Embattled beer company Broo Ltd has placed itself in a trading halt on the ASX pending the announcement of a ”material supply agreement”.
The halt came as the company’s share price hit at a record low of 2¢.
Broo Ltd first listed on the ASX in October 2016, giving a market update to the ASX in February 2017 announcing it achieved a 407% wholesale sales increase. It was trading at 39¢ in late November 2017.
The company was founded in 2009 by Ken Grogan, who remains the group’s largest shareholder with a 67% stake.
Broo raised $10.5million during a six-week initial public offering, issuing 52,500,000 ordinary shares at 20 cents per share to achieve market cap of $121.6million.
Grogan hasn’t commented on the recent developments, but noted to Brews News last October after the company announced a $4million loss: “We’re very comfortable where we are, and we’re pretty excited about the next 12 months.
“We’ve got a lot happening. So no reason for concern.”
The company also has a deal with a Chinese distribution group Beijing Jihua Information Consultants Ltd for a seven-year ”take or pay” agreement to sell 1.5 billion litres of Broo Premium Lager into China for aggregate revenue of $120 million.
However, Broo’s latest quarterly report, released on July 31, said that while outflows had been curbed, ”the company expects that it will continue to have negative operating cash flows in the short term”.
Broo Premium Lager and Australian Draught Beer are sold in independent liquor stores in Australia under a distribution deal with ALM.
The company also operates two brewhouses in Victoria, the Mildura Brewery Pub and the Sorrento Brewhouse on the Mornington Peninsula.
In February 2017, Broo announced plans to build a $100 million environmentally-friendly brewery on a 15-hectare site in Ballarat, including a 10,000-set event venue, zipline, museum and hospitality ventures.
City of Ballarat has confirmed that no planning application for the site is currently in existence.
Broo stated that the board is now “exploring realisation strategies for the Ballarat land”, including joint ventures or sale.