Despite significant cuts to costs, we're still operating at a loss - not great. Some good progress but we missed our Q2 $6m divestment target by 11%
Debt still very high
Loan Facility is with Pure Asset Management, $20m Facility, 3 year term, 11.5% interest rate, Pure Asset Management have first ranking security over assets of company and subsidiaries.
Loan with SVC Limited is short-term, 6 month loan with 25% interest, with repayment in February 2024. $876,000 of this loan was repaid during the quarter ending 31 December 2023. (as of 31 Jan this is now $1.7m repaid).
That 25% interest is brutal. I have little doubt the lending will extend the $3.3m for an additional term, probably 6 months as we seek to close off additional asset sales to fund it. Believe there is still another $4.5m in planned sales (assuming no material change from the $10m stated in Q1). Do note the following: *7 Noting the $5.5m divestment number is before fees and does not include a phased stock payment for Hills Cider (funds expected in Q3 FY24). *8 The $2m of expected divestments in Q3 FY24 includes Foghorn Brewery, Hunter Valley Brewhouse, Slipstream Brewing, and the freehold land in Emu Bay on Kangaroo Island (separate to Kangaroo Island Distillery).
Next material update should be the debt extension, followed by the completion of divestments in Q3 to reduce/close out that debt. Then onto the giant $20m facility with PAM....
Im sure we'd love to inject cash into Better Beers expansion but given we have none, really not great to see this on Ice. Our best asset by far we might see the 37% stake sold in part or fully in 2024 unless we're able to sell our other less profitable, less desirable brands we've bought at a premium. I'm doubtful about our ability to make such sales in this market.
Like many of you, I believe Better Beer will continue to grow and go on to be a very successful brand before it gets bought out by one of the big names however, given the size of the debt and the significant servicing cost, im very reluctant to throw more money into this one. Down 84% at this stage, so while it's tempting to DCA myself here I worry less about this being a falling knife and more about it being a falling guillotine...
I do feel positive about the current management and their best efforts - however, don't expect to see positivity here until later in the year (if ever).
Bit of a quite stock this one given the horrific history I understand!
MCL Price at posting:
1.4¢ Sentiment: Buy Disclosure: Held