Following on from this morning’s financial resultsand announced pause in share trading, Lark Distilling Co has released the details of its $22.5 million equity raising. It has also announced a 10-year Strategic Partnership with Seppeltsfield Wines, which has committed to subscribe for $14.5 million of the new capital.
The $22.5 million capital raising will be split into three components - a $6.5 million institutional placement that has already been successfully completed, a $15 million conditional placement, and a $1 million non-underwritten share purchase plan.
Lark’s CEO Sash Sharma said, “upweighted brand and marketing spend will see Lark investing ahead to enhance Global appeal and build awareness, positioning us well for success in new markets and channels. Additionally, we plan to enhance our cellar door experience in Hobart to better engage with our consumers and trade partners.
“This investment also supports further development of the Pontville site, expanding production and storage capacity as we aim to establish Pontville as the long-term home of the Lark brand."
Already completed, the Institutional Placement offer raised $6.5 million via issuing approximately 7.6 million new shares - approximately 10.1% of Lark’s existing issued capital - at a price of $0.85 each.
"We are very pleased with the strong level of support from shareholders as we execute on our strategic priorities," said Sharma.
"The proceeds from the Institutional Placement will contribute to providing Lark with balance sheet flexibility to invest in the Lark brand and facilities to drive the export strategy and accelerate growth."
The Share Purchase Plan will give eligible Lark shareholders the chance to subscribe a maximum of $30,000 of new shares at a price of $0.85 per share. Lark intends to raise up to $1 million via this non-underwritten plan.
The Conditional Placement will raise $15 via investment from Lark’s Directors. This includes both new Chair Domenic Panaccio and former Chair David Dearie committing $0.25 million each, and Director Warren Randall committing $14.5 million via Seppeltsfield Wines, of which he is the proprietor.
Today, Lark also announced a new long-term strategic partnership with Seppeltsfield Wines. Through this partnership, Lark will have access to the Barossa wine brand’s portfolio of fortified, tawny, muscat, tokay, Pedro Ximenez, and Oloroso barrels, providing Lark with the scope to upscale and expand both domestically and internationally. In its ASX announcement, Lark alluded to other recent successful international partnerships between wine and whisky producers, including Macallan’s partnership with Grupo Estevez.
"The strategic partnership with Seppeltsfield marks a significant milestone for Lark,” said Sharma.
“In providing security of access to some of the world's highest quality barrels, the strategic partnership with Seppeltsfield creates further competitive advantage for Lark in an integral part of our Whisky making process.
“The partnership also lays a solid foundation for Lark's future portfolio and brand offerings.”
Lark has signed a 10-year agreement with Seppeltsfield Wines that includes exclusivity to selected fortified barrels over five years old, first right of refusal over all other fortified barrels, and exclusivity on naming rights and usage in relation to whisky products. Last year’s release of Seppeltsfield’s flagship tawny - the 100-Year-Old Para Vintage Tawny 1923 - received 100 points in the 2024 Halliday Wine Companion Awards and was entered into the James Halliday Hall of Fame.
Sharma said, “this, in addition to the equity raise being undertaken, will equip Lark with the resources to continue to produce exceptional whisky while providing the balance sheet flexibility to invest in our brands, facilities and distilling production. Our goal is to accelerate our growth and drive increased shareholder returns through these strategic initiatives.”
Lark will have the option to extend the agreement for a further 10 years once the current agreement expires.
Lark has also provided an overview of how it intends to spend its raised capital. In a table published to the ASX, Lark said it will invest $5 million towards its Pontville plant and equipment and cellar door investment; $9 million towards brand restage - portfolio and positioning development and export market brand investment including GTR expansion; and $7 million towards working capital and general corporate purposes.
The capital raising will be conducted throughout August, with the new shares in Lark Distilling Co expected to be settled and integrated into normal trading by early September.
The announced capital raising and strategic partnership coincides with Lark’s final results for the 2024 Financial Year. This saw a total revenue of $14 million for the year, down $3.1 on FY23. A more thorough analysis of results can be found in this Drinks Trade article.
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