Broo confirms liquidations amid restructure
Broo has confirmed in a statement to the ASX today that it is liquidating some of its businesses facing financial difficulties amid a strategic review.
Con Kokkinos of Worrells was appointed as administrator of several of Broo’s businesses in May, including Mildura Brewery, Sorrento Brewhouse (which was sold last year) and Australian Draught. At the time the administrators said they were “considering the options” for the businesses.
In a release this morning, Broo told the stock market that the restructure which will see the company retain control of some of its subsidiaries and liquidate others “will allow the Group to focus on its core business”. It has been in a trading halt on the ASX since 9th May.
At the beginning of June, Broo said, creditors of Australian Draught approved a Deed of Company Arrangement but now that the administration period is at an end, control of the business will return to Broo.
Mildura Brewery has not been saved however. The company had previously suggested it would be closing down the Mildura operations, and as part of the latest restructure, Mildura Brewery Pub (Broo) Ltd and Mildura Brewery (Broo) Ltd are to be liquidated.
Broo was previously a guarantor under the lease arrangement with the Mildura pub operation, but it has now signed a deed of release with the owners to release all its current and future obligations under the lease.
Sorrento Brewhouse is being wound down also, but that company was largely non-operational following the sale of the Sorrento Brewhouse venue last year for $60,000.
New Broo chairman Kobe Li, who took over following the departure as a director of Broo founder Kent Grogan earlier this year, said that the moves came as a result of a strategic review into all aspects of the struggling business.
“It became apparent that the appointment of the Voluntary Administrator to the relevant Subsidiaries had become necessary, in light of the financial circumstances of those entities,” Li told the ASX.
The voluntary administration was intended to give Broo breathing room for its strategic review, and provided “an appropriate framework to facilitate a restructure of the Group’s business whilst ensuring that all creditors are treated equitably,” he said.
“With the return of control of Australia Draught to Broo, and the ongoing liquidation of Mildura pub and brewery subsidiaries, the Group is now better positioned to address its future strategy, and in this regard, we look forward to providing further updates to the market, including an update regarding its property in Ballarat.”
The contract brewing deal with Carlton and United Breweries signed in 2020 is unaffected by the restructure, it said. Broo also clarified that its main businesses and its Ballarat land, which was the subject of terminated sale talks earlier this year, were not involved in the administrations.
While the timeframe for the liquidation is unclear, Broo did say that as the biggest creditor of the subsidiaries which were placed under administration, it expects to receive a dividend as a result of the liquidation. Mildura Brewery has been on the market for the past nine months and has not yet found a buyer.
The strategic review remains ongoing, and its shares will remain in suspension until that process is complete, Broo explained.