Mighty Craft, the publicly listed Australian drinks business, has brought in administrators.
The company had been looking to merge with Better Beer, the local beer business in which it owns a minority stake.
Mighty Craft had made other moves in recent months to bolster its balance sheet, including a deal with senior lender Pure Asset Management and the sale of assets including its Lot 100 brewery.
However, in an announcement to the Australian Securities Exchange today (22 July), the company said it had appointed advisory firm Ankura as administrators.
In the statement, Mighty Craft said its proposal to merge with Better Beer – in which it holds a 33% stake – had been “fundamental” to its recent efforts to lower its debts.
Mighty Craft told the ASX it “now appears unlikely” a deal could be reached with its lenders and Better Beer “that is acceptable to all parties”.
It added: “The directors, therefore, formed the opinion that the company should be placed into voluntary administration to evaluate options for the company as a going concern, or, if this is not possible, that an administration will result in a better return for the creditors and members of the company than would otherwise result from an immediate winding-up of the company.”
The trading of shares in Mighty Craft has been suspended. It said a first statutory meeting of creditors must be held within eight business days of the appointment of the administrators.
Ankura has taken control of Mighty Craft’s operations. The drinks group said the administrators “have confirmed that the operations of the company and its subsidiaries will continue on a business-as-usual basis”.
In a statement to Business News Australia, Better Beer CEO Nick Cogger said he expects the brewer to continue trading as normal.
“At some point in the future, someone or a company will put forward a DOCA [deed of company arrangement] and we will likely have a new shareholder on our register,” Cogger was quoted as saying.
“We are looking forward to officially separating from Mighty Craft in the coming months.”
In Mighty Craft’s third quarter ended 31 March, the group posted revenue of A$19.8m ($13.1m), down 22% year on year. It had a net operating cash flow loss of A$2.4m.
In May last year, Mighty Craft launched a strategic review that included taking A$10m from the sale of some of its smaller brands like Jetty Road and Foghorn Breweries.
