Angry shareholders demand answers from Endeavour

Mates no more. An Endeavour founder and shareholders are angry at the company’s lack of transparency

Angry shareholders in Endeavour Beverages, the first Australian brewery to equity crowdfund, are calling for the embattled business to update them on its financial position and strategy, with one calling for shareholders to band together in joint legal action.

The company, which was subject to a wind-up motion by a former director at an Extraordinary General Meeting in June last year, has not met its obligation to provide shareholders with annual reports or hold an annual general meeting in the 2021 or 2022 financial years.

In its last communication with shareholders in August, the board advised shareholders the company “was working now to deliver both our 2021 (acquisition delayed) and 2022 financials which are being prepared by our accountants.”

The board had previously attributed the delay of the 2021 accounts to its former joint venture partner, Applejack Hospitality, which had not provided it with accounts for the joint venture operation. Endeavour announced in February it had assumed full ownership of Endeavour Tap Rooms, based in the Rocks.

In the February update, the company also advised shareholders that it was “soft launching” a new brand, Breakers, Good Beer for Good People to test the market, but provided no updated information in its August email.

Founder and former director Dan Hastings, who was ejected from the board last November, has been asking the board for updates in emails seen by Brews News, but Brews News understands he has received no reply.

Shareholders want answers

Brews News has been contacted by founding shareholder Aaron Davies, who has also been asking the board for updates.

Davies, a cousin of Hastings, was one of the 35 “friends and family” who invested in the company at the beginning, but says that his requests for information about his investment are being ignored.

“We were sold on the fact of the ‘Endeavour family’ and ‘join your mates and join a brewery and get a share of a brewery’, that’s completely gone,” he told Brews News.

Davies said there was a feeling among many shareholders that the company should return capital to shareholders.

Endeavour Beverages received $5 million from the partial sale of its intellectual property following a trade mark dispute with Endeavour Drinks Group.

While a significant settlement, the outcome was also challenging for the business with Endeavour Drinks Group’s Dan Murphy’s and BWS stores being the company’s major retail partner, according to its 2018 CSF prospectus.

“There’s obviously been some very clear voices out there saying, ‘hang on a minute, we can’t just continue’,” Davies said.

“There should have been a point where shareholders were given their money back. And that was voted down as quickly as possible, just for them [the Board] to continue.

“So ‘the family’ is certainly no more, that’s for sure.”

He said he believed the company was having troubles, but without access to the annual reports it was hard to know what was happening with his investment.

“That’s what everyone’s asking for, financials, because everyone’s in the dark,” he said.

“We don’t know the state of things at all. Absolutely zero idea.

“I mean, that’s the idea of doing financial reports, of course, but they seem to have zero interest in giving those to the shareholders and I’ve lost count how many times I’ve asked and I’m one of many.”

Band together for legal action

Davies comments were echoed by shareholder Eduardo Rodrigues, who invested $2000 in the company’s 2018 equity crowdfunding campaign. He said he invested because he had been to the brewpub, liked the beer and was interested in alternative investment opportunities.

Rodrigues said that he had not been able to get information from the company about his investment.

“I have no idea what’s the financial situation of the company at this stage; I’m not sure they’re going to go bankrupt next month or next year, or if they’re going to succeed,” he said.

Rodrigues said he had reached out to the crowdfunding platform Equitise so he could be put in touch with other investors.

“‘I’m trying to go back to the crowdfunding platform and see if they can get us in touch with all the investors because for me to go legal or something it would cost me more than my investment. But if we do that collectively, it might bring some results out of that.”

“I emailed Equitise asking them to have a forum or a place where the shareholders could engage.

Rodrigues said Equitise replied saying they were going to get in touch with Endeavour.

“The company [Endeavour] sent a marketing email, they said we’re gonna have this live event happening at the venue. It was a marketing email, not a shareholder email.”

Nothing crowdfunding platforms can do

Approached for comment about what Equitise could do for shareholders, co-founder and director Jonny Wilkinson said the company can’t force a company to act.

“Unfortunately not. But when people raise with us, we obviously make sure [the company is] aware of their requirements and ongoing responsibilities and try and do what we can to help aid and assist them in that,” he said.

Equitise, which charges up to $10,000 and 6 per cent of funds raised under a crowdfunding campaign, currently features Endeavour on its site as a ‘Crowdfunding Success’ case study.

Despite the platform having no responsibility for ensuring investors’ protection, Wilkinson said he didn’t agree that equity crowdfunding is functionally unregulated.

“I don’t think that’s correct,” he said. “We have ongoing discussions with ASIC around some of these matters,” he said.

“I can’t really say anything else on that, but we have interactions and ongoing discussions with ASIC around some of these matters and how we can help facilitate and support it and get what companies have as responsibilities and market standards.”

He said he was not aware of ASIC taking any action against companies that haven’t met their requirements under the crowdfunding legislation.

Endeavour’s shareholder complaints come as crowdfunding faces scrutiny in the United Kingdom, with The Guardian reporting shareholder anger following the recent collapse of Wild Beer Co, which raised £1.76 million through the equity crowdfunding platform Crowdcube in 2017.

The paper quoted a crowdfund participant who had invested £1,000 and felt he and other investors were kept in the dark.

“What communication was sent had no detail, no transparency, no financial information,” the shareholder told The Guardian.

“When contacted directly, by myself and another shareholder, on various occasions, it was just a litany of excuses as to the lack of communications, all the excuses under the sun.”

Brews News has approached Endeavour Director Ken Bromley for comment on when the financial statements would be provided or an annual general meeting held, but did not receive a response.

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