Mighty Craft offloads Mismatch beer and 78 Degrees gin to private consortium for $7.2 million

Mighty Craft offloads Mismatch beer and 78 Degrees gin to private consortium for $7.2 million

Photo via Mismatch Brew House Facebook

Craft beer and spirits group Mighty Craft (ASX: MCL) has offloaded its Mismatch and 78 Degrees brands for $7.2 million as part of a rationalisation of the loss-making business announced last year.

Mighty Craft has revealed that a consortium of Australian publicans has acquired the assets of Mismatch Brewing Company and The Hills Distillery, which produces 78 Degrees gin.

The deal includes the brands, intellectual property, trading names, contracting arrangements, inventory, plant and equipment, and licences for each of the Adelaide-based businesses.

The sale also includes the assignment of the leases for the Mismatch Brewhouse venue and the Mismatch and 78 Degrees production facility in South Australia.

Mighty Craft says the sale is conditional on liquor licence transfers and on the buyers making “reasonable” efforts to ensure “certain personnel associated with the businesses” accept offers of employment made by the consortium.

The group is aiming to settle the sale of Mismatch and The Hills Distillery by 31 May 2024. The company plans to apply half of the proceeds of the sale as partial payment of an outstanding debt facility owed to senior lenders, with the remainder to be used as working capital.

Mighty Craft, which posted a net loss of $51.19 million in the December half, announced mid last year its plans to sell assts to slash debt and reduce its cost base.

The bulk of the first-half loss for FY24 comprised non-cash write-downs totalling $40.7 million for businesses that it plans to sell.

Mismatch and The Hills Distillery are among the list that also included Slipstream Brewing, which in February was sold back to its founders Deale and Elisa Stanley-Hunt.

Mighty Craft is also looking for buyers of Kangaroo Valley Spirits and the Lot 100 venue in the Adelaide Hills.

This is in addition to the proposed sale of its stake in Better Beer despite Mighty Craft CEO Katie McNamara revealing in February that the Griffith-based Better Beer was delivering an “outstanding performance”.

Mighty Craft is Better Beer’s biggest shareholder and had flagged a possible sale when announcing its FY23 profit result in August.

When announcing the company’s half-year profit result in February, Mighty Craft chair Grant Peck said that the company’s “future direction will be determined once we are clear on the outcome of these asset sales”.

Mighty Craft managed a marginal improvement in its underlying performance with an EBITDA loss of $1.5 million reported for the first half, down from a $1.5 million loss previously. This is despite a 25 per cent surge in revenue to $28.8 million for the period.

Mighty Craft’s underlying performance reflects the challenges faced by the craft brewing sector across Australia, which late last week led to the appointment of voluntary administrators to Gold Coast-based Black Hops Brewing.

Deloitte Turnaround & Restructuring partners David Mansfield and Tim Heenan were appointed voluntary administrators on 28 March, ahead of the Easter long weekend.

Black Hops, which was founded in 2014 by Michael McGovern, Eddie Oldfield and Dan Norris, operates a craft beer brewery and tap rooms business from Burleigh Heads and Biggera Waters on the Gold Coast and in East Brisbane, employing about 70 staff.

The company set a record for a crowdfunding campaign in 2022 after raising $2.2 million in just 24 hours.

In an update issued to Business News Australia by the administrators, the Gold Coast brewing and taphouse operations continue to trade as “urgent sale options” are explored. However, the East Brisbane taphouse will be closed while options are considered that they hope will allow it to reopen.

“In these very early days, we are taking over management of the business and commencing a review of its financial position,” says Mansfield, partner at Deloitte Turnaround & Restructuring.

The first meeting of creditors to Black Hop Brewing is expected to be held on 11 April.

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