REG - Chill Brands Group - Directorate Change & Company Update

Chill BrandsAnnouncement

10/06/2024 07:00

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RNS Number : 7036R  Chill Brands Group PLC  10 June 2024

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

10 June 2024

Chill Brands Group plc

("Chill Brands" or the "Company")

 

Directorate change

and

Company update

 

 

 

Further to the announcement of 4 June 2024, the board of directors of Chill
Brands (the "Board") today provides an update on the position of the Company
following initial investigations carried out by the newly appointed Board.

Directorate Change

 

The Board also announces that it received a notification on 7 June 2024 from
Eric Schrader that he is stepping down from his role as a Non-Executive
Director and will leave the Board with immediate effect. Mr Schrader's work as
an independent contractor to the Company will also cease on 30 June 2024.
The Board has commenced a search for an additional independent Non-Executive
Director and expects to appoint one prior to this year's Annual General
Meeting, which is expected to be held in September 2024.

Company Update

Following its formation on 4 June 2024, the new Board commenced a review of
the Chill Brands' operations so that the Company is able to issue a trading
update to the market. The initial findings of this review are as follows:

·    Following the receipt of the notice requisitioning a general meeting
of the Company's shareholders to vote on certain changes to the Board (the
"GM") and the subsequent suspension by the Board of Callum Sommerton as the
Company's Chief Executive Officer, Antonio Russo (Chief Commercial Officer)
and Trevor Taylor (Chief Operating Officer) exercised executive management
control over the Company and its subsidiaries (together, the "Group") until
the conclusion of the GM on 4 June 2024.

·    Antonio Russo and Trevor Taylor failed to recommend to the Board any
candidates to appoint an Interim Chief Executive Officer despite repeated
requests from the Non-Executive Directors at the time.

·    Throughout May 2024, Mr Taylor and Mr Russo took preparatory steps to
transfer the registration of the Chill.com domain (the "Domain") from the
Company to themselves. They did not have Board authorisation to do so. These
activities appear to have culminated in the transfer of the domain's
registration to an account seemingly held and operated by Antonio Russo. The
transfer of the Domain registration completed on 31 May 2024, without Board
authority or knowledge.

·    At a Board meeting held on the evening (UK time) of 3 June 2024 (the
day before the GM), a resolution was proposed by Trevor Taylor for the
transfer of the Domain and certain of the Company's trademarks to Chill North
America, LLC ("CNA"), an entity controlled by Antonio Russo. An associated
leaseback of their use to Chill Brands was also proposed. No final documents
in executable form were presented to the Board and a vote of approval was
forced through, despite the objections of the Company's sole independent
Non-Executive Director. No disclosure was made at the Board meeting that the
Domain had been transferred already from the Company to an entity controlled
by Antonio Russo. The Company has initiated actions to recover the ownership
of the Domain.

·    There is currently no interruption to the business carried out by
Chill Brands on the Domain.

·    The suspension of the Company's shares on 3 June 2024 was because the
Company was unable to provide the market with an update on its trading. The
Board, based on the initial findings of its review, now believes that any
announcement or trading update issued by Chill Brands prior to the suspension
of trading in the Company's shares would have had to disclose the transfer of
the Company's major asset to an account controlled by Antonio Russo.

 

·    The Board has also discovered that, on 3 June 2024, payments
totalling almost $400k were made from the bank account of the Group's US
subsidiary to Antonio Russo and Trevor Taylor's personal US bank accounts.
These payments were not approved by the Board and were not notified to the
Board at their meeting held on the day. The Company's Board is seeking a
proper explanation from Trevor Taylor and Antonio Russo for these payments,
and the recovery of these funds through all legal means available.

·    The Board is examining the involvement of certain advisers appointed
by Mr Russo and Mr Taylor in facilitating the actions outlined above. The
Board will take appropriate action in relation to any misfeasance.

As a result of the initial findings of the investigation, the Board cannot yet
provide a full trading and financial update and will not seek a restoration of
trading of the Company's ordinary shares until it is in a position to provide
such an update. The Board is also working to provide an update regarding a
number of commercial arrangements that the Company has entered into connected
to its UK vape business, to the satisfaction of the investigation announced by
the Company on 3 and 4 of June 2024.

Harry Chathli, Non-Executive Chairman of Chill Brands, said: We are totally
shocked by the extent of destructive behaviour and actions of Mr Taylor and Mr
Russo. It is evident that they have not acted in good faith and their actions
have been motivated by self-interest rather than for the benefit of the
Company or its shareholders. The Company has commenced an investigation to
uncover if any professional advisers or persons had assisted them in their
actions to defraud the business. Shareholders can be assured that the current
Board will work unceasingly to ensure restoration of trading of shares and
seek to regain the positive momentum achieved in the year to 31 March 2024.

 

We will provide a further update to shareholders in the near future as matters
progress."

 

-ENDS-

About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an international consumer
packaged goods company focused on the development, marketing and distribution
of wellness and recreational products. The Company's proprietary nicotine-free
vapour products cater to the rapidly growing market for tobacco alternatives
and are distributed by some of leading retail stores in the US and UK. Chill
Brands also operates the chill.com e-commerce website, on which it is building
a marketplace of products from third-party brands.

 

Publication on website

A copy of this announcement is also available on the Group's website at
(http://www.chillbrandsgroup.com/) http://www.chillbrandsgroup.com
(http://www.chillbrandsgroup.com/)

 

Media enquiries:

 Chill Brands Group plc                                      +44 (0)20 4582 3500

 Harry Chathli, Chairman
 Allenby Capital Limited (Financial Adviser and Broker)      +44 (0) 20 3328 5656
 Nick Harriss/Nick Naylor/Lauren Wright (Corporate Finance)

Kelly Gardiner (Equity Sales)

 

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