REG - Hellenic Dynamics - Mezzanine Loan and Posting of Circular

Hellenic DynamicsAnnouncement

26/10/2023 07:00

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RNS Number : 3199R  Hellenic Dynamics PLC  26 October 2023

26 October 2023

 

Hellenic Dynamics plc

("Hellenic Dynamics" or the "Company")

 

Mezzanine Loan and Posting of Circular

 

London, 26 October 2023, Hellenic Dynamics Plc (LSE: HELD), a medical cannabis
cultivator with a dedicated focus on producing tetrahydrocannabinol ("THC")
dominant strains of medical cannabis flowers for the burgeoning European
medical cannabis markets, announces it has signed a US$3 million unsecured
Mezzanine Loan facility (the "Facility") with RiverFort Global Opportunities
PCC Ltd (the "Lender"), an international financial institution. The Facility
will provide the Company with a structured medium-term debt facility that
offers draw down and repayment flexibility as it enters its cultivation and
sales stage of development.

 

Highlights

·      Hellenic Dynamics has entered into a US$3 million unsecured
Mezzanine Loan facility with the Lender for a 36-month term

·      US$450,000 has been advanced immediately under the Facility
("First Advance")

·      A further $300,000 is available during the next 150 days ("Second
Advance")

·      The net proceeds from the Facility will be used to 1) accelerate
the Company's cultivation plans 2)  move to an increased cultivation area,
and 3) execute its sales strategy in line with the Company's ambitious growth
plans

·      The annual interest rate payable by the Company is 15% per annum
payable on any outstanding amounts, quarterly in arrears

·      Each advance is repayable in monthly cash instalments after a
holiday period, expected to be serviced from operational cashflow over the
next 12-months

·      The principal and interest of the Facility are payable in cash or
can be converted at 9.884 pence following approval of the Circular

·      4,249,291 Warrants granted to the lender exercisable at 9.884p
for 36 months, being a 40% premium to the 5-day preceding VWAP

·      Notice of general meeting has been posted in order to effect a
capital reorganisation to access the Second Advance of the Facility

 

The Facility provides for each tranche of funds drawn down to be repayable
within 12 months of drawdown in accordance with an agreed repayment schedule.
A First Advance of $450,000 has been made available immediately, which the
Company has today requested be drawn down, and a Second Advance of US$300,000
may be drawn down by the Company within the next 150 days.  As the Facility
allows for the principle amounts to be repaid in cash or a mechanism for them
to be repaid in shares, a condition of the Facility is that the Company must
be in a position to be able to issue new shares.  Therefore, in conjunction
with entering the Facility, the Company has today posted a circular to all
shareholders containing a Notice of General Meeting ("Notice") and Form of
Proxy for shareholders to consider and, if thought fit, approve a capital
reorganisation to allow the Company to access the full extent of the Facility.
Further details of the Notice are included below.

 

Davinder Rai, CEO of Hellenic Dynamics, commented: "Having an institutional
investor grant a 3-year facility of up to US$3 million to the Company for its
next stage of expansion further to completion of phase 1 of its operations,
allows the Company to move forward with its expansion plans. The splitting of
the First Advance and the Second Advance provides capital optionality for the
Company, and the granting of warrants at a 40% premium to the applicable
Reference Price shows confidence from the Lender in the Company. I look
forward to updating the market on our progress in due course."

 

Key Funding Terms

 

A summary of the key terms of the Facility are as follows:

 

·      15% annual interest payable quarterly in arrears for the term,
with a drawdown fee of 6% per advance, payable in cash or shares at the
Company's discretion

·      The Lender is granted subscription rights for repayment by way of
conversion, based on a 40% premium to the Reference Price

·      Interest only payable on the drawn down amount

·      Each tranche of funds drawn down by the Company are repayable
within 12 months of drawdown in accordance with an agreed repayment schedule

·      In respect of each tranche of funds advanced, the Company will
grant the Lender warrants over ordinary shares in the Company with an exercise
period of 36 months from the date of grant:

o  In respect of the First and Second Advance, the Company has granted the
Lender 4,249,291 warrants with an exercise price of 9.884 pence

o  In respect of the remaining tranches the Company will grant the Lender
warrants to subscribe for new ordinary shares equal to 40% of the funds made
available under the tranche divided by the 5-day VWAP prior to the date of
each draw down ("Reference Price") at an exercise price equal to a 40% premium
to the Reference Price

o  The Lender has the right of set off for any warrant exercise against any
amount owed to it by the Company under the Facility agreement

·      The Company may elect to miss payments in accordance with the
agreed repayment schedule. This would result in various rights being granted
to the Lender including the right to subscribe for shares in the Company using
a pre-determined calculation

·      The Facility is unsecured and Hellenic Dynamics S.A. is a party
to a corporate guarantee.

