20 February 2024

Silverwood Brands plc

("Silverwood" or the "Company", together with its subsidiaries, the "Group")

Proposed Reduction of Share Capital and Notice of General Meeting

Silverwood Brands plc (AQSE: SLWD), a holding company established to invest primarily in branded consumer businesses, announces that the Company is today issuing a circular (the "Circular") to Shareholders convening a General Meeting of the Company for 11.00 a.m. on 8 March 2024.

At the General Meeting, a resolution will be proposed to reduce the Company's share capital through the cancellation of the 228,212,632 ordinary shares of 10p each in the Company issued pursuant to  the Company's acquisition of a 19.8% stake in each of Lush Cosmetics Limited and Lush Cosmetic Warriors.

Extracted information from the Circular is set out below. Words and expressions defined in the Circular have the same meaning in this announcement.  A copy of the full text of the Circular will be available at www.silverwoodbrands.com.

 "EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

1)    The timing of the events in the above timetable and in the rest of this document is indicative only and may be subject to change. In particular, the expected dates for the confirmation of the Capital Reduction by the Court and the Capital Reduction becoming effective are based on provisional dates that have been obtained for the required Court hearings of the Company's application. These provisional hearing dates are subject to change and are dependent on the Court's timetable.

2)    The timetable assumes that there is no adjournment of the GM. If there is an adjournment, all subsequent dates are likely to be later than those shown.

3)    If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement via a regulatory news service.

4)    All of the events listed in the above timetable following the holding of the GM are conditional upon the passing of the Resolution. The Capital Reduction is further conditional upon (i) approval by the Court and (ii) registration with the Registrar of Companies of the Court order confirming the Capital Reduction, together with a statement of capital approved by the Court.

5)    The Capital Reduction will not take effect until the Court Order and accompanying statement of capital have been delivered to, and registered by, Companies House. This indicative timetable assumes that the Registrar of Companies is able to register these documents a few working days after the Court Hearing.

6)    All of the times referred to above are references to London time."

"Dear Shareholder

Proposed Cancellation of Consideration Shares

Reduction of Share Capital

Notice of General Meeting

I am writing to you, with details of our General Meeting, which will be held at 11.00 a.m. on 8 March 2024 at the offices of the Company's Aquis Corporate Adviser, Peterhouse Capital Limited, at 80 Cheapside, London, EC2V 6EE.

The Notice of the General Meeting is set out at Part II of this document. The business of the GM is to seek, inter alia, the cancellation of the Consideration Shares.

The purpose of this document is to explain the background, and the reasons, to the Capital Reduction, why the Independent Directors consider the Capital Reduction to be in the best interests of the Company and Shareholders as a whole, and to seek Shareholders' approval for the Capital Reduction.

Shareholders should note that, unless the Resolution is approved at the GM, the Capital Reduction will not take place. The Capital Reduction is also subject to the confirmation by the Court.   In the event that either the Resolution is not passed at the GM, or the Capital Reduction is not confirmed by the Court, it is unlikely that trading in the Company's Ordinary Shares on the Aquis Growth Market will be restored, and the Ordinary Shares may be subject to withdrawal from trading by the Aquis Exchange. In such circumstances, the Company would also need to explore other options to unwind the Lush Transaction.

1. ​Background to and reasons for the Capital Reduction

On 12 December 2022, the Company announced that a sale and purchase agreement had been entered into to acquire a 19.8% stake in Lush from the Lush Vendors pursuant to which the Company agreed to allot and issue the Consideration Shares to the Lush Vendors as consideration for the ownership of the Lush Shares.  Pursuant to the terms of the SPA, the Company instructed the Lush Vendors to transfer the Lush Shares to Cosmic.

On 20 February 2023, the Company announced that it had received notification from Lush that it was declining to record the transfers of the Lush Shares to Cosmic.

On 26 July 2023, the Company received notice that Lush had commenced legal proceedings against the Company, Cosmic and the Lush Vendors seeking, inter alia, declaratory relief that the transfers of the Lush Shares to Cosmic were not compliant with the Lush articles of association and that Lush was entitled to refuse to register the transfers and further that the Deed of Grant and Powers of Attorney were not compliant with the Lush articles of association and therefore of no legal effect.

