Gage Roads Successfully Raises Funds to Buy Back Woolworths’ Shares

Gage Roads Brewing Co. has raised $8.5 million (before costs) and will now buy back Woolworths Limited’s shares in the company, cancelling Woolworths’ 23.5 per cent stake.

Woolworths has been a major shareholder of Gage Roads since 2009, providing production, supply and distribution to the company, as well as access to up to 25 per cent of Australia’s total beer market.

The buy-back is part of the Company’s five-year ‘Returning to Craft’ strategy, with the aim of regaining its independence and opening up the distribution channels of its products to the remaining 75 per cent of the Australian beer market.

$1.6 million of the capital raised will be used to buy back Woolworths’ shares; the rest will go toward retire debt, working capital and cost of raising.

On the successful completion of the capital raisings, Gage Road’s Managing Director, John Hoedemaker, said, “I wish to thank shareholders and the institutions for their support of our 5-year ‘Returning to Craft’ strategy. I would also like to thank Argonaut Securities for lead-managing the placement, the entitlement issue and its underwriting.

“The funds provide a very solid footing from which to undertake our ‘Returning to Craft’ strategy. As one of Australia’s largest independent craft breweries with new markets ahead of us, the management team is excited to conclude the capital raising process and focus on delivering on the milestones of our strategy.”

In the prospectus issued in August 2016, Gage Roads explained that it will retain Woolworths’ support through the process, having been given a three-year extension (with a further two-year option) of its supply and distribution agreement with Pinnacle Liquor Group Pty Ltd, a subsidiary of Endeavour Drinks Group (formerly Woolworths Liquor Group) in May 2016.

“Over time, the supply agreement with Pinnacle sees the Company slowly un-wind the volume of contract production as we aim to replace that with volume with growth of our proprietary brands.” Gage Roads stated.

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