Silverwood Brands - Trading Update

29 January 2024

Silverwood Brands Plc

("Silverwood" or the "Company", together with its subsidiaries, the "Group")

Trading Update; Director Investment and Related Party Loan; Loan Conversion and Board appointment; Concert Party Update

Silverwood Brands plc (AQSE: SLWD), a holding company established to invest primarily in branded consumer businesses, announces:

·    a trading update in respect of the six months ended 31 December 2023;

·    a £1.0 million subscription by Andrew Gerrie, Chief Executive Officer of the Company, for 1,851,852 new ordinary shares of 10p each in Silverwood ("Ordinary Shares"; "New Ordinary Shares") at a price of 54p per share (the "Subscription"), and the provision by a company associated with Mr Gerrie of an unsecured convertible loan of £0.5 million to the Company (the "Related Party Loan"), together generating gross funds of £1.5 million for Silverwood;

·    the conversion by Castelnau Group Limited ("Castelnau") of an existing unsecured loan facility  into 8,148,147 New Ordinary Shares (the "Loan Conversion");

·    the appointment of Mark Power as a Non-executive Director of the Company; and

·    consequential changes to the shareholdings of the Concert Party.

Trading Update

The Company announced its unaudited interim results for the 6 months ended 30 June 2023 earlier today. Since the half year end, the Group's trading has continued in line with the Directors' expectations, with all the Group's brands performing strongly.

Director Subscription and Related Party Loan

Andrew Gerrie, Chief Executive Officer of the Company, has agreed to subscribe for 1,851,852 New Ordinary Shares at a price of 54p per share, raising gross proceeds of £1.0 million for the Company.

In addition, Silver Americum Limited, a company in which Mr Gerrie and his wife each hold separate 20% interests, has agreed to provide an unsecured convertible loan of £0.5 million to the Company. The Related Party Loan is for a fixed term of 2 years, bears interest at a rate of 9% per annum and is convertible into Ordinary Shares at the lower of 54p and the average closing price of an Ordinary Share on each of the five days immediately prior to conversion.

The gross proceeds of the Subscription and the Related Party Loan, amounting to  £1.5 million, will be used for general working capital purposes by the Company.

Loan Conversion and Board Appointment

Castelnau is a closed-ended investment company trading on the Specialist Fund Segment of the London Stock Exchange and managed by Phoenix Asset Management Partners ("PAMP"). Castelnau and the Company have agreed that the unsecured loan facility of approximately £4.4 million, entered into by the Company and Castelnau on 12 October 2022 (the "Loan"), will be converted into New Ordinary Shares at a price of 54p per share, resulting in the issue of 8,148,147 New Ordinary Shares to Castelnau. In addition, the Company and Castelnau have agreed that Castelnau may, at its discretion, convert the accrued interest on the Loan, currently totalling approximately £0.86 million, into further Ordinary Shares, at the lower of 54p and the average closing price of an Ordinary Share on each of the five days immediately prior to conversion. Pending conversion, the outstanding amount due to Castelnau will bear interest at the rate of 15% per annum.

Following the Loan Conversion, Castelnau will be interested in 12,718,499 Ordinary Shares, representing 4.70% of the Company's enlarged issued share capital.

In recognition of Castelnau's support for the Company, Mark Power has been appointed as a Non- executive Director of the Company to represent the interests of Castelnau.

Mr Power graduated with a degree in electronic engineering in 1996, and subsequently spent five years with Analog Devices as a senior engineer, working in both design and manufacturing.  In 2001, Mr Power pivoted to a career in investment research, first at Merrill Lynch and later as a partner at Redburn.  From 2011, Mr Power worked with Holland Advisors, where he helped shape the investment process for its nascent value fund. Mr Power joined PAMP in 2021.

There is no further information regarding Mr Power to be disclosed pursuant to Rule 4.9 of the Aquis Growth Market Access Rulebook.  

Related Party Transactions

As Andrew Gerrie is a Director of the Company, the Subscription and the Related Party Loan are  deemed to be related party transactions pursuant to Rule 4.6 of the Aquis Growth Market Access Rulebook. As Mr Gerrie is also a non-executive director of PAMP, the manager of Castelnau, the Loan Conversion is similarly deemed to be a related party transaction.

The Company's Directors (excluding Andrew Gerrie) having exercised reasonable care, skill and diligence, consider that the Subscription, the Related Party Loan and the Loan Conversion are fair and reasonable insofar as the shareholders of the Company are concerned.

Concert Party Interests

After the Sale and Purchase Agreement for the Company's acquisition of a 19.8% stake in each of Lush Cosmetics Limited and Lush Cosmetic Warriors (the "Lush Transaction") was entered into, and Andrew Gerrie received certain Ordinary Shares in connection with the Lush Transaction (the "Consideration Shares"), he transferred a certain number of those Consideration Shares to his children. Those children have now executed stock transfer forms to return those Consideration Shares to Andrew Gerrie.

Accordingly, following the registration of those Consideration Shares, the Subscription and the Loan Conversion, the Concert Party (as described and defined in the Company's announcement of 12 December 2022)  is interested in Ordinary Shares as follows:

¹ This holding comprises Ordinary Shares held jointly and individually in the names of Andrew Gerrie and his wife, Alison Hawksley, together with Ordinary Shares held by Silver Americum Limited.

² These Consideration Shares are held under the Attorney announced on 10 January 2024, and will not be voted at any General Meeting of the Company whilst held under the Attorney. This includes the Consideration Shares that were transferred by Andrew Gerrie to his children, who have now executed stock transfer forms to return those Consideration Shares.

³Issued share capital = 270,712,808 Ordinary Shares.

Following the issue of the New Ordinary Shares in respect of the Subscription and the Loan Conversion, the Concert Party's aggregate interest in the voting rights of the Company has increased to 96.07%. For so long as the Concert Party holds more than 50% of the Company's voting share capital and its members are presumed to be acting in concert, they may increase their aggregate interests in the Ordinary Shares in the Company without incurring any obligation under Rule 9 of the Takeover Code to make a mandatory offer for the remaining shares, although individual members of the Concert Party, with the exception of Andrew Gerrie and Alison Hawksley, would not be able to increase their percentage interest in the Ordinary Shares of the Company through 30%, or between 30% and 50%, without the consent of the Panel.

Total Voting Rights

Following the Subscription and the Loan Conversion, the Company has 270,712,808 Ordinary Shares in issue, each share carrying the right to one vote.

This figure of 270,712,808 Ordinary Shares may be used by shareholders in the Company 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 share capital of the Company under the FCA's Disclosure and Transparency Rules.

Admission and Trading

Application will be made for the New Ordinary Shares to be admitted to trading on the Aquis Growth Market at an appropriate time.

The Company will announce further information regarding the process to unwind the Lush Transaction as soon as practicable. Pending the publication of that further information, trading in the Company's ordinary shares on the Access segment of the Aquis Growth Market will remain suspended.

--Ends--

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).