The company was another victim of this once-popular sector, even though it was valued at millions of dollars a few years ago.
Thousands of Australian businesses have disappeared over the past year, and experts say it will only get worse in the future.
Mighty Craft was listed on the Australian Stock Exchange just five years ago, but in the past year it has been selling assets, seeking a merger and slashing its board and management. The company has also seen the interest rate on a $20.9 million loan rise from 8.5% to 11.5%.
But moves to save it were not enough, as the company announced on the ASX that it had fallen into administration with the appointment of insolvency firm Ankura.
Mighty Craft (MCL) owns 33% of the fast-growing Better Beer, which counts popular comedians Jack Steele and Matt Ford of The Inspired Unemployed as shareholders.
Despite the slump in the craft beer market, Better Beer performed strongly, with sales up 32 percent to $26.1 million in the six months to Dec. 31, according to accounts.
Inspired Unemployed owns a 46% stake in Better Beers. Photo: Facebook
There was a proposal to merge Mighty Craft and Better Beer but that now appears to have fallen through.
The company has undergone a divestment and restructuring program to reduce
Company debt. The proposed merger between Better Beer and
Holdings Pty Ltd and MCL, an arrangement that requires the support of senior executives at MCL.
“The lenders and shareholders of Better Beer,” the company said in a statement to the ASX.
“Consideration has also been given to raising capital to support this process. It now appears unlikely that an agreement will be reached between MCL’s senior lenders, Better Beer and Mighty Craft, which is acceptable to all parties.”
Mighty Craft first listed on the ASX in 2019 and its shares were trading at 42c in late 2020.
But the stock price has fallen sharply, last trading at 0.5 cents, valuing the company at $1.8 million.
Better Beer posted a strong performance with sales up 32 percent to $26.1 million in the six months to Dec. 31, the company’s accounts showed. Image: Facebook
Last June, the company revealed that its business model required an “urgent review.”
“The cost base is disproportionate to the earnings profile, debt levels are excessive and the business model needs to be further simplified,” said then-chairman Chris Malcolm.
This comes after the company spent heavily in recent years, including paying $47 million in cash and shares for the Adelaide Hills Group, which includes the likes of Mismatch Brewing, Hills Cider and the Lot100 site in the Adelaide Hills.
However, it has now sold all of its investments with Lot100 the latest to be sold as it is currently being sold for $1.5 million to a consortium of bar owners.
Mismatch and spirits company 78 Degrees were sold last year to a group including former Carlton & United Breweries chairman Peter Filipovic for just $7.2 million.
Mighty Craft was listed on the ASX just five years ago, but has now collapsed after failing to pull itself out of financial difficulties. Image: Facebook
Officials are currently conducting an urgent assessment of Mighty Craft’s operations.
Meanwhile, officials stressed that the company’s operations and those of its subsidiaries will continue as usual, Ancora said.
“The administrators will provide updates on any material events throughout the administration period through announcements to the ASX.”
It has been a tough time for the craft beer brewing industry with a number of companies collapsing or announcing closures.
Nick Potts, industry consultant from The Business of Beer Consulting and Advisory and former managing director of the popular Stone & Wood brewery in Byron Bay, warned earlier this year of the recent collapse of Stone & Wood. Melbourne based Deeds BrewerThis will not be the last to shake the sector.
His warnings continue to resonate across the industry.
Mighty Craft was listed on the ASX just five years ago, but has now collapsed after failing to pull itself out of financial difficulties. Image: Facebook
Just last month the popular Sydney was unveiled. Malt Shovel Brewery Uniform It will close at the end of August, affecting nine staff members.
Last week, Lotus Beer Co, which runs Valhalla Brewing in Geelong, while in June, a Melbourne-based company Alchemy Brewing Company The company posted on social media saying it had “had a tough ride” and that “the time has come to stop operating” as it closed its doors permanently.
Award-winning Black Hops Brewery Queensland It was also placed under voluntary management.
A number of other independent breweries have gone into administration in the past year including Brisbane-based Ballistic Beer Company, Adelaide-based Big Shed Brewing, Melbourne-based Hawkers Brewery, and Wayward Brand and Akasha Brewery, both from Sydney.