Copies of the Deed of Grant and Powers of Attorney are available for inspection during business hours at the Company's registered office by prior appointment with the Company.

The Company announced on 9 October 2023 that, in light of legal advice, the significant risks and uncertainties of the Lush Proceedings as well as potentially significant costs that would be incurred in fully defending the Lush Proceedings and the associated disruption to  its business, the Company had decided: (i) to withdraw the request that Lush register the transfers of the Lush Shares to Cosmic; and (ii) not to argue in its defence that Cosmic is now entitled to be registered as the holder of the Lush Shares.  

The effect of the withdrawal of the request to Lush to register the transfers, is that the Lush Shares will not be registered in the name of Cosmic, and accordingly the Company began seeking to take steps with a view to unwinding the Lush Transaction announced on 12 December 2022. Pending the unwinding of the Lush Transaction, the Company continues to defend the Lush Proceedings in a limited respect by seeking to uphold the validity of the Deed of Grant and the Powers of Attorney.

The Company's Ordinary Shares were suspended from trading on the Aquis Growth Market on 9 October 2023 and will remain suspended until such time as the process to unwind the Lush Transaction is completed.

As a part of the process to unwind the Lush Transaction, the Company announced on 10 January 2024, that it had agreed a conditional Settlement Deed with the Lush Vendors to enter into, among other things, a period during which the Lush Vendors will work together with the Company to achieve the cancellation of the Consideration Shares through a Capital Reduction. Pursuant to the Settlement Deed, subject to and conditional upon  the Capital Reduction, the Company, Cosmic and the Lush Vendors have agreed (i) to fully and finally settle and release all Claims against each other arising under or in connection with the SPA, Deed of Grant and Powers of Attorney or otherwise in relation to the Consideration Shares and (ii) that the SPA, the Deed of Grant and Powers of Attorney shall be terminated in their entirety with immediate effect. 

In the event there is no Completion or a Change of Control Event occurs prior to Completion: (i) there will be no settlement of the Claims under the Settlement Deed; (ii) any payments or loans made on or behalf of the Lush Vendors to the Company pursuant to the Settlement Deed shall be immediately repayable by the Company; and (iii) certain obligations of the Lush Vendors under the Settlement Deed that became effective prior to Completion shall be terminated with immediate effect and no further performance by them will required.  As at the date of this document, the Company's issued ordinary share capital is 270,712,808 Ordinary Shares.

The purpose of the Capital Reduction is to: (i) cancel the Consideration Shares (ii) to cancel the amount standing to the credit of the Share Premium Account in its entirety and (iii) approve the release of the Lush Vendors from any and all obligations arising under or in connection with the SPA, Deed of Grant and Powers of Attorney or otherwise in relation to the Consideration Shares and the termination of the SPA, Deed of Grant and Powers of Attorney with immediate effect. As at the Latest Practicable Date, the balance standing to the credit of the Company's Share Premium Account was £221,176,536.56.

If the Capital Reduction is approved by Shareholders at the GM, the Capital Reduction will be subject to confirmation by the Court, which may impose additional conditions for the protection of creditors. This is described in further detail in paragraph 2 below. Subject to obtaining such Court confirmation, and to the registration of the Court Order (and accompanying statement of capital) by the Registrar of Companies, the Capital Reduction is expected to take place on or around 18 April 2024.

As a consequence of the Capital Reduction, the Consideration Shares and the Share Premium Account will be cancelled and in turn the Lush Vendors will be released from any and all obligations arising under or in connection with the SPA, Deed of Grant and Powers of Attorney or otherwise in relation to the Consideration Shares and the SPA, Deed of Grant and Powers of Attorney will terminate with immediate effect. The investment in Lush which has been recorded as an asset valued at £216,802,001 in the consolidated financial statements of the Company will cease to be an asset of the Group.

2. Capital Reduction - Procedure

As set out in paragraph 1 above, the Company must obtain Shareholder consent in order to implement the Capital Reduction. The Resolution will, subject to the confirmation of the Court, cancel all of the Consideration Shares, cancel the Share Premium Account in its entirety and release the Lush Vendors from any and all obligations arising under or in connection with the SPA, Deed of Grant and Powers of Attorney or otherwise in relation to the Consideration Shares and terminate the SPA, Deed of Grant and Powers of Attorney with immediate effect.

