Announcement PDF ASX Release RETAIL ENTITLEMENTS OFFER OPENS AND DISPATCH OF OFFER DOCUMENTS TO ELIGIBLE RETAIL SHAREHOLDERS Melbourne, Australia, 19 June, 2024: Vinyl Group Ltd (ASX: VNL), Australia’s only ASX-listed music Company, today announces that it has dispatched the Offer documents to Eligible Retail Shareholders participating in the fully underwritten pro rata accelerated non-renounceable entitlement offer previously announced to raise approximately A$5.4 million. Retail Entitlement Offer Eligible retail shareholders with a registered address in Australia or New Zealand as at 7.00pm (Sydney time) on Monday 17 June 2024 (Record Date), not being US persons or acting for the account or benefit of persons in the US (Eligible Retail Shareholders) will be invited to participate in the Retail Entitlement Offer at the same Offer Price and offer ratio as the Institutional Entitlement Offer. The Retail Entitlement Offer will open at 9.00am (Sydney time) on Wednesday, 19 June 2024 and close at 5.00pm (Sydney time) on Wednesday, 3 July 2024. Eligible Retail Shareholders can choose to take up all, or part or none of their Entitlement under the Entitlement Offer. In addition to each Eligible Retail Shareholder's Entitlement under the Retail Entitlement Offer, Eligible Retail Shareholders will be offered the opportunity to apply for additional New Shares under a Shortfall Facility. Eligible Retail Shareholders are not assured of being allocated any New Shares in excess of their Entitlement under the Shortfall Facility. The Company retains absolute discretion regarding allocation under the Shortfall Facility. If Eligible Retail Shareholders take no action, they will not be allocated New Shares and their Entitlements will lapse. Eligible Retail Shareholders who do not take up their Entitlements in full under the Retail Entitlement Offer will not receive any value or payment for those Entitlements they do not take up. The Retail Entitlement Offer is non-renounceable and cannot be traded on ASX or any other exchange, nor can it be privately transferred. The Prospectus for the Retail Entitlement Offer was dispatched to eligible retail shareholders today either by email (if they have elected to receive electronic communications only), online or by post together with a personalised Entitlement and Acceptance Form. The terms and conditions under which Eligible Retail Shareholders may apply are outlined in the Offer Document, included in this announcement. Vinyl Group Ltd | 11 Wilson Street, South Yarra VIC 3141 | ABN 15 106 513 580 | ASX: VNL Existing Shareholders with a registered address outside Australia and New Zealand on the Record Date or who are acting for the account or benefit of persons in the United States will be ineligible to participate in the Retail Entitlement Offer. The presentation can also be found on our investor page at https://investors.vinyl.group/. Authorisation and Additional Information: This announcement was authorised by the Board of Vinyl Group Ltd Vinyl Group Investor Relations: E: investors@vinyl.group -Ends- Vinyl Group Ltd | 11 Wilson Street, South Yarra VIC 3141 | ABN 15 106 513 580 | ASX: VNL ABOUT VINYL GROUP Vinyl Group is the heartbeat of an equitable music world, providing tech solutions that connect and give credit to the creator economy. The Company’s diverse portfolio has touchpoints across all corners of the global music ecosystem, empowering everyone from creators to consumers. Vinyl.com offers a world-class ecommerce experience including over 50K titles for fans to support their favourite artists. Vampr is a leading dedicated social-professional networking platform and talent marketplace, allowing 1.3M creators to discover collaborators and monetise their work in over 180 countries. Jaxsta is the world’s largest and only database of official music credits with over 380M verified credits to streamline revenue opportunities for businesses in the music industry. The Brag Media is Australia’s largest creator of premium youth content and events and publishes iconic titles including Rolling Stone AU/NZ, Variety Australia, TheBrag.com, The Music Network, Tone Deaf, and more. Vinyl Group Ltd | 11 Wilson Street, South Yarra VIC 3141 | ABN 15 106 513 580 | ASX: VNL VINYL GROUP LTD ABN 15 106 513 580 (ASX: VNL) RETAIL ENTITLEMENT OFFER BOOKLET Details of a 1 for 17 non-renounceable pro-rata entitlement offer of fully paid ordinary shares in Vinyl Group Ltd at an issue price of A$0.098 per New Share to raise A$5,415,567 (Entitlement Offer). The Retail Entitlement Offer opens on 19 June 2024 and closes at 5.00pm (AWST) on 3 July 2024. Valid acceptances must be received before that time. This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its content or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser without delay. Applications for New Shares by Eligible Retail Shareholders can only be made by using or following the instructions on an Entitlement and Acceptance Form, as sent with this Offer Document. The Entitlement and Acceptance Form sets out Eligible Retail Shareholders' Entitlements to participate in the Retail Entitlement Offer. Please read the instructions in this document and on the accompanying Entitlement and Acceptance Form regarding the acceptance of your Entitlement. If you have any queries, please contact the Company Secretary at investors@vinyl.group or consult your stockbroker, accountant or other independent professional adviser. The New Shares offered by this Offer Document should be considered speculative. 