Cannabis firm Zoetic raises £0.39m from individual investor

Cannabidiol company Zoetic International has raised £0.39m through a subscription for £0.33m of convertible loan notes and 950,000 ordinary shares at a price of 6p each, it announced on Wednesday, by an individual, John Story.

The London-listed firm said the proceeds would be applied primarily to accelerate the contract manufacturing of Zoetic's products in the United States.

As the company announced on 5 February, subject to concluding a successful trial with the contract manufacturers in the coming weeks, Zoetic was targeting entering into supply contracts with two major distributors, with the aim of supplying initial stores in their network by the spring of 2020.

The firm said the loan notes were non-transferable, unsecured and convertible into new ordinary shares in Zoetic at a conversion price of 6p each at any time during its next financial year to 31 March 2021, when they mature.

Conversion could take place in part or in whole, it explained.

Prior to conversion or repayment, the loan notes carried an interest coupon of 7% per annum, payable on 31 March and 30 September, with interest to be paid in cash with no right to convert accrued interest.

The subscription shares comprised the 950,000 currently held by the company in treasury.

“I am delighted to welcome John Story as an investor in Zoetic,” said chief executive officer Nick Tulloch.

“Taking his investment in shares and loan notes together, he is becoming one of our largest stakeholders and, in addition to his financial investment, he has already been willing to assist our business development by introducing us to certain retail stores in the UK.

“With Mr Story's support, we are able to accelerate the plans we outlined in our trading update last week.”

Tulloch said the company had an “exciting opportunity” with AATAC and New Age Beverage Corporation to “significantly expand” its sales of ‘Chill’ products in the US.

“The key to securing these contracts is to successfully outsource bulk manufacturing and the new funds give us the ability to progress our plans immediately.”

At 1424 GMT, shares in Zoetic International were up 5.97% at 7.52p.