In accordance with Article 14.3 of the Articles, the Company has the power at any time, by special resolution to reduce its share capital and subject to compliance with applicable legislation, to cancel the Consideration Shares by way of a reduction of capital.

If the Resolution is duly passed at the GM, it is the current intention of the Company thereafter to apply to the Court for confirmation of the cancellation of the Consideration Shares and the cancellation of the Share Premium Account. The Capital Reduction will take effect when an order of the Court confirming the Capital Reduction, and a statement of the capital approved by the Court, have been registered by the Registrar of Companies.

Provisional dates have been obtained for the required Court hearings of the Company's application, but they are subject to change and are dependent on the Court's timetable. It is anticipated that the initial directions hearing in relation to the Capital Reduction will take place on 25 March 2024, with the Court Hearing taking place on 16 April 2024 and assuming the Court grants the Court Order, the Capital Reduction becoming effective on or around 18 April 2024, upon the registration of the Court Order and statement of capital at Companies House. This indicative timetable also assumes that, subject to compliance with all procedural requirements, the Registrar of Companies is able to register the documents a few working days after the Court Hearing.

In order to approve the Capital Reduction, the Court will need to be satisfied that the interests of the creditors of the Company (including contingent creditors) as at the date the Capital Reduction takes effect are protected and accordingly will not be prejudiced. Any such creditor protection may include (amongst other possible methods) seeking the consent of the Company's creditors to the Capital Reduction, demonstrating to the Court the sufficiency of the Company's liquid assets, or the provision by the Company to the Court of an undertaking either to deposit a sum of money into a blocked account created for the purpose of discharging any non-consenting creditors, or not to distribute the reserves created by the Capital Reduction until non-consenting creditors in existence at the date of the Capital Reduction have been discharged.

It is the Board's current intention, given the relatively small number of material creditors of the Company, that consent to the Capital Reduction will have been sought from such creditors prior to the Company seeking the approval of the Court. If obtained, the Directors anticipate that such consents will satisfy the Court regarding the protection of creditors' interests. The Court may, however, direct that other measures be taken before approving the Capital Reduction as described above. The terms upon which the Court is willing to approve the Capital Reduction are, ultimately, for the Court to determine and the Company may give to the Court such undertaking as it is advised is appropriate.

No votes will be cast in relation to the voting rights attaching to the Consideration Shares at the General Meeting, although the Lush Vendors do intend to exercise the voting rights attached to the other Ordinary Shares held by them to vote in favour of the Resolution. The Lush Vendors have also consented to the proposed Capital Reduction pursuant to the terms of the Settlement Deed. 

3. Effect of the Capital Reduction

If approved by Shareholders and confirmed by the Court, the Capital Reduction will result in (i) the cancellation of the Consideration Shares, (ii) the cancellation of the Share Premium Account and (iii) the release of the Lush Vendors from any and all obligations arising under or in connection with the SPA, Deed of Grant and Powers of Attorney or otherwise in relation to the Consideration Shares and the termination of the SPA, Deed of Grant and Powers of Attorney with immediate effect. Assuming that the Capital Reduction becomes effective and that no new Ordinary Shares are issued between the Latest Practicable Date and the Capital Reduction taking effect, the Company's issued share capital will comprise 42,500,176 Ordinary Shares.

Trading in the Ordinary Shares on the Aquis Growth Market is expected to be restored on or around 19 April 2024, subject to the registration of the Court Order and statement of capital at Companies House. Should there be any change to this date, the Company shall inform Shareholders by making an appropriate announcement via a regulatory information service.

There will be no change to the Company's Aquis Growth Market symbol (TIDM - SLWD), ISIN (GB00BNRRGD95) SEDOL (BNRRGD9) or LEI (213800MOKU1KYZUFYZ40).

4. Concert Party Interests

Assuming that the Capital Reduction becomes effective and that no new Ordinary Shares are issued between the Latest Practicable Date and the Capital Reduction taking effect, the remaining members of the Concert Party (as described and defined in the Company's announcement of 12 December 2022) will be interested in Ordinary Shares as follows:

*This holding comprises shares held jointly and individually in the names of Andrew Gerrie and his wife, Alison Hawksley, together with shares held by Silver Americum Limited, a company in which Andrew Gerrie and Alison Hawksley each hold separate 20% stakes.

