Mighty Craft has provided a funding update as it fights for survival in a challenging market. The company is attempting to reduce its debt through a divestment program aimed at redefining its core business.

Its latest divestment is Slipstream Brewing, with founders Deale & Elisa Stanley-Hunt entering into a binding agreement to repurchase shares from Mighty Craft, becoming the sole proprietors with 100% ownership.

The transaction, set to conclude by the end of February, will result in the transfer of Mighty Craft’s 45% stake back to the founders.

“We are pleased to announce the acquisition of the shares back from Mighty Craft,” said Slipstream Brewing Director, Deale Stanley-Hunt.

“We’re looking forward to continuing the business going forward and shaping the direction of Slipstream Brewing to align with our long-term vision for the brand. We extend our gratitude to Mighty Craft for their partnership and in supporting us to get to this outcome”.

Settlement of the sale of Mighty Craft’s Emu Bay property on Kangaroo Island is scheduled for the 26 February 2024 for a purchase price of $793,000. The company said it has also received multiple nonbinding offers for its South Australian-based assets.

Bridging loan secured for Mighty Craft debt

Mighty Craft has also negotiated an extension of a Swiss-based family office bridging loan for 50% of the loan balance – the original loan principle was $5 million – on the same terms as the original facility, which is 25% interest compounding daily.

This is conditional upon a $435,733 payment due on or before the 23 February 2024 and a $1 million payment due on or before 29 February 2024.

This will leave a remaining loan balance of $2.5 million as at the 29 February 2024, which is due for repayment on the 17 August 2024.

Mighty Craft also has ATO payment plan, with the company agreeing to a payment plan with the ATO for full settlement of the outstanding liability including interest of $8,811,197 on the 31 July 2024.

The company is in ongoing discussions with Pure Asset Management (Pure), which it said has expressed support for its divestment program.

Better Beer performs “exceptionally well”

On January 31, Mighty Craft provided a business update for the quarter ended 31 December 2023, which showed unaudited group revenue was $29.5 million, down 5% versus the prior corresponding period.

Among the highlights from the results:

• Beer and cider saw 4.6 million litres sold (+11% versus pcp), with like-for-like sales of $20.3 million (+18% versus pcp).
• Spirits saw 81k bottles sold (-25% versus pcp), impacted by challenging market conditions in the premium spirits category.
• Hospitality saw like-for-like hospitality sales of $5.3 million or +2% versus pcp.
• Better Beer celebrated sales of 4 million litres across Australia & New Zealand, (+23% versus pcp). It achieved annual sales of 11.8 million litres in CY 2023 reflecting +35% growth versus pcp.

Better Beer also continued to build presence in the on-premise channel with the brand available in over 1000 venues around Australia in Q2 FY24 with strong growth in Queensland and Victoria.

The Better Beer capital raise process – as announced in 2023 – is currently on hold while Mighty Craft’s divestment and restructuring program is finalised.

Mighty Craft Managing Director Katie McNamara said: “Q2 trading performance was a mixed result – we continue to see Better Beer perform exceptionally well, while cost of living pressures continue to impact the premium end of the spirits
category. Better Beer sales of 12.2 million litres in its second calendar year post-launch is remarkable. The Company continues to focus on reducing operating costs and divestments and has made solid progress on both fronts.”