·      The Facility agreement contains customary covenants, warranties,
undertakings and indemnities for such project related finance and default
events and termination rights of the Lender, as well as any penalties to be
incurred by the Company, in the event of such default

 

The Second Advance may be drawn down by the Company at any time within the
next 150 days provided that: (1) the Company completes the share consolidation
and (2) the Company provides evidence to the Lender of either (a) £250,000
received from sales of product; or (b) receipt of further grants following the
date of the Facility agreement which results in aggregate net receivable of no
less than £250,000. Subject to the satisfaction of these conditions, the
Company will have the ability to request further drawdowns up to a maximum
total additional amount of US$2.25 million. The Company will pay interest only
on the drawn down funds.

 

Proposed Capital Reorganisation and Notice of General Meeting

 

The Company announces that it will today post a circular to all shareholders
containing a notice of general meeting and form of proxy seeking shareholder
approval for a capital reorganisation and the adoption of new articles of
association.  A copy of the circular, together with supporting documents,
will be available from the Company's website, www.hellenicdynamics.com
(http://www.hellenicdynamics.com) .

 

The Directors are proposing a capital reorganisation by way of a:

 

(i)            Share Consolidation: consolidate every 100 Existing
Ordinary Shares held into one ordinary share of £0.10 each (the "Consolidated
Share"); and

(ii)           Share Subdivision and Share Reclassification:
subdivide and reclassify each Consolidated Share into 99 Deferred Shares and
one New Ordinary Share of £0.001 each.

 

The effects of the capital reorganisation will be to consolidate the number of
shares in issue from 12,530,000,000 to 125,300,000, which will increase the
Company's share price by a factor of 100, whilst maintaining the current
nominal value per share of £0.001 each.

 

The General Meeting will be held at the offices of Shakespeare Martineau LLP,
6th Floor, 60 Gracechurch Street, London, EC3V 0HR on 20 November 2023 at
09:00 a.m. GMT.

 

 

Enquires:

 

 Hellenic Dynamics plc               +44 (0)20 3818 7850
 Davinder Rai                        davinder@hellenicdynamics.com

 Cairn Financial Advisers LLP        +44 (0)20 7213 0880
 Emily Staples / Jo Turner

 Peterhouse Capital                  +44 (0)20 7469 0930
 Lucy Williams / Charles Goodfellow

 

About Hellenic Dynamics plc

 

Founded in 2019, Hellenic Dynamics is specifically focused on the cultivation
and supply of THC ("tetrahydrocannabinol") - dominant strains of medical
cannabis flowers, destined for the growing medical cannabis markets
across Europe. Hellenic Dynamics' core strategy is to develop and operate its
40,000 square metre active cultivation licence from its 195,506 square metre
facility located near Thessaloniki in Northern Greece. In full production,
Hellenic Dynamics is capable of producing over 54,000 kg of dried flowers per
annum.

 

Hellenic Dynamics will take advantage of its relatively low cost base
resulting from a comparatively low cost of power, having its own running
water supply and the labour rates for skilled and semi-skilled labour in
Northern Greece.

 

25 European countries now allow medical cannabis via prescription and the
European cannabis market is expected to reach €43.3 billion per annum by
2027. Sales of Hellenic Dynamics' dried THC-dominant cannabis flowers and
extracts are initially intended for export into Europe's largest market -
Germany, in addition to other European markets including domestically in
Greece.

 

As the first medical cannabis cultivator to obtain a listing on the main
market for listed securities of the London Stock Exchange, Hellenic is
significantly different to the number of CBD (Cannabidiol) related companies
that have appeared over the recent years. Hellenic Dynamics cultivates
THC-dominant medical cannabis flowers. THC-dominant medical cannabis products
are only available via a medical prescription. Medicinal cannabis has been
approved for use both in the United Kingdom and Germany, plus 23 other
European countries, for conditions including but not limited to chronic pain,
intractable chemotherapy-related nausea, anxiety, insomnia,
Tourette's syndrome, substance use disorder, multiple sclerosis, IBS, spinal
cord treatment, lack of appetite due to HIV/AIDS, cachexia, anorexia and
glaucoma.

For further information please visit our website www.hellenicdynamics.com
(http://www.hellenicdynamics.com)

 

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect",
''will'' or the negative of those, variations or comparable expressions,
including references to assumptions. These forward-looking statements are not
based on historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the amount,
nature and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.

 

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