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Ambitious beer dreams go flat at Broo
An underdog beer company that listed on the ASX six years ago faces an uncertain future as it completes a strategic review and restructuring as its sharemarket capitalisation has dropped below $9 million.Broo, which sells Broo Premium Lager and Australia Draught and champions an Australiana theme with a silhouette of a kangaroo on the label, is set to come out of a trading halt on the ASX on Wednesday.
The group’s shares reached as high as 39¢ in late 2017 but since tumbled to 0.9¢.Broo suffered a heavy interim loss of $2.9 million. It has a new set of directors controlling the boardroom after founder and major shareholder Kent Grogan stepped down as chief executive on April 8 to take on a lesser role as general manager of Broo Beer.The new chairman is Kobe Li, who had previously spent eight years at the ASX overseeing compliance by companies with the exchange’s listing rules.
Another director, David Zhu, has been made executive director. They represent the interests of 61 Corporate Advisory, which has been granted 30 million unlisted options in the company at an exercise price of 2.5¢, expiring in January 2025.Another new director appointed last month is George Karafiotis, who is also CEO of the ASX-listed infant formula company Wellnex.Wellnex, which changed its name from Wattle Health in mid-2021, sells a new organic infant formula brand called Ocean Road Dairies that will be on the shelves of Chemist Warehouse. Wattle Health had a volatile history on the exchange, and was briefly a sharemarket darling in early 2018 but then crashed to heavy annual losses in financial 2020 and spent almost 18 months off the ASX boards with its shares in suspension. Broo’s new chairman, Mr Li, is also a director of Wellnex.Broo in 2017 announced plans for a $100 million-plus “green” brewery on land near Ballarat that was supposed to be an environmental showpiece. That has not happened, and on April 22 Broo announced that a plan to raise $7.5 million by selling that vacant land to Bentley Property Group, was not going ahead and that the deal had been terminated.The trading halt notice lodged by Broo with the ASX on Monday said the halt was for “a market update in relation to a restructure of the company”.In 2020, Broo signed a two-year deal with Carlton & United Breweries for CUB to brew Broo Premium Lager and Australia Draught at CUB’s Yatala brewery in south-east Queensland.Broo listed in October 2016 as a brewing underdog using its Australian-owned status as a challenger to CUB and Lion, which are both foreign-owned.It listed via a $10.5 million capital raising at an issue price of 20¢. Many of its shareholders took up stock in 2011 when Broo was an unlisted public company. They were each given 10 shares after buying a carton of Broo beer in a special promotion designed to accelerate sales at the company.
BEE Price at posting:
0.9¢ Sentiment: None Disclosure: Not Held
