REG - British Honey Co. - Fund Raising, Proposed Name Change & Board Change

Liontrust Asset ManagementAnnouncement

23/03/2022 15:00

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RNS Number : 7865F  British Honey Company PLC (The)   23 March 2022

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THE COMPANY OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR
ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY
SECURITIES OF THE BRITISH HONEY COMPANY PLC IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 11 OF THE
MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310).

UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

23 March 2022

The British Honey Company plc

 

("BHC" , the "Group" or the "Company")

 

Fundraising to raise gross proceeds of up to £0.54 million

Proposed Board change

Proposed change of Company name

BHC, (AQUIS: BHC), the producer of premium British honey and craft spirits
products, is delighted to announce that it has today raised gross proceeds of
£0.54 million via a non pre-emptive Placing of 675,000 new ordinary shares of
10 pence each ("New Ordinary Shares") with existing institutional investors
(the "Placing" or the "Fundraise") at an issue price of 80 pence per New
Ordinary Share (the "Placing Price"). The Placing Price represents a discount
of approximately 9.09 per cent. to the closing mid-market price of 88 pence on
22 March 2022, being the latest practicable date prior to this announcement.
The Placing Shares are being issued out of the Boards existing allotment
authorities granted at the time of the last Annual General Meeting.

The net proceeds of the Fundraise, amounting to £0.475 million, will be used
for general working capital purposes to drive product expansion to service the
Company's customer base and to support the exciting growth prospects of the
Company. It will also assist with bringing in certain immediate cost savings
and an overall strengthening of the Company's balance sheet. In the opinion
of the Directors having made due and careful enquiry, taking into account the
net proceeds of the Fundraising, the working capital available to the Group
will be sufficient for its present requirements, that is for at least the next
12 months from the date of the Second Admission.

The Company is also pleased to announce that it is further strengthening the
Board with Interim Chief Executive Officer Mark Jones taking up the role on a
permanent basis.

Furthermore, to reflect the expanding product range of the business and the
increasing breadth of offering, the Board has determined to change the
Company's name to Union Distillers plc. A separate notification detailing this
name change will follow once the necessary documentation has been filed at
Companies House.

Summary:

•     Placing of 675,000 New Ordinary Shares ("Placing Shares"), at the
Placing Price to raise gross proceeds of approximately £0.54 million.

•     The Placing Shares have been conditionally placed by Stanford
Capital Partners acting as lead bookrunner with certain existing shareholders
(the "Placees").

•     The New Ordinary Shares issued under the Placing will represent
approximately 4.09 per cent. of the Company's existing issued share capital.
Application has been made to the Aquis Stock Exchange ("AQSE") for the 675,000
Placing Shares to be admitted to trading on AQSE on 28 March 2022
("Admission"). Upon Admission, the Enlarged Issued Share Capital is
expected to be 17,162,735
Ordinary Shares. On this basis, the New Ordinary Shares will
represent approximately 3.93
per cent. of the Company's Enlarged Issued Share Capital.

•     Mark Jones to be appointed permanent CEO following completion of
the Fundraise and subject to standard regulatory checks being completed.

•     Change of Company name to Union Distillers plc.

Commenting on the appointment, Richard Day, Chairman of BHC said:

"We appreciate the support from investors for the Placing which will provide
us with sufficient additional working capital to support the further growth of
our business across all our operations. It will also help to deliver the
closure of our Worminghall office and distillery and the transfer of
production to our Market Harborough site.

We are also further strengthening our Board. Mark Jones joined us on an
interim basis in October last year and has succeeded in stabilising our
operations and helping develop a twin-track strategy for growth across our
white label and own brand operations. I am delighted he has agreed to join the
Board on a permanent basis as full time CEO, pursuant to the Placing.

The Board has determined that now is the right time to change the Company's
name to Union Distillers PLC. This will allow us to present ourselves more
clearly for what we are; a closely aligned team working together to provide a
range of spirits, drinks and services to our customers and partners. This will
not impact in any way on our range of brands and trading names.

