Broo asked to explain share price spike

Broo Australia Draught

Beleaguered listed brewery Broo has been placed in a trading halt after the ASX queried a recent share price spike.

In a statement published this morning to the ASX, it announced that trading in securities of the business would be halted temporarily, pending further announcements.

A subsequent notice has now been posted, in which the ASX Listing Compliance team queried fluctuations in Broo’s share price.

The letter from the ASX noted the unusual price movements, which saw Broo’s share price rise from a low of $0.015 per share to a high of $0.026 on both the 5th and 9th June.

It also said it had noted a “significant increase in the volume of BEE’s securities” from 2nd to 9th June – BEE being the ASX code for Broo.

The ASX asked Broo to respond to a series of questions regarding these unusual fluctuations and whether there was any information which had not been announced to the market which could explain the spike.

In a response, Broo company secretary Justyn Stedwell said the company was not aware of any information that could explain the recent trading.

He admitted that Broo was progressing in negotiations in relation to contract brewing arrangements, despite claims from executive director Kent Grogan last year that its Mildura Brewery would not be sold as it looks to outsourcing agreements.

The statement from Broo also said it was “holding discussions in regard to ongoing funding options and other commercial opportunities”, but stipulated that these matters had not yet been finalised.

Stedwell also forwarded an article from a stocks-focused media outlet which stated that both Broo and Gage Roads stocks have remained bullish as consumers stock up on alcohol during the COVID-19 pandemic.

Gage Roads Brewing Co. shares have risen in price incrementally over the same period, but not to the same extent as Broo’s.

ASX graph showing the share price and volume of shares traded by Broo over the past year.

Trading halts and Broo

At the beginning of May the company, owners of the Broo and Australian Draught brands, announced in itslatest quarterly report that it had made $509,000 in sales in its latest quarter which ran to the end of March, but a net loss of $1.2 million for its operating activities.

Just prior to this announcement, executive director Kent Grogan sold 40 million shares held by his company Groges Holdings Pty in an off-market sale, netting himself $400,000 and reducing his shareholding to well below 50 per cent.

According to CommSec, Australia’s largest online stockbroker owned by CommBank, a trading halt is a temporary suspension of a company’s activity on the markets, either at the request of the company or where the ASX receives an announcement from a related entity that is deemed to be market sensitive.

This is not the first time Broo has experienced a halt in trading on the markets. In August 2019 it placed itself in a trading halt pending the release of news about its much-lauded Queensland distribution deal.

Prior to that it was also placed in a trading halt in February 2019. At the time, an announcement from the ASX Listing Compliance team raised questions over a rise in its share price which was not immediately attributed to any publicly-available market sensitive information.

Broo responded to Listing Compliance’s inquiries saying it did not know of any announcement to the market that would have affected the share price, and that it had no explanation for the spike. The ASX apparently accepted this explanation as Broo returned to trading.

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