1 TABLE OF CONTENTS IMPORTANT INFORMATION 4 1 CEO’S LETTER 2 2 INDICATIVE TIMETABLE 3 3 DETAILS OF THE RETAIL ENTITLEMENT OFFER 4 3.1 Overview of the Retail Entitlement Offer 4 3.2 Background to the Retail Entitlement Offer 4 3.3 Underwriting and sub-underwriting arrangements 5 3.4 Entitlements and acceptance 5 3.5 No Rights Trading 5 3.6 Ineligible Shareholders 5 3.7 Notice to nominees and custodians 6 3.8 Opening and closing dates 6 3.9 Issue and Despatch 6 3.10 Application Monies held on trust 6 3.11 Entitlement and Acceptance Forms and BPAY® payments 7 3.12 ASX Quotation 7 3.13 CHESS 7 3.14 Risk factors 7 3.15 Withdrawal 8 3.16 Enquiries concerning Offer Document or Entitlement and Acceptance Form 8 4 ACTION REQUIRED BY APPLICANTS 9 4.1 Eligible Retail Shareholders 9 4.2 How to accept the Offer 9 4.3 Enquiries concerning your Entitlement 9 4.4 Ineligible Shareholders 10 4.5 Payment by BPAY® 10 4.6 Representations by Applicants 10 4.7 Brokerage 12 5 INVESTOR PRESENTATION 13 6 PURPOSE AND EFFECT OF THE ENTITLEMENT OFFER 47 6.1 Reason for the Entitlement Offer 47 6.2 Use of proceeds 47 6.3 Historical and pro forma financial position 48 6.4 Capital Structure 48 6.5 Effect on the control of the Company 48 6.6 Dilution 49 2 6.7 Directors Interests and Participation 49 6.8 Substantial shareholders 50 6.9 Underwriting 50 6.10 Rights and liabilities attaching to New Shares 51 7 RISK FACTORS 52 7.1 Introduction 52 7.2 Risks specific to Vinyl Group’s business 52 7.3 General risks 57 7.4 Investment speculative 59 ADDITIONAL INFORMATION 60 9 9.1 Continuous disclosure obligations 60 9.2 Foreign jurisdictions 60 9.3 New Zealand 61 9.4 Governing Law 61 9.5 Taxation implications 61 10 GLOSSARY AND INTERPRETATION 62 10.1 Definitions 62 10.2 Interpretation 63 3 IMPORTANT INFORMATION No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this Offer Document. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer. or to any person to whom, it would be unlawtul to make such an offer or to issue this Offer Document. This document is not a prospectus It is not practicable for the Company to comply with the securities laws of all overseas jurisdictions (other than those mentioned above) having regard to the number of overseas Shareholders, the number and value of New Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, no action has been taken to permit the offer of New Shares to existing Shareholders in any jurisdiction other than Australia and New Zealand. This Offer Document has been prepared by Vinyl Group Ltd (ABN 15 106 513 580) (Company) and was lodged with ASX on 19 June 2024. This Offer Document is not a prospectus under the Corporations Act and has not been lodged with the ASIC. It does not contain all of the information that an investor would find in a prospectus or which may be required in order to make an informed investment decision regarding, or about the rights attaching to, the Shares offered by this document. The Offer is not being extended, and New Shares will not be issued, to Shareholders with a registered address which is outside Australia or New Zealand. United States Shareholders This Offer Document including each of the documents attached to it and which form part of this Offer Document are important and should be read in their entirety prior to making an investment decision. If you do not fully understand this Offer Document or are in any doubt as to how to deal with it, you should consult a professional adviser. Section 708AA of the Corporations Act The offer document has been prepared in accordance with section 708AA of the Corporations Act and applicable ASIC Corporations (Non-Traditional Rights Issue) Instrument 2016/84. In general terms, section 708AA permits certain companies to undertake rights issues without being required to use or provide to shareholders a prospectus or other disclosure document. Accordingly, the level of disclosure in this Offer Document is significantly less than the level of disclosure required in, and what you would expect in, a prospectus. Eligible Shareholders should rely on their own knowledge of the Company, refer to disclosures made by the Company to ASX and consult their professional advisers before deciding to accept the Offer. No updates to offer document Statements in this Offer Document are made only as of the date of this Offer Document unless otherwise stated and the information in this Offer Document remains subject to change without notice. The Company does not give any undertaking or representation that information in this Offer Document will be updated, except to the minimum extent required by law. Neither the Company nor any other person warrants or guarantees the future performance of the Company or any return on any investment made under this Offer Document. Overseas Shareholders This Offer Document does not, and is not intended to, constitute an offer in any place or jurisdiction in which, 4 This Offer does not constitute an offer in the United States of America, nor does it constitute an offer to a person who is a US Person or someone who is acting on behalf of a US Person. The Shares have not been, and will not be, registered under the US Securities Act 1933 (US Securities Act) and may not be offered or sold in