The Hydration Pharmaceuticals Company secures loan to drive expansion throughout the US and Canada

The Hydration Pharmaceuticals Company (ASX: HPC), which trades as Hydralyte North America, has secured a $12 million loan facility to fund its growth plans across the United States and Canada.

Boutique asset manager and existing substantial shareholder PURE Asset Management has provided the funds via a two-tranche secured facility.

The first tranche is for $6.5 million, with the remaining $5.5 million available to be drawn within 365 days of the agreement.

Repayment date has been set at 48 months after the date of utilisation of the first tranche and includes a 10% per annum interest.

Funding includes detached warrants which will be issued to PURE once each tranche has been used. First tranche warrants will be exercisable at a price representing the lower 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 chief executive officer Oliver Baker said the company was “very pleased” to secure the loan from PURE, which has been supporting its journey for two years.

“The terms of the funding reflect their confidence in our ability to meet our large ambitions for the brand, with a four-year repayment period, it allows considerable time for the company to expedite its growth trajectory.”

Hydralyte North America products

Hydralyte North America has developed a range of liquid, table and powder “healthy hydration solutions” products.

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.

During the first half of FY2022, the company launched new high-margin stock keeping units (SKU) products Hydralyte+ Liver Support and Hydralyte+ Stress Relief with Ashwagandha.

Driving continued growth

Mr Baker said the new funding will be used to “drive continued growth” across three key parts of the business: distribution throughout Canada, building the US store and e-commerce arms and launching of the Shay Mitchell co-branded SKU product.

Ms Mitchell is a renowned North American actress and brand ambassador with a strong social media following.

Mr Baker said co-branded SKU product was already “generating significant buzz” in the market.

The timing of the extra funding will enable Hydralyte North America to accelerate its growth momentum, which gained further traction during the northern summer period.

During the September quarter 2022, the company achieved a 62% increase in Amazon US sales compared to the same time in 2021.

E-commerce revenue had risen at between 5-12% per month throughout FY2022.

Hydralyte North America also noted strong uptake for its products on Walmart Canada, with year-to-date sales up 92%.