The Hydration Pharmaceuticals Company (ASX: HPC), doing business as Hydralyte North America, secured a $12 million loan facility to fund its growth plans in the United States and Canada.
Existing boutique asset manager and major shareholder, PURE Asset Management, provided the funds via a two-tranche secured facility.
The first installment is $6.5 million, with the remaining $5.5 million available for withdrawal within 365 days of the agreement.
The repayment date was set at 48 months after the date of use of the first installment and includes interest of 10% per year.
The financing includes strip warrants that will be issued to PURE once each tranche has been utilized. The first tranche warrants will be exercisable at a price representing the lesser of $0.29, or a 20% discount to the price of any change of control transaction, or an anti-dilution price adjustment.
Hydralyte North America CEO Oliver Baker said the company was “very happy” to secure the loan from PURE, which has supported its journey for two years.
“The terms of the financing reflect their confidence in our ability to deliver on our grand ambitions for the brand, with a four-year repayment period, this gives the company considerable time to accelerate its growth trajectory.”
North America Hydralyte Products
Hydralyte North America has developed a line of liquid, tabletop, and powder “healthy hydration solutions.”
The products are combined with various vitamins, minerals, prebiotics and electrolyte salts in a more bioavailable liquid format to provide rapid rehydration along with other health benefits.
In the first half of fiscal 2022, the company launched new high-margin Hydralyte+ Liver Support and Hydralyte+ Stress Relief product SKUs with Ashwagandha.
Driving continuous growth
Baker said the new funding will be used to “drive continued growth” in three key areas of the business: distribution across Canada, building the U.S. store and e-commerce branches, and launching the product. Shay Mitchell co-branded SKU.
Ms. Mitchell is a renowned North American actress and a well-followed brand ambassador on social media.
Mr. Baker said the co-branded product SKU was “already generating significant buzz” in the market.
The timing of the additional financing will allow Hydralyte North America to accelerate its growth momentum, which has further accelerated during the northern summer period.
In the September 2022 quarter, the company achieved a 62% increase in Amazon sales in the United States compared to the same period in 2021.
E-commerce revenue grew 5-12% per month throughout fiscal 2022.
Hydralyte North America has also seen strong adoption of its products on Walmart Canada, with year-to-date sales up 92%.