the United States of America, or to, or for the account or benefit of, US Persons (as defined in Rule 902). Registration under the US Securities Act These Shares may only be resold or transferred if registered under the US Securities Act or pursuant to an exemption from registration under the US Securities Act and in compliance with state securities laws. The Company is under no obligation and has no intention to register the Shares in the United States of America. New Zealand Shareholders The New Shares are not being offered to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of these securities is being made in reliance on the Financial Markets Conduct (Incidental Offers) Exemption Notice 2021. This document has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013. This document is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain. Notice to nominees and custodians Shareholders resident in Australia or New Zealand holding Shares on behalf of persons who are resident overseas are responsible for ensuring that taking up an Entitlement under the Offer does not breach regulations in the relevant overseas jurisdiction. Return of a duly completed Entitlement and Acceptance Form will be taken by the Company to constitute a representation that there has been no breach of those regulations. Risk Factors An investment in New Shares should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are specific risks associated with an investment in the Company. Refer to Section 7 for details of the key risks applicable to an investment in the Company. Forward-looking statements This Offer Document contains forward-looking statements which are identified by words such as ‘may, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’ or ‘intends’ and other similar words that involve risks and uncertainties. information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Offer Document, except where required by law. These forward looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 7. Privacy Act If you complete an Entitlement and Acceptance Form, you will be providing personal information to the Company (directly or by the Company's share registry). The Company collects, holds and uses that information to assess your application, service your needs as a Shareholder, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Offer Document, are expected to take place. The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company's share registry. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of our Company, the Directors and our management. You can access, correct and update the personal information that we hold about you. Please contact the Company or its share registry if you wish to do so at the relevant contact numbers set out in this Offer Document. We cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Offer Document will actually occur and investors are cautioned not to place undue reliance on these forwardlooking statements. Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (Cth) (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. We have no intention to update or revise forwardlooking statements, or to publish prospective financial 2 You should note that if you do not provide the information required on the Entitlement and Acceptance Form, the Company may not be able to accept or process your application. 1 CEO’S LETTER Dear Shareholder On behalf of Vinyl Group Ltd, I am pleased to invite you to participate in a pro-rata nonrenounceable entitlement issue of one (1) New Share for every seventeen (17) existing Shares held by Eligible Shareholders on the Record Date at an Issue Price of $0.098 per New Share to raise approximately $5,415,567. The Offer closes at 5.00pm (AWST) on 3 July 2024. The Company intends to use the funds to fuel growth of our existing brands and to provide working capital in-line with our objective to become cash flow positive in the medium term. Further detail on the use of funds is set out in Section 6.2 below. Our 2024/2025 focus is on revenue growth, margin growth and expansion through strategic acquisition. Some of these activities will include: 1. Reduce Jaxsta technology costs by >55%; 2. Artificial intelligence R&D to deliver a superior customer experience, improved quality and faster results; 3. Increased spend on user acquisition for Vinyl.com and Vampr; 4. Further optimisation of The Brag Media operations to build upon the previously announced $750k per annum savings; and 5. Identify and qualify future acquisitions across the supply chain to improve GP margin. The Company anticipates that at the conclusion of the Offer, the company will have enough growth capital and working capital to achieve the above activities and put us in good stead as we head towards our held goal of profitability. The Offer is non-renounceable, and Entitlements will not be tradeable on ASX or otherwise transferable. Shareholders who do not take up their Entitlement in full will not receive any value in respect of those Entitlements they do not take up. I encourage you to consider this Offer carefully. As a Director eligible to participate in the Offer I intend to take up my respective Entitlements under the Offer. As such I urge you to participate in this issue. Yours sincerely Josh Simons Chief Executive Officer & Director 2 2 INDICATIVE TIMETABLE Announcement of the Entitlement Offer Record