harry Chathli, Chairman

 Callum Sommerton, CEO
 Allenby Capital Limited (Financial Adviser and Broker)      +44 (0) 20 3328 5656
 Nick Harriss/Nick Naylor/Lauren Wright (Corporate Finance)

Kelly Gardiner (Equity Sales)

 

About Chill Brands Group

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
vapour 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.

 

Publication on website

A copy of this announcement is also available on the Group's website at
(http://www.chillbrandsgroup.com/) http://www.chillbrandsgroup.com
(http://www.chillbrandsgroup.com/)

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