THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN 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.

The British Honey Company plc

("British Honey", "BHC" or the "Company")

STRATEGIC ACQUISITION AND FUNDRAISING

Acquisition of Union Distillers Limited

&

Placing, Subscription and Convertible Loan Note

The British Honey Company plc, the producer and distributor of premium British honey, honey-infused spirits and alcohol sanitiser products, is pleased to announce the conditional acquisition of Union Distillers Limited ("Union Distillers" or "Union") for an initial consideration of £8.0 million (the "Initial Consideration") and an earn-out consideration of up to £2.0 million (the "Earn-out Consideration") (the "Acquisition"), to be satisfied through a combination of cash and BHC shares.

The Board is pleased to announce its intention to raise approximately £4.59 million by the issue of an aggregate of 4,175,455 new Ordinary Shares of 10 pence each (the "Ordinary Shares") pursuant to a placing (the "Placing") of 3,674,829 new Ordinary Shares (the "Placing Shares") at 110 pence per share (the "Issue Price") and by the issue of 500,626 new Ordinary Shares pursuant to a subscription (the "Subscription") at the Issue Price (the "Subscription Shares") (the Placing Shares and Subscription Shares, together the "Fundraising Shares").

In addition, the Company is pleased to announce it has entered into an agreement for a new £1.63 million unsecured convertible loan facility (the "CLN") arranged with Mr Khaled Said, the Company's largest shareholder (the Placing, Subscription and CLN, together the "Fundraising"). The CLN will be drawn down immediately upon satisfaction of the conditions precedent set out in the loan agreement in a single tranche in order to part fund the Acquisition. Details of the terms of the CLN are set out below.

British Honey, the Directors of the Company and Mark Gamble, joint owner and CEO of Union, have entered into a placing agreement with Stanford Capital Partners ("Stanford") and finnCap Ltd ("finnCap") to act as the joint bookrunners in relation to the Fundraising.

Union Distillers

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 "own-label" spirits. It has well-invested infrastructure which includes its own stills, bonded warehouse and it is proposing to install a canning line. Union has a strong manufacturing capability, established brands and an extensive and growing retail and wholesale customer base. Union will benefit from BHCs own platform, in particular its software infrastructure. Products include its premium, proprietary "Two Birds" range of spirits comprising 11 gins, seven vodkas, a spiced rum, an absinthe and a 29% ABV espresso vodka liqueur. In addition, Union distils spirits on behalf of a range of B2B customers including some major German supermarkets with a UK presence. Like BHC, Union is also SALSA accredited.

Union is a cash generative business, with cash of over £250,000, and on completion, the Acquisition is expected to be earnings enhancing for the combined group (the "Enlarged Group").

For the two years ended 30 September 2019 and 2020, Union recorded audited revenue of £3.42 million and £4.94 million respectively, and profits before taxation were £0.40 million and £1.13 million respectively. At 30 September 2020, Union had net assets of £1.52 million. 

The Enlarged Group will benefit from the following:

The strategy of the Enlarged Group is to develop a multi-category brand portfolio across a number of geographies through both organic and acquisitive growth. This will be driven by increased marketing, new product development and significantly increased e-commerce revenue, thereby expanding its combined range of established premium spirits brands, developing new brands and products and further penetrating existing UK and overseas markets. Additionally, it will utilise the experience and expertise of the combined management team, BHC's market-leading proprietary IT systems and the larger distilling and bottling infrastructure of the Enlarged Group. The proceeds of the Placing will also provide additional working capital to help develop current and future relationships with strategic partners. The Enlarged Group will represent circa four per cent of the UK 'craft' spirits market.

BHC is anticipating purchasing a new canning line and enhancing the production facilities at Union. The new production capacity of the Enlarged Group will enable the production of three million bottles, seven million cans and five million miniatures (5cl) in 2021.

As well as helping to satisfy the Initial Consideration, the proceeds of the Fundraising will provide additional working capital to the Enlarged Group to develop current and future relationships with strategic partners. BHC and Union intend to largely complete the integration plan by the end of 2021.