We are expecting to announce our full year results to 31(st) December 2021 in
April 2022. We have made a good start to this current year and, with good
visibility of production orders for the start of 2022, we are encouraged by
the order book for the first quarter and beyond. We have every confidence in
our strategy and the Company's growth prospects."

 

 

 

 

 

 

 

 Enquiries:

 The British Honey Company plc                        via Walbrook PR Limited

 Richard Day / Mark Jones                             (see below)

 finnCap -

 AQSE Corporate Adviser & Joint Broker

 Carl Holmes / George Dollemore (corporate finance)   Tel: +44 (0)20 7220 0500

 Richard Chambers (ECM)
 Stanford Capital Partners -                          Tel: +44 (0)20 3650 3650

 Joint Broker

 Patrick Claridge / John Howes / Bob Pountney
 Walbrook PR Limited -                                Tel: +44 (0)20 7933 8780

 Financial PR                                                 +44 (0)7768 807631

 Paul Vann / Nicholas Johnson                         paul.vann@walbrookpr.com

 

 

About BHC

 

Launched in 2014, BHC has an extensive collection of award-winning spirits
brands. Its impressive range began with Keepr's British Honey Spirits infused
with 100% pure British honey and includes gin, rum, bourbon, and vodka.

 

In 2020 it expanded further after acquiring the brands of the London
Distillery Company (Dodd's Organic Gin, Rye and Single Malt Whiskeys),
securing an exciting partnership agreement with English Heritage to produce
its gins and launching an affordable luxury spirits range, 1606. In the same
year, BHC also developed its first alcohol sanitiser product in the UK in
response to the Covid-19 outbreak.

 

In February 2021, BHC completed the acquisition of Union Distillers Limited,
based in Market Harborough, Leicestershire, Union Distillers was founded in
2012 by Mark Gamble and his partner. Over the past eight years it has grown to
become an independent producer and distributor of proprietary and "white
label" spirits. It has well-invested infrastructure which includes its own
stills and a bonded warehouse. Union has a strong manufacturing capability,
established brands and an extensive and growing retail and wholesale customer
base. Products include its premium, proprietary "Two Birds" range of spirits
comprising 11 gins, seven vodkas, a spiced rum and a 29% ABV espresso vodka
liqueur.

 

In addition, Union distils spirits on behalf of a range of B2B customers
including some major supermarkets. Like BHC, Union is also SALSA accredited.

 

1.    Introduction

 

The Company is pleased to announce the Placing of 675,000 New Ordinary Shares
at 80 pence per share to raise £0.54 million (before expenses). The net
proceeds of the Fundraise, amounting to £0.475 million, will be used for
general working capital purposes, to drive product expansion to service the
Company's customer base and to support the growth of the Company. It will also
assist with bringing in certain immediate cost savings and overall
strengthening of the Company's balance sheet. In the opinion of the Directors
having made due and careful enquiry, taking into account the net proceeds of
the Fundraising, the working capital available to the Group will be sufficient
for its present requirements, that is for at least the next 12 months from the
date of the Second Admission.

The Placing is conditional on Admission. It is expected that the Placing
Shares will be admitted to trading on AQSE on 28 March 2022.

 

The Placing Price represents a discount of approximately 9.09 per cent. to the
closing mid-market price of 88 pence on 22 March 2022, being the last
practicable date prior to the announcement of the Fundraise.

 

The purpose of this announcement is to explain the background to and reasons
for the Fundraising and to explain why the Board considers the Fundraising to
be in the best interests of the Company and its Shareholders as a whole.

 

2.    Background to and reasons for the Fundraising

 

Since the Company's announcement on 14 October 2021, where a general meeting
request notice was withdrawn and certain changes to the Company's board of
directors were implemented, the newly constituted Board has been working hard
to form a new plan for future growth for the benefit of all stakeholders in
the Company.

