TIDMGUN
RNS Number : 8912R
Gunsynd PLC
02 July 2020
Gunsynd plc
("Gunsynd" or the "Company")
Further Investment in Human Brands and Share Exchange with Rogue
Baron
Gunsynd Plc (AIM: GUN, AQUIS: GUN) announces the following
update regarding Human Brands International Inc ("Human Brands"), a
US-based premium spirits company in which Gunsynd holds a
convertible loan note ("Loan Note") of GBP378,575:
Share Exchange Agreement
As part of the redomiciling process from the US to the UK,
pursuing a listing in the UK and raising further funds to develop
the business, as notified by the Company on 27 January 2020, Human
Brands has entered into a share exchange agreement ("Share
Exchange") with Rogue Baron Ltd ("Rogue Baron"), a limited company
incorporated in England and Wales, to sell the subsidiaries listed
below:-
Shinju Whiskey LLC
Shinju Spirits, Inc
Mazeray Corporation
STI Signature Spirits Group, LLC
Legacy Retail Group LLC
These subsidiaries hold the Shinju, Mazeray and Copa Imperial
Brands , as well as a 52% interest in the Bin 1301 wine bar in
Washington DC.
The consideration for the sale is GBP2,827,305 which will be
satisfied through the issue of 36,247,500 ordinary shares in Rogue
Baron at a price of GBP0.078 per ordinary share.
The decision has been taken that the Armero tequila brand and
the conditional agreements with the owners of the Santo Coyote
restaurant , as notified in the Company's quarterly update of 21
February 2020 , will not be part of the Share Exchange and will
remain with Human Brands.
Following the Share Exchange, the 36,247,500 ordinary shares in
Rogue Baron will be distributed in specie to existing shareholders
of Human Brands , who will hold all bar one of the issued shares in
Rogue Baron. Hamish Harris, a director of Gunsynd, has been
appointed to the board of Rogue Baron as a representative of the
Company.
Deed of Novation and Further Investment
A deed of novation ("Novation") has been entered into which will
transfer Gunsynd's Loan Note of GBP378,575 from Human Brands to
Rogue Baron. Simultaneously, Gunsynd will increase the Loan Note by
a further GBP120,000 to GBP498,575. It will accrue interest at 12%
per annum, be unsecured and repayable on 31 March 2021.
As a result of the Novation, Gunsynd has no further conversion
rights into new shares in Human Brands. Gunsynd holds no shares in
Human Brands.
The Loan Note may be converted (in full or in part) at any time
at the election of Gunsynd , into ordinary shares of Rogue Baron at
a price per share determined by dividing GBP1,616,304 (representing
the agreed valuation of the ordinary share capital of Rogue Baron)
by the total number of ordinary s hares in Rogue Baron in issue
immediately prior to conversion.
Fundraising Event
Furthermore, on 27 January 2020, the Company announced that, in
recognition of the efforts of Gunsynd to assist with its proposed
London Stock Exchange listing, Human Brands will , within 5
Business Days of each Fundraising Event (as defined below) which
occurs in 2020, issue ordinary shares to Gunsynd in order to ensure
that:
i. where the total amounts raised pursuant to Fundraising Events
occurring in 2020 (Raised Funds) are equal to or less than
US$350,000, Human Brands shall issue an aggregate number of Fee
Shares equal to 1% of the entire issued share capital of Human
Brands to Gunsynd as enlarged by the applicable Fundraising
Event;
ii. where the Raised Funds are greater than US$350,000 but equal
to or less than US$500,000, Human Brands shall issue an aggregate
number of Fee Shares equal to 2% of the entire issued share capital
of Human Brands to Gunsynd as enlarged by the applicable
Fundraising Event; and
iii. where the Raised Funds are more than US$500,000, Human
Brands shall issue an aggregate number of Fee Shares equal to 3% of
the entire issued share capital of Human Brands to Gunsynd as
enlarged by the applicable Fundraising Event.
A Fundraising Event means either (i) a placing of Ordinary
Shares carried out pursuant to an IPO of Human Brands on any
recognised investment exchange or (ii) the raising of funds on a
crowdfunding platform in the UK by Human Brands. Under the
Novation, Rogue Baron has undertaken the obligations set out above
previously made by Human Brands.
Hamish Harris, the Company's Executive Chairman, commented:
"The Novation and Share Exchange with a UK company are an
important and essential step for Human Brands/Rogue Baron to take
with respect to monetising our investment via a proposed listing in
London and eliminating any need for future funding by Gunsynd. The
Share Exchange will result in Gunsynd keeping exposure to what we
regard as the key brands, not least Shinju Whisky which has seen
large growth in its distribution channels in the last twelve months
including potential overseas orders from a number of countries. It
will also cut capital expenditure and working capital requirements
associated with the Mexican conditional agreements.
Rogue Baron has applied for and been granted EIS advanced
assurance, something which we believe will increase investor
appetite, which we believe is strong for premium drinks companies
as shown earlier this year by the admission of The British Honey
Company to the Aquis Stock Exchange Growth Market (AQSE: BHC) which
we understand was strongly supported.
The Board believes that the reduced Loan Note conversion price
is at a significant discount to the value of the Shinju Whisky
alone. Whilst it has taken longer than we hoped, this step will
allow us to move forward. We look forward to further updating
shareholders regarding Rogue Baron in the near future."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
The Directors of Gunsynd accept responsibility for this
announcement.
For further information please contact:
Gunsynd plc
Hamish Harris +44 20 7440 0640
Cairn Financial Advisers LLP
James Caithie / Liam Murray +44 20 7213 0880
Peterhouse Capital Limited
Lucy Williams + 44 20 7469 0930
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END
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