Terms of the Acquisition

The aggregate purchase consideration for the Acquisition comprises:

The Initial Consideration Shares and the Earn-out Consideration Shares are subject to a 12-month lock-in and a further 12-month orderly market restriction. The Earn-out Consideration is based on revenue generated by certain brands of the target business and will be satisfied by the issue of new BHC shares at the mid-market price at the time of issuance but not less than 110 pence per share.

The Acquisition is conditional, inter alia, on the successful completion of the Fundraising detailed below. 

Fundraising

BHC announces the intention to conduct a Fundraising to raise approximately £6.23 million, through the issue of up to 4,175,455 new Ordinary Shares at an Issue Price of 110 pence per share and a new £1.63 million unsecured convertible loan facility. The proceeds of the Fundraising will be used in part to satisfy the £5.0 million cash consideration element of the purchase with the remaining net proceeds being used for working capital purposes and to further strengthen the Company's balance sheet.

Certain Directors of the Company intend to participate in the Fundraising.

Details of the Fundraising Shares

The Fundraising Shares, when issued, will represent approximately 43.8 per cent of the Company's issued share capital prior to the Fundraising. The Issue Price of 110 pence per Fundraising Share represents a discount of approximately 5.6 per cent to the closing mid-market price of 116.5 pence per Ordinary Share on 18 February 2021, being the last trading day immediately preceding the date of this Announcement.

The Fundraising Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue.

In accordance with the terms of the placing agreement dated 19 February 2021 entered into between the Company, Stanford and finnCap and Mark Gamble (the "Placing Agreement"), the Company has, via Stanford and finnCap as placing agents, conducted a placing to raise approximately £4.04 million by way of the issue of 3,674,829 Placing Shares at the Issue Price.

The Placing Agreement is conditional, inter alia, upon:

Details of the CLN

The CLN will be for £1.63 million, should the gross proceeds of the Placing exceed £3.368 million. The CLN will be unsecured and issued on Admission. The interest rate payable on debt drawn down is 4.5 per cent per annum which compounds every six months and rolls up and carries an arrangement fee of 3.0 per cent payable by BHC. The term of the CLN is five years.

The CLN can be converted into new Ordinary Shares in the Company at a conversion price of 126.5 pence, being a 15 per cent premium to the Issue Price and conversion can only be requested by the holder at any time. In the event that any conversion would trigger a Rule 9 event under the Takeover Code, the Company will inform the holder and a decision will be made on whether to proceed with conversion.

Board Appointment

Following completion of the Acquisition, Union's joint owner and CEO, Mark Gamble, will join the Board of BHC as an Executive Director and will play a key role in the integration, development and growth of the Enlarged Group.

The Board will be seeking a full time Chief Financial Officer. A further announcement will be made in due course following completion of final due diligence procedures on the prospective candidates.

Update on List Distillery LLC

As a result of continuing global economic disruption caused by the Covid-19 pandemic, BHC has agreed with List Distillery LLC of The United States, to extend the timeframe for completion of their mutual Share-Swap Agreement (originally announced on 30 June 2020 with an extension announced 29 October 2020) from 28 February 2021 to 28 July 2021 (the "Long-Stop Date"). A further announcement will be made on or before the Long Stop Date.

Enquiries:

About The British Honey Company plc

Launched in 2014, BHC has an extensive collection of award-winning spirits brands crafted at its onsite distillery in Buckinghamshire. Its impressive range began with Keepr's British Honey Spirits infused with 100% pure honey from its own fully traceable apiaries and includes gin, rum, bourbon, vodka and a ready to drink selection of hard seltzers and a low alcohol gin and tonic.

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.

Future plans will see BHC open a second distillery on Oxfordshire's Tusmore Estate, expected late 2021, where it will produce a Tusmore Single Estate Triple Distilled Premium English Whiskey to add to its Single Malt Tusmore Whiskey, of which investment casks are currently available to purchase.