Warpaint London plc (LON:W7L), the specialist supplier of colour cosmetics and owner of the W7 and Technic brands, has announced a proposed placing of 2,745,098 new ordinary shares of 25 pence each in the capital of the Company at a price of 510 pence per Placing Share to raise gross proceeds (before fees and expenses) of £14 million.
The Placing Shares will represent approximately 3.53 per cent. of the existing issued ordinary share capital of the Company and the Issue Price represents a discount of approximately 2.67 per cent. to the closing mid-market price of 524 pence per Existing Ordinary Share on 4 December 2024, being the latest practicable date prior to the publication of this Announcement.
Warpaint also intends to carry out a separate retail offer of up to 196,078 new Ordinary Shares at the Issue Price on the Bookbuild Platform to raise gross proceeds (before fees and expenses) of up to £1 million. The Retail Offer will provide existing retail Shareholders in the United Kingdom with an opportunity to participate in the Fundraising at the same price as the Placing. A separate announcement will be made in due course regarding the Retail Offer and its terms. For the avoidance of doubt, the Retail Offer is not part of the Placing.
Warpaint has separately released an announcement earlier today under Rule 2.7 of the City Code on Takeovers and Mergers relating to a firm intention to make an offer pursuant to which it is proposed that Warpaint will acquire the entire issued, and to be issued, ordinary share capital of Brand Architekts plc, a beauty brand specialist which offers a portfolio of problem-solving challenger beauty brands. It is intended that the Acquisition will be effected by means of a scheme of arrangement under Part 26 of the Companies Act. The Acquisition is being unanimously recommended by the Brand Architekts Board.
It is expected that the Fundraising will result in the Company raising total gross proceeds (before fees and expenses) of up to £15 million. Warpaint proposes to use the net proceeds of the Placing to repay the bridging loans which have been used to fund the maximum cash consideration payable by the Company pursuant to the Acquisition. The final cash consideration payable by the Company pursuant to the Acquisition will be dependent upon the final level of elections in respect of the share alternative. Further detail is set out in the Rule 2.7 Announcement.
Current Trading Update
In the 2.7 Announcement the Company made the following update regarding its current trading:
On 17 September 2024, the Company announced with its results for the six months ended 30 June 2024 that positive business momentum had continued post period end. Since then, the Group has seen continued strong momentum and the board expects the results for the year ended 31 December 2024 to be in line with its expectations.
Trading in the US has been particularly strong in the second half, benefitting from an initial order from Walmart for both W7 and Chit Chat products. The Company now expects to report US revenue growth of around 20% for the year (in US dollar terms) at a significantly higher margin to that achieved in 2023, following the reduced focus on deep discounters. Constructive talks are ongoing with Walmart regarding the supply of all year round and gifting ranges for 2025.
The Group’s gross margin for 2024 as a whole is expected to be comfortably above the level achieved last year (2023: 39.9%).
Looking forward to 2025, in the UK, Superdrug is expected to rollout W7 colour cosmetics into a significant number of new stores, and is in talks to roll out accessories into several hundred stores. In Tesco, confirmation of a 150-store expansion of the Group’s W7 impluse offering during 2025 has been received. Additionally, Boots has agreed to take a number of gifting products for the first time for Christmas 2025, which will be stocked in several hundred stores.
After a successful launch of W7 product into Etos in the Netherlands at the end of 2023, Warpaint has received confirmation of an expansion of the product assortment in all Etos stores, and the roll out of a ‘back wall’ fixture with an enhanced product range is now taking place.
The Company is currently in talks with other large new retailers in Europe, the US and the UK with a view to stock the Group’s products.
Details of the Placing
Shore Capital Stockbrokers Limited is acting as sole bookrunner in connection with the Placing and Shore Capital and Corporate Limited is acting as nominated and financial adviser to Warpaint.
The Placing will be effected by way of an accelerated bookbuild at the Issue Price. The Bookbuild will open with immediate effect following the release of this Announcement in accordance with the terms and conditions set out at the appendix at the end of this Announcement.
The Placing is conditional upon the Placing Agreement between the Company and the Bookrunner not having been terminated in accordance with its terms. The Placing is being carried out pursuant to the Company’s existing shareholder authorities granted at the Company’s 2024 Annual General Meeting.
The Placing is not conditional on the completion of the Acquisition. The conditions to the completion of the Acquisition are set out in the Rule 2.7 Announcement. If the Acquisition does not complete, the Company may, at its option, decide to use the funds for alternative investments or general working capital or consider a tax efficient way to return the net proceeds to Shareholders (or any combination of such uses). The Retail Offer is conditional on the Placing but the Placing is not conditional on the Retail Offer.
The timing for the close of the Bookbuild and allocation of the Placing Shares shall be at the absolute discretion of the Bookrunner, in consultation with Warpaint London. The final number of Placing Shares to be issued pursuant to the Placing will be agreed by the Bookrunner and the Company at the close of the Bookbuild. The result of the Placing will be announced as soon as practicable thereafter. The Placing is not being underwritten. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so. The Placing Shares are not part of the Retail Offer.
Directors’ participation in the Placing
All of the Directors have indicated that they intend to participate in the Placing as set out below. Further details will be set out in the announcement regarding the results of the Placing.
| Director | Position | Amount (£) |
| Clive Garston | Non-Executive Chairman | 30,000 |
| Samuel Bazini | Chief Executive Officer | 250,000 |
| Eoin Macleod | Managing Director | 250,000 |
| Neil Rodol | Chief Financial Officer | 10,000 |
| Paul Hagon | Executive Director | 7,500 |
| Sally Craig | General Counsel and Company Secretary | 5,000 |
| Keith Sadler | Non-Executive Director | 10,000 |
| Sharon Daly | Non-Executive Director | 10,000 |
| Indira Thambiah | Non-Executive Director | 9,999 |
| Total | 582,499 |
Admission, settlement and dealings
Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the AIM market of the London Stock Exchange.
Admission is expected to take place at 8.00 a.m. on 10 December 2024 and dealings in the New Ordinary Shares are expected to commence at 8.00 a.m. on 10 December 2024 or, such later time and/or date as the Bookrunner and the Company agree (being in any event no later than 8.00 a.m. on 31 December 2024).
The New Ordinary Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.
The New Ordinary Shares will be in registered form and will be capable of being held in either certificated or uncertificated form (i.e. in CREST). Accordingly, following Admission, settlement of transactions in the Ordinary Shares may take place within the CREST system if a Shareholder so wishes. Shareholders who wish to receive and retain share certificates are able to do so.
The ISIN number of the New Ordinary Shares is GB00BYMF3676. The TIDM is W7L.
