A move by a co-founder and former director of Endeavour Brewing to wind up the company has failed at an Extraordinary General Meeting of shareholders.
In a short EGM via Zoom, shareholders heard the vote had failed with more than the requisite 25 per cent being voted against the motion even before the formal vote.
Former Director Ben Kooyman alone controls 27.44 per cent of the company.
The wind-up vote was called last month, with former director, Dan Hastings, describing the company’s future as “unstable and uncertain”.
“Since the change in Board, the company lost its single biggest customer (Woolworths) which contributed approximately two thirds and more of the company’s total revenue,” Hastings said in his Statement to Accompany the Resolution.
“It also reinstated previous management against clear independent legal advice after a number of serious issues came to light, and members of the current Board failed to disclose relevant relationships and conflicts of interest to the previous management.
“And the relationship with the company’s major equal Joint Venture partner in the Taprooms venue in The Rocks, Sydney, has deteriorated to an irreparable terminal state. And most significantly, available cash reserves have depleted significantly in that same period of time, with no prospect of future profit.”
In a subsequent note sent to shareholders, Hastings said that in late 2018 when the company entered into an Equity Crowd Funding campaign the company was in a stable state.
“Subsequently things deteriorated. In 2019 significant debts were accumulated, cash was depleted – primarily to wages, staff superannuation was unpaid for over a year, significant ATO debts accumulated and misrepresentations made, financial reporting ceased, wage overpayments ran free for a year, and most critically, much of this was concealed and withheld from the board at the time,” he said.
“The recent information presentation confirmed as much, with some $2 million in debts accumulated and no cash.”
“As it came to light in early 2020, the board (including myself) lost confidence and trust in management at the time. Around the same time we secured $5 million in a deal with Woolworths, which presented an opportunity to properly reset and execute the plans for the business.
“After a thorough independent legal review, leading to a change of management in May 2020, as we sought to clean up the mess, the previous CEO played a majority hand (26% of 50% voting rights) with a small handful of close friends and associates in removing the then board (myself and the company’s other founder, Andy Stewart) and installing his sister in law and best friends father.
“None of the other 600 plus shareholders were consulted and none of the conflict of interest was declared, until their hand was forced at the recent shareholder presentation.”
The current directors made no reply to Hastings observations during the EGM and shut the meetings immediately after voting
Shareholders are yet to see the annual report for the 2020 financial year, despite the report due to be lodged with ASIC almost 8 months ago.
The 2019 report revealed a different financial position from the rosy one presented in the CSF prospectus just 8 months earlier, with year-on-year losses growing from $278,753 to $593,797.
Brews News had made a number of requests to the current board to provide some background to the dramatic change in fortunes following the equity raise, with investors in that process receiving little communication from the company regarding their investment.
When approached, the board has told Brews News to refer questions to ‘former management’. When asked if this included co-founder and former Executive Chairman Ben Kooyman, who was the face of the crowdfunding, Brews News was advised that as he is an employee and not a current board member he was not available to speak to media.
Kooyman was re-employed by the current board on 1 December 2020 as Head of Sales, Marketing and Businesses Development despite the company losing its key customer, Dan Murphy’s.
While he was unavailable to speak directly to Brews News, an email sent by Brews News to the current board containing questions about the issue was forwarded to Kooyman to provide background to the board. Brews News was inadvertently included in the email asking Kooyman for this information.
Immediately after today’s EGM the board closed the meeting providing no further update to shareholders on the current state or future of the company or when the outstanding results will be made available.