 

Over the last number of months, the Board has carefully rationalised and
strengthened the senior management team of the Group, with the appointment of
Mark Jones as interim CEO, a new and experienced CFO, Jonathan Morley-Kirk,
and the appointment of both a new Head of HR and a Head of Sales. Pursuant to
a review of the Group's strategy it was resolved that the focus should be on a
twin track strategy of the Group's white label business, whilst also
invigorating its own label brands with some measured marketing spend as well
as consolidating its operations in one place.

 

The Board believes that from a geographic perspective, the Company should
focus on the UK market opportunity, which is clear and it has been resolved
that it would not be pursuing the acquisition opportunity with LIST Distillery
in the US and that targeting the Chinese consumer market would no longer be a
near to mid-term objective. In addition, the Board has entered into
negotiations with one of its major shareholders, Cottisford Ltd, to
restructure the joint venture which was entered into and announced on 16 July
2020. The joint venture was to set up and operate a new whisky distillery and
bonded warehouse within the grounds of the Tusmore Park Estate in Oxfordshire,
which is owned indirectly by Cottisford. Constructive discussions are underway
with Cottisford to ensure the project might either be completed without any
additional funding requirement from the Company or that the joint venture may
be terminated, which would mean the Company could take its whisky production
and distribution in-house at Market Harborough. A further announcement will be
made in due course once discussions have reached a conclusion.

 

The Board also resolved to relocate all production to Market Harborough in
order to drive operational efficiencies, and to shut down its Worminghall
operations. This is expected to result in significant  cost savings of around
£850k per annum and a one-off working capital improvement of £250k in the
current financial year through better managed stockholdings.

 

 

 

Name change

 

The Board has determined to change the Group's name to Union Distillers PLC to
reflect the expanding product range of the business and the increasing breadth
of offering, and a further announcement will be made in due course, once the
necessary Companies House filings have been made.

 

White Label opportunity

 

The Company's "White Label" business represents c.75% of sales volume and is
where the Board sees the largest opportunity. It has a number of blue-chip
customers and current major customers are predicting strong growth in 2022 in
demand for the Company's products and services which the Group is keen to
meet. The Company is looking to deepen its relationships with its customers
base and has the opportunity to add more volume with modest investment in
capacity and infrastructure.

 

Use of proceeds of Placing

 

The Fundraise is required for general working capital purposes to support the
growth of the Company and to capitalise on a number of near term opportunities
summarised as follows:

 

·    Grow the Two Birds brand with marketing investment and a more
dedicated sales team.

·    Spend on R&D around the smaller, premium, incubator brands like
Dodd's.

·    Satisfy strong demand from the White Label business and a stronger
balance sheet will also help attract new White Label customers.

 

In addition to the Fundraise, the Company is negotiating a £600k asset
finance facility with HSBC, to fund new production equipment.

 

3.    Current trading & prospects

 

As set out in the trading update announced on 6 January 2022, the Company
ended the year with sales ahead of expectations which are now expected to be
not less than £8.4m for the Group trading as a whole, for the year ended 31
December 2021. The Company  has good visibility of production orders for the
start of 2022 and the Board is encouraged by the order book for the first
quarter and beyond. The cash position as at 31 December 2021 was £0.734m and
the Board felt it was prudent to undertake the Fundraise in order to
strengthen the balance sheet and provide addition working capital to the
Company. In the opinion of the Directors having made due and careful enquiry,
taking into account the net proceeds of the Fundraise, the working capital
available to the Group will be sufficient for its present requirements, that
is for at least the next 12 months from the date of Admission.

 

4.    Details of the Placing

 

The Company is proposing to raise, in aggregate, £0.54 million (before
expenses) by means of the Placing. The Placing Shares will represent
approximately 4.09 per cent. of the Existing Ordinary Shares. The aggregate
net proceeds after costs related to the Placing are expected to be £0.475
million.

 

The Placing Shares shall, when issued, rank in full for any dividend or other
distribution declared, made or paid after Admission and otherwise equally in
all respects with the Existing Ordinary Shares.

 

Application will be made to the Aquis Stock Exchange for the Placing Shares to
be admitted to trading on AQSE and it is anticipated that trading in the
Placing Shares will commence on AQSE at 8.00 a.m. on 28 March 2022.

