Mighty Craft raises $5m for growth

Listed drinks company Mighty Craft has advised the ASX it is raising $5.2 million via a share placement with the funds to go towards strengthening its balance sheet and investing in growing its spirits portfolio and Better Beer.

Today’s announcement comes after Mighty Craft placed its shares in a trading halt on Monday of this week ahead of the placement announcement.

The announcement said that the company had received “firm commitments to raise $5.2 million via a placement of approximately 35.9 milion new shares to sophisticated and institutional investors” at an issue price of $14.5 cents.

The issue price represents an almost 20 per cent discount to the $0.18 price when the stock was last traded. The amount raised and share price is also well below the figure the Australian Financial Review reported the company was seeking, citing the company’s term sheet sent to investors.

The AFR reported Mighty Craft was seeking $7.7 million with the offer priced at 16¢ a share.

After trading resumed today the share price fell 16 per cent to $0.15 cents.

Capital raise

Announcing the raise, CEO Mark Haysman said the company was at an “exciting juncture”.

“Mighty Craft is at a very exciting juncture given the significant growth we are experiencing and the upside potential across our portfolio,” he said in the announcement.

“Our H1 FY23 growth rates were strong and as we set the path to achieving our FY25 ambitions we believe the time is right to bring some new investors into the business to support our growth.

“We are confident in achieving our FY25 ambitions given the success of Better Beer and scope for growth across our other brands in particular our premium spirits portfolio.”

The current raise follows a $5.8 million raise in October 2021 at a share price of $0.29 with those funds to be “primarily used to accelerate the Company’s whisky strategy”.

That raise coincided with the sale and leaseback of the freehold of its Jetty Road brewery to unlock capital.

Mighty Craft historical share price

Better Beer restructure

Mighty Craft’s share issue comes a week after the company announced a restructure of its ownership of Better Beer.

Mighty Craft currently owns 35 per cent of Better Beer through its 61 per cent holding in Torquay Beverage Company, though the restructure will see this fall to 33 per cent.

The change in its position follows the beer brand hitting 10 million litres.  The initial agreement with the The Inspired Unemployed allowed for a step up in equity for the celebrity co-owners, upon achieving the volume benchmark.

The restructure will see Torquay Beverage Company renamed to Better Beer Holdings with Mighty Craft to become a direct equity holder in Better Beer. This will enable Mighty Craft to change the way the value of Better Beer is represented in Mighty Craft’s accounts.

Better Beer is currently undertaking its own capital raising that, if successful, could see the brand valued in excess of $200 million with Mighty Craft’s holding potentially worth more than the company’s current market capitalisation of $58.39 million.

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