TIDMSLWD
RNS Number : 3385M
Silverwood Brands PLC
23 May 2022
DATE: 23 May 2022
Silverwood Brands plc
("Silverwood" or the "Company")
Proposed Acquisition of Balmonds Skincare Ltd and Publication of
Admission Document
Silverwood Brands plc, an enterprise company established to
invest primarily in branded consumer businesses, is pleased to
announce that it has signed a conditional share purchase agreement
("SPA") for the acquisition by the Company of Balmonds Skincare Ltd
("Balmonds"), a UK based skincare company that manufactures
cosmetic skincare products primarily for consumers who suffer from
skin conditions such as eczema, psoriasis and dermatitis. Balmonds'
product line is made from natural ingredients that work to protect
and hydrate sore and inflamed skin.
The proposed acquisition of Balmonds ("Acquisition") constitutes
a reverse takeover under the AQSE Growth Market Rules and as such
will require the approval of Shareholders which will be sought at a
general meeting of the Company convened for 9.00 a.m. on 14 June
2022 at VSA Capital's offices at Park House, 16-18 Finsbury Circus,
London EC2M 7EB ("General Meeting").
The Admission Document relating to the Acquisition (including
the Notice of General Meeting and Form of Proxy) has been published
on the Company's website at www.silverwoodbrands.com on Friday 20
May 2022 and is being posted to Shareholders today.
Details of the Acquisition
On 20 May 2022, the Company entered into a conditional sale and
purchase agreement with Andrew Gerrie and Alison Hawksley (the
"Principal Vendors") to acquire their respective shareholdings in
Balmonds for a consideration of up to 6,811,389 new Ordinary Shares
with a deemed price of 85p per share ("Consideration Price"). The
combined shareholdings of the Principal Vendors in Balmonds is
equal to 85 per cent. of the issued share capital. The Company is
entitled to acquire the remaining 15 per cent. of the issued share
capital of Balmonds from the other shareholders in Balmonds (the
"Minority Vendors") on the same terms pursuant to "drag along
provisions" in the articles of association of Balmonds except the
Company may choose to expedite the acquisition process by agreement
with the Minority Vendors. The total consideration payable to the
Minority Vendors will be up to 1,202,010 new Ordinary Shares with a
deemed price of 85p per share.
The total consideration for the Acquisition amounts to up to
approximately GBP8,000,000 and will be satisfied via the issue and
allotment of up to 8,013,399 new Ordinary Shares ("Consideration
Shares") to the Principal Vendors and the Minority Vendors
(together the "Vendors") pro rata to their holdings in Balmonds at
the Consideration Price. The Consideration Shares comprise
4,808,039 new Ordinary Shares to be allotted and issued to the
Vendors at the time of Admission (the "Initial Consideration
Shares") and up to 3,205,360 Ordinary Shares to be allotted and
issued to the Vendors after the satisfaction of certain performance
and other criteria (the "Deferred Consideration Shares").
The Deferred Consideration Shares shall be issued on or around
the third anniversary of Admission subject to certain conditions
including the applicable Vendors remaining employed by Balmonds and
certain performance targets being satisfied. The number of Deferred
Consideration Shares to be issued to the Vendors will calculated on
a straight line basis and agreed formula.
As part of the Acquisition, the Company conditionally acquired a
shareholder loan (the "Balmonds Shareholder Loan") advanced to
Balmonds by Andrew Gerrie and Alison Hawksley (the "Balmonds Loan
Holders"). In consideration of the Balmonds Loan Holders agreeing
to novate the Balmonds Shareholder Loan to the Company, 1,398,365
new Ordinary Shares at a price equivalent to the Consideration
Price (the "Loan Shares") will be issued to the Balmonds Loan
Holders on or around Admission subject to Admission and completion
of the Acquisition.
Because the Directors of the Company are also shareholders and
as a result of the relationships of the board members and certain
Shareholders, a concert party will be formed as a result of the
Acquisition (the "Concert Party"). Further information on the
Concert Party is given below.
On completion of the Acquisition, the Concert Party will hold
8,445,140 Ordinary Shares on Admission, representing approximately
73.2 per cent. of the Enlarged Share Capital. Under Rule 9 of the
Takeover Code, the Concert Party would normally then be obliged to
make a general offer to all Shareholders (other than the Concert
Party) to acquire all the Ordinary Shares not owned by the Concert
Party. The Panel has agreed to waive this obligation ("Rule 9
Waiver") subject to the approval by Independent Shareholders of the
Rule 9 Waiver (on a poll) at the General Meeting. The Acquisition
is therefore also subject to the approval of the Rule 9 Waiver by
the Independent Shareholders.
