Beleaguered publicly-listed brewery Broo has advised the ASX that Development Victoria has declined to approve the sale of its Ballarat property under its current terms.
The company announced the proposed sale of the land in June, though the contract was conditional upon approval from Development Victoria which is responsible for the Ballarat West Employment Zone on which it sits. It was also conditional on the purchaser entering an approved use agreement with Development Victoria.
The site is subject to a call option under the original purchase agreement with the vendor having the option to buy back the land in the event that Broo defaulted on its obligations to complete the development of a commercial brewery at the site and ensure that at least 100 full-time employees are employed within five years of settlement. This is due to expire in February 2022.
Broo had announced that it had sold the land for $7.5 million after purchasing it at a cost of $2.16 million. If approved, the sale would have provided the struggling business with a much-needed cash injection.
In its most recent quarterly results, the company announced it had lost a further $2.9 million in the 20/21 financial year, taking its total losses since listing in 2016 past $20 million. Its quarterly cash flow report revealed it had just $116,000 cash and cash equivalents available at the end of the June quarter, with just $242,000 unused financing facilities available.
The company, which has been producing its beer under a contract arrangement with CUB since last August, was forced to pay for its first order through a capital raise last year.
In May’s quarterly announcements, the company advised that it had prepaid $855,000 for a production order under its agreement with CUB drawing down against a series of loans at the end of March, presumably to pay for the purchase.
Its latest quarterly results showed the company had generated just $1.99 million in revenues from customers for the year while spending $2.3 million making beer and $2.1 million on administration and corporate costs alone.
Despite announcing the ‘World’s Greenest Brewery’ project with much fanfare in 2017, the project has languished with no planning applications lodged or further announcements. After Broo announced the sale, the City of Ballarat said it will write to Development Victoria to advocate for the site in the Ballarat West Employment Zone to be returned and put back on the market.
Broo’s announcement today said the company had agreed with the purchaser to a 30-day extension of the contract to obtain the approvals and is currently in communication with Development Victoria and will “provide a further update to shareholders in due course”.
CEO Kent Grogan was once again contacted for comment on this story but has not responded.