Date for determining Entitlements in the Retail Entitlement Offer Offer Booklet and Entitlement and Acceptance Forms sent out to Eligible Retail Shareholders Retail Entitlement Offer opens (Open Date) Retail Entitlement Offer closes* (Close Date) 5.00 pm (AWST) Retail Shortfall Bookbuild 13 June 2024 5:00 pm on 17 June 2024 19 June 2024 19 June 2024 5:00 pm on 3 July 2024 8 July 2024 Settlement of Retail Entitlement Offer 9 July 2024 Announcement of results of Retail Entitlement Offer 10 July 2024 Allotment of New Shares under the Retail Entitlement Offer Despatch of holding statements for New Shares under the Retail Entitlement Offer Normal trading on ASX of New Shares under the Retail Entitlement Offer commences 10 July 2024 10 July 2024 11 July 2024 The above timetable is indicative only and subject to change. Subject to the Listing Rules, the Directors reserve the right to vary these dates, including the Closing Date, without prior notice. Any extension of the Closing Date will have a consequential effect on the anticipated date for issue of the New Shares. 3 3 DETAILS OF THE RETAIL ENTITLEMENT OFFER 3.1 Overview of the Retail Entitlement Offer Eligible Retail Shareholders are being offered the opportunity to subscribe for 1 New Share for every 17 Shares held by Eligible Retail Shareholders as at the Record Date, being 5:00pm (AWST) on 17 June 2024, at the Offer Price of $0.098 per New Share (Retail Entitlement Offer). Eligible Retail Shareholders may also apply for New Shares in excess of their Entitlement under the Retail Shortfall Facility (Additional Shares). The allocation of any Additional Shares will be limited to the extent that there are sufficient New Shares available from Eligible Retail Shareholders who do not take up their full Entitlement. Additional Shares will be allocated by the Company in its absolute discretion. The Company may scale-back Applications for Additional Shares in its absolute discretion. In particular, the Company may scale-back Applications for Additional Shares if the allotment of Additional Shares would result in a Shareholder holding a ‘relevant interest’ (as that term is defined in the Corporations Act) in 20% or more of the Shares on issue. All of the Shares offered under the Retail Entitlement Offer will rank equally with the Shares on issue at the date of this Offer Document. Please refer to Section 6.10 for further information regarding the rights and liabilities attaching to the Shares. The Directors, may at any time decide to withdraw this Offer Document and the offer made under this Offer Document, in which case the Company will return all applications monies (without interest) within 28 days of giving notice of such withdrawal. 3.2 Background to the Retail Entitlement Offer The Retail Offer is part of the Entitlement Offer that was announced by the Company on 13 June 2024. The Entitlement Offer has two components: (a) an accelerated offer to Eligible Institutional Shareholders, which was completed on 14 June 2024 and resulted in the issue of 33,575,360 Shares to raise $3,290,385 (Institutional Entitlement Offer); and (b) an offer to Eligible Retail Shareholders, for the issue of 21,685,534 Shares to raise $2,125,182 (Retail Entitlement Offer) which is being made under this Offer Booklet. Both the Institutional Entitlement Offer and the Retail Entitlement Offer are nonrenounceable. Accordingly, Entitlements cannot be traded on the ASX, nor can they be sold, transferred or otherwise disposed of. The purpose of the Entitlement Offer is to raise funds to accelerate the growth of key product lines through investment in customer acquisition funding, development resources and working capital required to fund customer engagements in its Events business. Refer to Section 6.2 below for further detail on the proposed use of funds and reasons for the Entitlements Offer. 4 3.3 Underwriting and sub-underwriting arrangements The Entitlement Offer is fully underwritten by Peloton Capital Pty Ltd (Underwriter) to the full value of the Offer being A$5,415,568, which represents 55,260,894 New Shares. Peloton Capital Pty Ltd will serve as the Underwriter and Lead Manager and Red Leaf Securities will act as a the Sub-Underwriter. The Company and the Underwriter have entered into an Underwriting Agreement, the key terms of which are set out in Appendix A of the Investor Presentation and in Section 6.9 of this Offer Document. The Company advises that it has received a firm commitment letter from Realwise Group Holdings Pty Ltd for its full entitlement of 17,378,009 Shares ($1,703,045) under the Institutional Offer. The Company advises that it has received a firm commitment letter from Joshua Simons for his full entitlement of 1,347,410 Shares ($132,046) under the Institutional Offer. The Company advises that it has received a firm commitment letter from Robert Millner for its full entitlement of 213,030 Shares ($20,877) and a shortfall placement of $500,000 under the Institutional Offer. 