Approval by the Shareholders will be sought at a General Meeting
convened for 9.00 a.m. on 14 June 2022 at VSA Capital's offices at
Park House, 16-18 Finsbury Circus, London EC2M 7EB.
The Acquisition is conditional, inter alia, on:
I. the grant of a waiver of Rule 9 of the Takeover Code by the Panel;
II. the passing of the Resolutions proposed at the General Meeting of the Shareholdersr;
III. the passing of the Rule 9 Waiver at the General Meeting by Independent Shareholders; and;
IV. Admission of the Enlarged Share Capital to trading on the AQSE Growth Market.
Subject to the conditions being satisfied on or before 30 June
2022, the Company will issue and allot to the Vendors pro rata to
the shares held by them in the issued share capital of Balmonds as
at 20 May 2022:
-- the Initial Consideration at the Consideration Price.
Application will be made for the Initial Consideration Shares to be
admitted to the AQSE Growth Market on 15 June 2022.
-- such number of Deferred Consideration Shares on or around the
third anniversary of Admission calculated in accordance with the
agreed formula in the Share Purchase Agreement and subject to the
satisfaction of the agreed performance criteria.
The Initial Consideration Shares will represent approximately
41.7 per cent. of the Enlarged Share Capital on Admission and will,
when issued, rank pari passu in all respects with the Existing
Ordinary Shares, including all rights to all dividends and other
distributions declared, made or paid following Admission.
If the total number of the Consideration Shares are issued and
allotted pursuant to the terms of the Proposed Acquisition, the
Consideration Shares will represent approximately 54.4 per cent. of
the Enlarged Share Capital on Admission and will, when issued, rank
pari passu in all respects with the Existing Ordinary Shares,
including all rights to all dividends and other distributions
declared, made or paid following Admission.
Information about the Concert Party
The Company has agreed with the Panel that the following persons
are acting in concert in relation to the Company:
-- Andrew Gerrie (Age: 59):
is a director of Silverwood and, together with his wife, Alison
Hawksley, shares a number of business interests with the other
directors of Silverwood and the individuals set out below.
Additional biographical information on Mr Gerrie can be found in
the admission document.
-- Andrew Tone (Age: 49):
is the co-founder of Lush Japan, a subsidiary of Lush Cosmetics
which Andrew Gerrie co-founded, and has historically worked closely
together with Andrew Gerrie. Additional biographical information on
Mr Tone can be found in the admission document.
-- Paul Hodgins (Age: 51):
is a director of Silverwood and also has a directorship in
Ginger Teleporter Limited together with Andrew Gerrie. They are
both shareholders in Ginger Teleporter Limited. Additional
biographical information on Mr Hodgins can be found in the
admission document.
-- James Wilson (Age: 36):
is a director of Silverwood and also is a partner at Phoenix
Asset Management Partners Limited, of which Andrew Gerrie is a
non-executive director. Additional biographical information on Mr
Wilson can be found in the admission document.
-- Angus Thirlwell (Age: 59):
Angus is the co-founder and CEO of Hotel Chocolat, an AIM quoted
company. Although Andrew Gerrie is the Non-Executive Chairman of
Hotel Chocolat, and Angus is a board adviser to Silverwood (due to
his specialist brands expertise). Additional biographical
information on Mr Thirlwell can be found in the admission
document.
-- Alison Hawksley (Age: 55):
is co-owner of Balmonds and CEO/Trustee of MAD 4 AFRICA charity.
She is also Mr Andrew Gerrie's wife. She is not a director,
officer, employee and/or representative of Balmonds or the
Company.
-- Hu Yu (also known as Harry Yu) (Age: 27):
is a shareholder of Silverwood, in addition to being the 20%
owner of a subsidiary of Balmonds. He also advises Balmonds on the
Chinese market. He is not a director, officer, employee and/or
representative of Balmonds or the Company.
