ZOE.L Regulatory News (ZOE)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310

Zoetic International plc

('Zoetic', the 'Company' or the 'Group')

Financing Agreement with LDA Capital

Zoetic, the international CBD group, is pleased to provide an update on its efforts to secure capital commitments in order to accelerate its growth.

Overview

· Group enters into a put option agreement facility with LDA Capital.

· Term of the facility is 36 months with a commitment of up to £35 million.

· Financing facility provides the Group with accretive growth capital and the optionality to better manage equity issuance prices and overall dilution.

Zoetic is pleased to announce that it has entered into a put option agreement ("Financing Agreement") with LDA Capital Limited ("LDA Capital"), an institutional investment manager based in California, US. The Agreement provides Zoetic with the ability to access up to £35 million over a 36-month period. Zoetic retains the optionality to control the timing and amount of capital draws over this period, guaranteeing operational flexibility for the Group as it looks to further expand its international footprint.

Access to the Financing Agreement will provide the Group with the capital required to pursue new distribution opportunities in the US and Europe for its Chill product line whilst accelerating the formation of new distribution channels.

Zoetic's business model is dynamic and its finances are closely tied to inputs including store ramp rates and product sell-through rates. As the Group progresses through its pilot programmes, it will continue to collect data to provide visibility into more specific funding requirements and projected financial results. This business model is best served by an adaptive funding facility which the agreement with LDA Capital provides. By securing access to additional funds while retaining optionality over the issuance of equity, the Group will be well placed to pursue its pipeline of projects while limiting shareholder dilution. Notably, access to flexible funding of this nature will allow the Group not only to pursue an abundance of value accretive organic growth projects but also to explore and capture inorganic strategic growth opportunities as they become available.

Trevor Taylor, Co-CEO of Zoetic, said: "We are thrilled to have found an ideal financial partner in LDA Capital, not least because it brings highly significant strategic benefits to the table. LDA has executed on multiple international transactions and we anticipate significant synergies from the partnership."

Deal Specifics

The capital may be accessed by Zoetic by exercising put options under the Financing Agreement at the Company's discretion. The Company has agreed to draw down £15 million in the first twelve months ("Minimum Draw Down Amount") and may draw up to a maximum of £35 million over the term of the agreement. The Company will draw down funds under the Financing Agreement by issuing ordinary shares of 1 pence each of the Company ("Ordinary Shares") for subscription by LDA Capital. Any issue of shares by the Company under the Minimum Draw Down Amount is expected to be fulfilled under the Company's current share issue authorities, without requiring additional approval. If the Minimum Draw Down Amount is not drawn in the first 12 months, a 10% penalty fee is payable on the amount not drawn down.

The number of shares subject to any single call notice will be limited to a maximum ten times the average volume on a fifteen-day trailing basis. The issue price of the shares will be 90% of the volume-weighted average price ("VWAP") over a flexible pricing period, with a maximum of 30 days. The Company also retains the right to specify a minimum acceptable price during the pricing period. Any price point below this minimum price may be omitted from the VWAP calculation. Under this scenario, a proportional share volume will also be omitted from the maximum volume under the call notice. LDA Capital has agreed not to engage in any short selling of Zoetic and to limit its holding to 19.9% of the issued Ordinary Shares.

In addition, the Company has agreed to pay a 2% option premium fee on the facility for a total of £0.7 million. The fee is expected to be paid from the proceeds of the Minimum Draw Down Amount and will be paid in full within the first twelve months of the Agreement. There are no other financial considerations associated with the Agreement.

Paul Ferguson, CFO of Zoetic, said: "We are pleased to announce LDA Capital as our financial partner and are excited to continue Zoetic's journey of growth with the benefit of a sizeable funding facility. Zoetic is in a transitional phase, both in terms of growth and investor base profile, and LDA has provided the Group with capital at an attractive cost that is sure to enable a smooth transition to the next phase. The optionality retained in this Agreement is a tremendous asset to the Company and its shareholders, and it grants us the operational and financial flexibility to generate new growth opportunities while securing accretion for all stakeholders while also restricting the amount of dilution."

Anthony Romano, Managing Partner of LDA Capital, said: "The Zoetic team has created a new product category with tremendous growth potential. The Group is uniquely positioned as a first mover in providing consumers an innovative tobacco alternative and has locked in strong global distribution agreements ensuring its products will reach their customers. LDA looks forward to supporting the Group's expansion plans in the coming months."

Use of Proceeds

The funds accessed via the Agreement will be used primarily to pursue existing growth opportunities while paving the way towards the distribution of the Group's products across new markets. This includes product inventory investment as well as marketing and promotional campaigns. Funds will also be allocated to securing critical pieces of the supply chain, attracting further executive talent, and supporting further international expansion.

About LDA Capital

LDA Capital is a global alternative investment group with expertise in cross border transactions worldwide. Our team has dedicated their careers to international & cross border opportunities having collectively executed over 200 transactions in both the public and private middle markets across 43 countries with aggregate transaction values of over US$10 billion. For more information please visit: www.ldacap.com; For inquires please email: info@ldacap.com

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Publication on website

A copy of this announcement is also available on the Group's website at www.zoeticinternational.com

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