3.4 Entitlements and acceptance The Entitlement of Eligible Retail Shareholders to participate in the Retail Entitlement Offer is determined on the Record Date. Your Entitlement is shown on the Entitlement and Acceptance Form accompanying this Offer Document. Acceptance of a completed Entitlement and Acceptance Form and Application Monies by the Company creates a legally binding contract between the Applicant and the Company for the number of New Shares and any Additional Shares accepted by the Company. The Entitlement and Acceptance Form does not need to be signed to be a binding acceptance of New Shares and any Additional Shares. Fractional entitlements will be rounded down to the nearest whole number. If an Entitlement and Acceptance Form is not completed correctly it may still be treated as valid. The Directors' decision as to whether to treat the acceptance as valid and how to construe, amend or complete the Entitlement and Acceptance Form is final. 3.5 No Rights Trading The rights to New Shares under the Entitlement Offer are non-renounceable. Accordingly, there will be no trading of rights on the ASX and you may not dispose of your rights to subscribe for New Shares under the Retail Entitlement Offer to any other party. If you do not take up your Entitlement by the Closing Date, the Retail Entitlement Offer to you will lapse. 3.6 Ineligible Shareholders Shareholders with a registered address outside Australia or New Zealand (Ineligible Shareholders) will not be able to participate in the Retail Entitlement Offer. 5 The Company will notify Ineligible Retail Shareholders of the details of the Retail Entitlement Offer and advise them that they are not eligible to participate in the Retail Entitlement Offer. The Company is of the view that it is unreasonable to make the Offer to the Ineligible Shareholders due to a small number of such Shareholders and the number and value of New Shares these Shareholders would be offered, the cost of complying with applicable regulations in jurisdictions outside Australia and New Zealand, and the administrative burden that will place on the Company in making the Offer available to Shareholders outside Australia and New Zealand. 3.7 Notice to nominees and custodians Eligible Retail Shareholders resident in Australia or New Zealand holding Shares on behalf of persons who are resident overseas are responsible for ensuring that taking up an Entitlement under the Retail Entitlement Offer does not breach regulations in the relevant overseas jurisdiction. Return of a duly completed Entitlement and Acceptance Form will be taken by the Company to constitute a representation that there has been no breach of those regulations. 3.8 Opening and closing dates The Company will accept Entitlement and Acceptance Forms in respect of the Retail Entitlement Offer from Eligible Retail Shareholders from the Opening Date until 5.00pm (AWST) on the Closing Date or such other date as the Directors shall determine, subject to the Listing Rules. A completed Entitlement and Acceptance Form, or payment made by BPAY®, must be received no later than 5.00pm (AWST) on the Closing Date. It is the responsibility of all Eligible Retail Shareholders to ensure that their Entitlement and Acceptance Form or BPAY® payments are received by the Company on or before the Closing Date. 3.9 Issue and Despatch It is the responsibility of Applicants to determine their allocation prior to trading in New Shares. Applicants who sell New Shares before they receive their holding statements will do so at their own risk. The expected dates for the issue of New Shares offered by this Offer Document and dispatch of holding statements is expected to occur on the dates specified in the Indicative Timetable set out in Section 2 of this Offer Document. 3.10 Application Monies held on trust Pending the issue of the New Shares or payment of refunds pursuant to this Offer Document, all Application monies will be held by the registry in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest by completing and returning the Entitlement and Acceptance Form. 6 3.11 Entitlement and Acceptance Forms and BPAY® payments Acceptance of a completed Entitlement and Acceptance Form, or alternatively, a BPAY® payment, by the Company creates a legally binding contract between the Applicant and the Company for the number of New Shares accepted by the Company. The Entitlement and Acceptance Form does not need to be signed to be a binding acceptance of New Shares. If the Entitlement and Acceptance Form is not completed correctly it may still be treated as valid. The Directors' decision whether to treat a completed Entitlement and Acceptance Form as valid and how to construe, amend or complete the Entitlement and Acceptance Form is final. 3.12 ASX Quotation Application for official quotation by ASX of the New Shares offered pursuant to this Offer Document will be made. If ASX does not grant official quotation of the New Shares within three months after the date of this Offer Document (or such period as the ASX allows), no New Shares will be issued or allotted under the Offer and the Company will return all Application Monies without interest in accordance with the Corporations Act. The fact that ASX may grant official quotation to the New Shares is not to be taken in any way as an indication of the merits of the Company or the New Shares. 3.13 CHESS The Company is a participant in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation. Electronic registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with a statement (similar to a bank account statement) that sets out the number of New Shares allotted to them under this Offer Document. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month. 3.14 Risk factors An investment in New Shares should be re