-- Fushia Investments PTE LTD
is a family office investment company based in Singapore and a
subsidiary of GKG Investment Holdings Pte Ltd, which is controlled
by the Goh family. The company participated in Silverwood's pre-IPO
fundraise round. The company is registered in Singapore with Unique
Entity Number 199901064M and its registered office is at 11 North
Buona Vista Drive, #08-08, The Metropolis, Singapore 138589. Its
directors are Mr Goh Geok Khim and So Madeline Mrs. Goh
Madeline.
-- Silver Americum Ltd:
is a private investment company and registered in England and
Wales with company number 12701954. The company's registered office
address is at 14 Laurel Road, Barnes SW13 0EE, United Kingdom. Its
director is Mr Andrew Gerrie and it is controlled by Mr Andrew
Gerrie and Mrs Alison Hawskley.
-- Andrew Monk and Andrew Raca, both directors of VSA Capital
Limited, and Jane Raca (the wife of Andrew Raca) hold in aggregate
212,500 shares representing 4.0% of Silverwood's share capital. VSA
Capital, the Company's AQSE Corporate Adviser and Broker, however
does not hold any shares in Silverwood.
Following Admission, the members of the Concert Party will be
interested in a maximum of 8,445,140 Ordinary Shares, representing
approximately 73.2 per cent. of the Enlarged Share Capital. A table
showing the respective individual interests in shares of the
members of the concert party on Admission is set out below:
Maximum Ordinary Shares
Ordinary interested in
Shares held following Admission
immediately as a percentage
following of the Enlarged
Shareholder Admission Share Capital
--------------------------- ------------- ---------------------
Andrew Gerrie & Alison
Hawksley
Alison Hawksley & Andrew
Gerrie 2,112,651 18.3%
Alison Hawksley 2,043,417 17.7%
Silver Americum Ltd * 714,286 6.2%
Andrew Gerrie 2,043,417 17.7%
Angus Thirlwell 571,429 5.0%
Fushia Investments PTE
LTD 571,429 5.0%
Andrew Monk 200,000 1.7%
Andrew Tone 104,572 0.9%
Paul Hodgins 28,577 0.2%
James Wilson 28,572 0.2%
Hu Yu ** 14,286 0.1%
Jane Raca 7,500 0.1%
Andrew Raca 5,000 0.0%
--------------------------- ------------- ---------------------
Total 8,445,140 73.2%
* Mr Andrew Gerrie holds a 20% stake in the company, Mrs Alison
Hawksley holds a 20% stake in the company
** Also known as Harry Yu
Information on Balmonds Skincare Ltd
Balmonds is a manufacturer of cosmetic skincare products
primarily aimed at consumers who suffer from skin conditions such
as eczema, psoriasis and dermatitis. Balmonds' product line is made
completely from natural ingredients that work to protect, nourish,
and hydrate sore, inflamed or itchy skin. All merchandise is
non-steroidal, no-nut, and unperfumed. Balmonds has a diversified
product line suitable for all, but especially helpful to those with
sensitive, allergy-prone skin. Balmonds' largest distributers are
currently Amazon and Holland & Barrett.
Quality Control
Balmonds take the upmost care in manufacturing, packaging, and
shipping products to consumers. For every product, except the Skin
Salvation, all batches produced are sent to a laboratory for
testing and are certified before being passed to Balmonds' various
distribution channels. Previously, every batch of the Skin
Salvation was tested and certified. Due to continuous
accreditations over the course of many years and the fact that Skin
Salvation does not contain water and therefore has no expiry date,
Balmonds has moved to one in every five batches of the Skin
Salvation being tested instead. Balmonds' quality control practices
are above industry requirements.
Manufacturing & Supply Chain Management
Balmonds' primary manufacturing and warehousing facilities are
based in the same location as its registered address. The principal
ingredients used in Balmonds' products are:
-- Beeswax
-- Natural Oils
-- Herbal Tinctures
-- Shea Butter
Balmonds has a single supplier of unrefined beeswax, the
principal ingredient used in Skin Salvation and other products,
however it can obtain more from other sources. It also has one
supplier of natural oils and another two in reserve (as the primary
supplier cannot always supply all the natural oils at one time).
Furthermore, Balmonds' herbal tinctures are specially grown in
England, and it sources its shea butter from a women's collective
in Burkina Faso. It can normally obtain additional ingredients
within a two-week period, however, Balmonds' hemp comes from China
which poses a geopolitical risk to its operations. Balmonds holds
at least one month's stock of finished products on shelves, as well
as another two months additional stock in drawdown facilities and
warehouses.
