Equity Fundraising

Chill Brands (LSE: CHLL), the consumer packaged-goods distribution company, is pleased to announce a new equity fundraising of approximately £2.4m.

The Company has undertaken the conditional placing of 28,533,800 new ordinary shares of 1p each ("Ordinary Shares") in the Company (the "Placing Shares") at a price of 3.75 pence per share (the "Issue Price") by Allenby Capital Limited ("Allenby Capital") (the "Placing"), and conditional subscription of 3,466,700 new Ordinary Shares (the "Subscription") at the Issue Price, together raising approximately £1.20 million before expenses for the Company. The Company also announces the capitalisation of £1.20 million of liabilities predominantly comprised of inventory debt financing by existing significant shareholder, Mr Jonathan Swann for 32,000,000 new Ordinary Shares (the "Capitalisation", together with the Placing and Subscription, the "Fundraise"), in aggregate 64,000,500 new Ordinary Shares (the "Fundraise Shares"), at the Issue Price.

Sales and distribution of the Company's vape products have expanded rapidly since their launch in August 2023. The funds raised will be deployed to support further growth as Chill Brands continues to record increasing demand for its products from customers and additional retail store chains.

Callum Sommerton, Chief Executive Officer of Chill, commented:

"We are very pleased to have secured funding to fuel the next chapter of our growth. These resources will be deployed to procure the ever increasing number of products ordered by new and existing customers and to further expand Chill Brands' distribution network of major retailers.

Uptake of our Chill vape products continues to exceed expectations and sustained demand for reorders from our current independent retailers is a clear indicator that our products are resonating well with consumers.

We are now equipped to scale the Company's operations to meet the growing appetite for our products. Over the coming months we will engage with further leading stores and drive brand awareness through targeted marketing campaigns as Chill ZERO launches into mainstream retail."

Background to the Fundraise and Indicative use of Net Proceeds

The Directors anticipate utilising the net proceeds of the Fundraise during 2024 to accelerate sales and distribution of Chill ZERO nicotine-free vape products, which are already being launched into initial WH Smith travel locations, Morrisons stores and roadside retail stores operating on Shell, BP and Esso branded forecourts during January 2024 with the roll out continuing incrementally throughout Q1. The products are also being launched into Smoker Friendly stores in nine US states with in-store sampling activations.

The Company will further develop its distribution network of independent stores while continuing to service existing accounts, supporting sales rates with new point of sale displays, out-of-home advertising and other marketing campaigns.

Details of the Fundraise

The Fundraise consists of three parts.

• The Placing to raise approximately £1.07m through the issue of 28,533,800 new Ordinary Shares at the Issue Price;
• The Subscription to raise approximately £0.13m through the issue of 3,466,700 new Ordinary Shares at the Issue Price;
• The Capitalisation, replacing £1.20m of short-term debt liabilities through the issue of 32,000,000 new Ordinary Shares at the Issue Price

The Placing and Subscription has been made to a number of new financial institutions, high-net-worth and professional individual investors. Callum Sommerton, the CEO of Chill, has subscribed for 266,668 new Ordinary Shares under the Subscription. Mr Sommerton does not currently hold any Ordinary Shares, so following the Fundraise, he will hold 266,668 Ordinary Shares, equivalent to 0.05% of the Ordinary Shares as enlarged by the Fundraise. The FCA notification, made in accordance with the requirements of UK MAR is appended further below.

The Fundraise Shares are to be issued pursuant to the authorities granted to the Board at the Company's 2023 annual general meeting.

Jonathan Swann has continued to demonstrate his significant support of the Company by agreeing to capitalise the current balance of the supply chain finance facility announced on 20 December 2023 (the "Facility"), which currently stands at £1,000,000 at the Issue Price. In addition, the first annual interest coupon on the £1.6m convertible loan note (announced on 3 April 2023), amounting to £192,000 and £8,000 of accrued interest on the Facility will also be capitalised at the Issue Price. As a result, Mr Swann will be issued a total of 32,000,000 new Ordinary Shares.

The Facility will remain available in full (£1m) and on the same terms for future stock purchase requirements, with a balance of zero on completion of the Capitalisation.

Mr Swann is considered a related party as a result of his current shareholding in the Company of 29,000,000 Ordinary Shares, equivalent to 6.56% of the current Ordinary Shares. The board of directors of Chill Brands consider the terms of the Facility to be fair and reasonable and in the best interests of all shareholders. The funds will support the acquisition of inventory and the roll-out of products to new stores, reducing the cashflow impact of the Company's rapid expansion. Following the Fundraise, Mr Swann will hold 61,000,000 Ordinary Shares, equivalent to 12.05% of the Ordinary Shares as enlarged by the Fundraise.

Admission and Total Voting Rights

Applications will be made for the Fundraise Shares to be admitted to trading on the Main Market of the London Stock Exchange and to listing in the Standard Segment of the FCA Official List ("Admission"). It is expected that the issue will take place, Admission will become effective and that dealings in the New Shares on the Main Market of the London Stock Exchange will commence on or around 31 January 2024.

On Admission, the Company will have 506,291,025 Ordinary Shares in issue, each with one voting right. There are no shares held in treasury. Therefore, the Company's total number of Ordinary Shares and voting rights will be 506,291,025 and this figure may be used by shareholders from Admission 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.

PDMR Table

Notifications and public disclosure of transactions by persons discharging managerial responsibilities ("PDMR") and persons closely associated ("PCA") with them.

Other

Notice to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended and as this is applied in the United Kingdom ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II and Regulation (EU) No 600/2014 of the European Parliament, as they form part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Fundraise Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors who do not need a guaranteed income or capital protection and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). The Fundraise Shares are not appropriate for a target market of investors whose objectives include no capital loss. Notwithstanding the Target Market Assessment, distributors should note that: the price of the Fundraise Shares may decline and investors could lose all or part of their investment; the Fundraise Shares offer no guaranteed income and no capital protection; and an investment in the Fundraise Shares is compatible only with investors who do not need a guaranteed income or capital projection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraise. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Allenby Capital will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Fundraise Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the shares and determining appropriate distribution channels.

Notice to overseas persons

General

Allenby Capital, which is authorised and regulated by the FCA in the United Kingdom, is acting as nominated adviser and joint broker to the Company in connection with the Placing and Subscription. Allenby Capital will not be responsible to any person other than the Company for providing the protections afforded to clients of Allenby Capital or for providing advice to any other person in connection with the Fundraise. Allenby Capital has not authorised the contents of, or any part of, this announcement, and no liability whatsoever is accepted by Allenby Capital for the accuracy of any information or opinions contained in this announcement or for the omission of any material information.