Zoetic International inks financing deal with US investment manager

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Zoetic International PLC (LON:ZOE) said it has secured a put option financing agreement with US investment manager LDA Capital.

The cannabidiol (CBD) group said the agreement will allow it to access up to £35mln over a 36-month period as well as retain the optionality to control the timing and amount of capital draws, which it said will guarantee operational flexibility for the group as it looked to further expand its international footprint.

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The firm has agreed to draw down £15mln in the first 12 months of the facility, adding that the drawdown of funds will be facilitated by issuing shares for subscription by LDA Capital. The group has also agreed to pay a 2% option premium fee on the facility for a total of £0.7mln, which is expected to be paid from the proceeds of the minimum drawdown amount of £15mln.

Zoetic also said the deal will provide it with the capital needed to pursue new distribution opportunities in the US and Europe for its Chill product line, including through product inventory investment and marketing campaigns, while also accelerating the formation of new distribution channels.

The company added that funds will also be allocated to securing critical pieces of the supply chain, attracting further executive talent, and supporting further international expansion.

“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”, Zoetic chief financial officer Paul Ferguson said in a statement.

“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”, added Zoetic co-chief executive Trevor Taylor.

Shares in Zoetic were 2% lower at 100p in early deals on Tuesday.

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