 

The Placing is conditional upon, amongst other things:

 

•     the Placing Agreement becoming unconditional in respect of such
obligations that fall to be performed prior to Admission (save for Admission)
and not having been terminated; and

 

•     admission of the Placing Shares to trading on AQSE becoming
effective by not later than 8.00 a.m. on 28 March 2022. or such later date
(being not later than the Longstop Date) as the Company and Stanford may
agree.

 

Placing Agreement

 

Pursuant to the terms of the Placing Agreement, Stanford acting as agent of
the Company, has conditionally agreed to use its respective reasonable
endeavours to procure placees for the Placing Shares at the Placing Price; the
Placing Agreement contains warranties from the Company in favour of Stanford
in relation to, inter alia, the accuracy of the information contained in the
documents relating to the Placing and certain other matters relating to the
Company and its business. In addition, the Company has agreed to indemnify
Stanford in relation to certain liabilities that it may incur in respect of
the Placing.

 

Stanford may terminate the Placing Agreement in certain circumstances
(including for breach of warranty or any other obligations on the part of the
Company any time prior to Admission, if such breach is considered by Stanford
to be material in the context of the Placing) and/or in the event of a force
majeure event or material adverse change occurring at any time prior to
Admission.

 

5.    Effect of the Fundraise

 

Upon Admission, the Enlarged Issued Share Capital is
expected to be 17,162,735
Ordinary Shares. On this basis, the New Ordinary Shares will
represent approximately 3.93
per cent. of the Company's Enlarged Issued Share Capital.

 

Following the issue of the New Ordinary Shares pursuant to the Fundraising, Shareholders who do not participate

in the Fundraise will experience a dilution of approximately 4.09
per cent. to their interests in the Company.

 

 

Directors' Holdings in Ordinary Shares

 

                                                As at the date of this announcement                                             Immediately following Admission
 Name                   Role                    No. of existing Ordinary Shares  Percentage of existing Ordinary Share capital  No. of Ordinary Shares held following Admission  Percentage of Enlarged Share Capital

 Mark Gamble*           Executive Director      2,727,273                        16.54                                          2,727,273                                        15.89

 "Sophie" Guifang Luo*  Non-Executive Director  198,020                          1.2                                            198,020                                          1.15

 

*Together with connected persons

 

6.    Admission and Total Voting Rights

 

Application has been made to the AQSE for Admission of the 675,000 Placing
Shares. It is expected that the Placing Shares will be admitted to trading on
AQSE at 8.00 a.m. on 28 March 2022 (or such later date as may be agreed
between the Company and Stanford, but no later than 3:00 p.m. on 11 April
2022).

 

Following Admission of the Placing Shares the total number of Ordinary Shares
in the Company will be 17,162,735. This figure may be used by shareholders 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.

 

7.    Board Appointment

 

Following completion of the Fundraise, Mark Jones will join the Board of BHC
on a permanent basis as Chief Executive Officer subject to standard regulatory
checks being completed. A further announcement will be made in due course
following completion of standard regulatory due diligence procedures and
processes.

8.   Related Party Transactions

Unicorn Asset Management Limited ("Unicorn") has subscribed for 125,000 New
Ordinary Shares at the Placing Price. Following this subscription, Unicorn
will in aggregate hold 2,853,182 Ordinary Shares in the Company, representing
approximately 16.62 per cent. of the enlarged issued share capital on
Admission.

Octopus investments Limited ("Octopus") has subscribed for 126,250 New
Ordinary Shares at the Placing Price. Following this subscription, Unicorn
will in aggregate hold 2,035,339 Ordinary Shares in the Company, representing
approximately 11.86 per cent. of the enlarged issued share capital on
Admission.

Both Unicorn and Octopus are respectively considered a "related party" as
defined under the AQSE Growth Market Apex Rulebook as a result of their
respective substantial shareholdings in the Company. Unicorn's and Octopus'
participation in the Placing constitutes a related party transaction for the
purposes of Rule 4.6 of AQSE Growth Market Apex Rulebook.

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