Balmonds uses a combination of machinery and labour to
manufacture its products. Much of the equipment has been recently
acquired and is under warranty whilst some has been leased. If any
machine were to break down it would normally take around two to
three days to fix. In the meantime labour and the re-introduction
of old equipment on-site would ensure production continued, albeit
at a slower rate.
The current manufacturing facility has the capacity to increase
output between 3x-4x given the introduction of more machinery and
labour. At the moment, Balmonds employs one person full-time solely
to manufacture its products, however, it also uses temporary staff
and other team members as needed. If the maximum productive
capacity of the current site were to be reached, Balmonds would
need to acquire more storage facilities to house its products.
Balmonds uses numerous suppliers to procure its packaging
materials and incorporates recyclable and bio-degradable materials
wherever possible.
General Meeting
The General Meeting to seek shareholder approval of, amongst
other matters, the Acquisition is convened to be held at 9.00 a.m.
on 14 June 2022 at VSA Capital's offices at Park House, 16-18
Finsbury Circus, London EC2M 7EB.
In addition, the Company is seeking approval of the Rule 9
Waiver from Independent Shareholders, waiving the obligation of the
members of the Concert Party to make a mandatory takeover offer.
The Company is also seeking authority to allot the Ordinary Shares
in connection with the Acquisition and an additional authority for
up to GBP5,000,000 in conjunction with a resolution to disapply
statutory pre-emption rights.
Assuming that all resolutions will be passed at the General
Meeting, it is expected that the Acquisition completes on
Admission.
Application to the AQSE Growth Market
Application will be made for the Consideration Shares and the
Loan Shares to be admitted to trading on the AQSE Growth Market.
Dealings in the Ordinary Shares are expected to commence on 15 June
2022.
The Consideration Shares and the Loan Shares will, on Admission,
rank pari passu in all respects with the existing Ordinary Shares
and will rank in full for all dividends and other distributions
hereafter declared, paid or made on the ordinary share capital of
the Company.
Paul Hodgins, Non-Executive Director, said:
"I am delighted that the Company has been able to contract to
acquire this extremely exciting and impressive company."
For more information, please contact:
Silverwood Brands plc
Andrew Gerrie info@silverwoodbrands.com
--------------------------
VSA Capital - AQSE Corporate Adviser and
Broker +44(0)20 3005 5000
--------------------------
Andrew Monk, CEO ipo@vsacapital.com
Andrew Raca, Head of Corporate Finance
Pascal Wiese, Associate Corporate Finance
--------------------------
Capitalised terms defined in the Admission Document published by
the Company dated 20 May 2022 shall bear the same meaning unless
otherwise defined.
Further details
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of this Document 20 May 2022
Posting of this Document and the Form of 23 May 2022
Proxy
---------------------
Latest time and date for receipt of Forms 9.00 a.m. on 10 June
of Proxy for the General Meeting 2022
---------------------
General Meeting 9.00 a.m. on 14 June
2022
---------------------
Announcement of the result of the General 14 June 2022
Meeting
---------------------
Admission of Enlarged Share Capital 15 June 2022
---------------------
Ordinary Shares credited to CREST accounts 15 June 2022
(where applicable)
---------------------
Despatch of share certificates (where applicable) Within 10 Business
Days of Admission
---------------------
All references to time in this Document are to London, UK time
unless otherwise stated and each of the times and dates are
indicative only and may b e subject to change.
SHARE ADMISSION STATISTICS
Ordinary Shares in issue at the date of
this Document 5,324,942
Total Consideration Shares and the Loan
Shares to be issued pursuant to the Acquisition 9,411,764
---------------------
Initial Consideration Shares to be issued
pursuant to the Acquisition 4,808,039
---------------------
Deferred Consideration Shares to be issued
pursuant to the Acquisition 3,205,360
---------------------
Loan Shares 1,398,365
---------------------
Consideration Price 85 pence
---------------------
Initial Consideration Shares and the Loan
Shares as a percentage of the Existing Issued
Share Capital 116.6%
---------------------
Enlarged Share Capital on Admission 11,531,346
---------------------
Expected market capitalisation of the Company GBP9.80 million
on Admission
---------------------
AQSE Growth Market symbol (TIDM) SLWD
---------------------
ISIN GB00BNRRGD95
---------------------
SEDOL BNRRGD9
---------------------
LEI 213800MOKU1KYZUFYZ40
---------------------
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