Assuming that the Capital Reduction becomes effective on the basis set out above, the Concert Party's aggregate interest in the voting rights of the Company will reduce to 74.49% of the voting share capital of the Company. For so long as the Concert Party holds more than 50% of the Company's voting share capital and its members are presumed to be acting in concert, they may increase their aggregate interests in the Ordinary Shares in the Company without incurring any obligation under Rule 9 of the Takeover Code to make a mandatory offer for the remaining shares, although individual members of the Concert Party would not be able to increase their percentage interest in the Ordinary Shares of the Company through 30% without the consent of the Panel.

5. General Meeting

The General Meeting is scheduled to be held at the offices of Peterhouse Capital Limited at 80 Cheapside, London, EC2V 6EE on 8 March 2024 at 11.00 a.m. as set out in the Notice of General Meeting at the end of this document.

Resolution

The Resolution proposes, subject to Court confirmation, to (i) cancel the share premium account of the Company,  (ii) reduce the share capital of the Company by the cancellation of the Consideration Shares and (iii) to release the Lush Vendors from any and all obligations arising under or in connection with the SPA, Deed of Grant and Powers of Attorney or otherwise in relation to the Consideration Shares and to terminate the SPA, Deed of Grant and Powers of Attorney with immediate effect.

The Resolution proposed is a special resolution. A special resolution requires 75% of the votes cast at the meeting in favour of the special resolution for it to pass.

Registered Shareholders can submit questions about the Capital Reduction and/or about the Company in advance of the meeting by email to: info@silverwoodbrands.com by 11.00 a.m. on 6 March 2024, in order for the Company to prepare, where appropriate and in accordance with regulations, informed responses for the GM. When submitting questions, registered Shareholders must provide the registration details of their shareholding so that the Company can identify them as a Shareholder.

6. Action to be taken

Proxy votes should be submitted as early as possible and, in any event, no later than 48 hours (excluding any part of a day that is not a working day) before the time for the holding of the GM or any adjournment of it.

A hard copy proxy form accompanies this document. To be valid, any hard copy proxy form or other instrument appointing a proxy must be received by post or (during normal business hours only) by hand at the Company's registrars Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, B62 8HD, no later than 48 hours (excluding any part of a day that is not a working day) before the time for the holding of the GM or any adjournment of it.

Alternatively, if you are a member of CREST, you may register the appointment of a proxy by using the CREST electronic appointment service. Further details are contained in the notes to the Notice of General Meeting set out at the end of this document.

7. ​Recommendation

The Independent Directors consider that the Capital Reduction is in the best interests of the Company and its shareholders as a whole. Accordingly, the Independent Directors unanimously recommend that Shareholders vote in favour of the proposed Resolution as the Independent Directors, to the extent they hold any shares, intend to do in respect of their own beneficial holdings. For the avoidance of doubt, no voting rights will be exercised in relation to the Consideration Shares. However, Mr Gerrie and Ms Hawksley will be exercising their voting rights attached to the other Ordinary Shares that they hold in the Company to vote for the Resolution.  Those holdings together with the holdings of the Independent Directors represent approximately 42 % of the voting share capital of the Company (excluding the Consideration Shares).   In the event that either the Resolution is not passed at the GM, or the Capital Reduction is not confirmed by the Court, it is unlikely that trading in the Company's Ordinary Shares on the Aquis Growth Market will resume and trading in the Company's Ordinary Shares could be subject to withdrawal from trading by Aquis Exchange.   In such circumstances, the Company would also need to explore other options to unwind the Lush Transaction.

Yours faithfully

PAUL HODGINS

NON-EXECUTIVE DIRECTOR

FOR AND ON BEHALF OF SILVERWOOD BRANDS PLC"

Sonotas

Further to the Company's announcement of 30 June 2023, Silverwood has now settled the deferred consideration due to Andrew Tone, a Director of the Company, in respect of the Company's  acquisition of the Sonotas Group.

Cash consideration of approximately £2,075,887 million has been paid from the Company's existing resources in settlement of the deferred consideration due of ¥341,103,296 (approximately £1,805,119), with an agreed 15% premium applied in accordance with the terms announced on 30 June 2023.

--Ends--