Former CUB boss Peter Filipovic buys Mismatch Brewing from struggling Mighty Craft
Struggling alcohol maker Mighty Craft has offloaded key beer and spirits assets to former CUB boss Peter Filipovic at a steep discount to what it bought them for.
Former Carlton & United Breweries boss Peter Filipovic has bought Mismatch Brewing Company and spirits company 78 Degrees from the struggling Mighty Craft, paying a fraction of what the latter bought them for in a wider deal.
Mighty Craft bought Adelaide-based Mismatch Brewing, Hills Cider, Adelaide Hills Distillery and 75 per cent of the Lot. 100 hospitality venue in the Adelaide Hills for $47m in cash and stock in June 2021.
That buyout consisted of $27m in cash and $20m worth of Mighty Craft shares, which were valued at 35c apiece at the time.
Mighty Craft has since fallen on hard times, however, and has been selling off assets in a desperate bid to stay afloat.
The company’s shares were trading at 2.2c on Wednesday, with the entire company now valued at less than $10m.
Mr Filipovic last year bought Hills Cider from Mighty Craft for $3m, and also bought the Jetty Road Brewery on Victoria’s Mornington Peninsula for about $3m as part of a consortium including comedian Mick Molloy and publican Richie Ludbrook.
Mighty Craft said in its announcement to the ASX on Wednesday that “a consortium of experienced publicans in the Australian hospitality industry” had agreed to pay $7.2m in cash for Mismatch and Adelaide Hills Distillery, which makes the 78 Degrees gin brand.
The fine print of the ASX release indicated that companies recently established by Mr Filipovic have agreed to buy the assets.
Mighty Craft has been growing revenue strongly, however is struggling to turn that into profits.
The company reported revenue of $28.8m from continuing operations during the first half, up by a quarter, with $26.1m of that coming from sales of its Better Beer brand.
Mighty Craft reported a net loss of $51.3m for the half, including non-cash writedowns of $40.7m.
On an underlying basis, the company delivered negative EBITDA of $1.4m.
Mighty Craft had $22.2m in debt at the end of the half and a cash balance of $5.5m, and said its focus for the current half was to deleverage the business through asset sales.
Mighty Craft managing director Katie McNamara said at the time of the results release that while Better Beer was performing well, “trading conditions at the premium end of the spirits and craft beer continued to be challenging”.
The sale of Mismatch also includes the lease over the Mismatch Brewhouse in Adelaide.
“It is intended that approximately half of the proceeds of the sale will be paid to Mighty Craft’s senior lenders as partial repayment of its outstanding debt facilities and the other half will fund the ongoing operations of the business,” the company told the ASX.
“Whilst the timing of completion of the sale is uncertain, the parties are currently targeting a settlement on or prior to 31 May, 2024.’’
The sale comes amid a difficult time for the Australian craft brewing industry, with several companies being placed in administration or being shuttered completely.
Fellow Adelaide-based brewer Big Shed Brewing company recently struck a deed of company arrangement with its creditors, allowing it to continue operating, while Melbourne’s Deeds Brewing appointed administrators last month.
While the name “craft beer” suggests artisan operators, the majority of craft-style beers manufactured in Australia are now made by the major brewers Lion and Asahi.
Mr Filipovic has been contacted for comment.
More Coverage
Guzman y Gomez valuation ‘too spicy’
The Mexican fast-food chain has been added to the sell basket over its ‘overly ambitious’ store expansion plan, ‘inappropriately’ pegged stretched valuation and a stock overhang.
Three-way merger to create new food powerhouse
In a strategic play to survive SPC, Original Juice and powdered milk business Nature One will combine to create a new food manufacturing company on the ASX.