Drinks accelerator, Mighty Craft, has updated the market on the sale of Mismatch Brewing Co and 78 Degrees to United Publicans Group (UPG). The sale was announced in April, for $7.2 million.
Mighty Craft said the sale of 78 Degrees settled on 3 June for $5.2 million, and it expects Mismatch to be settled on, or around, 12 June.
The asset sales follow Mighty Craft’s ambitious acquisition program in 2021 – Adelaide Hills Group ($47 million), Jetty Road Brewery, Ballistic, Slipstream Brewing, Sparkle Investment – and investment in the Inspired Unemployed’s Better Beer brand.
However, the company has since been offloading brands to meet debt repayments. In February it reached a payment plan agreement with the ATO to pay its outstanding liability of just over $8.8 million by 31 July.
It also reached agreed terms with its lenders and creditors, including an extension of a bridging loan with the Swiss based family office for 50 per cent of its loan balance, being $2.5 million and due on 17 August.
The consortium that acquired Mismatch and Adelaide Hills Distillery (78 Degrees gin), UPG, is a consortium of 15 pub groups that have more than 200 venues and high-profile industry investors. Former CEO of Carlton & United Breweries (CUB), Peter Filipovic, is one of the parties.
Filipovic said UPG was essentially the same group that acquired Hills Cider Co and Jetty Road Brewery from Mighty Craft last year (which was referred to as Jetty Road Publican Group), for $3 million apiece.
Mighty Craft sells 7.5 per cent of share in Better Beer
In May, Mighty Craft entered an agreement with its senior debt provider, Pure Asset Management to buy out the royalty with Pure for a portion of its shareholding in Better Beer.
Mighty Craft and Pure are parties to a royalty deed in relation to Mighty Craft’s wholesale revenue in Australia.
The deed agrees that either party could elect the royalty payable to Pure be paid out in accordance with the buyout mechanism – equal to two per cent of the trailing 12 months gross product sales, multiplied by 5.5.
Mighty Craft MD, Katie McNamara, said the royalty swap was another “meaningful debt reduction".
“This combined with the $2.3 million debt reduction announced in Q3 FY24 and the proposed flow of funds from the settlement on the 78 Degrees and Mismatch sale, will represent over $10 million of debt reduction across H2 FY24,” McNamara said.
The transaction will see Mighty Craft sell 7.5 per cent of its shares in Better Beer to Pure for around $6.1 million.
The two agree the royalty deed will be terminated from there.
Better Beer shareholders have agreed to waive their pre-emptive rights regarding the sale and “welcome Pure onto the Better Beer register”.
Mighty Craft and Better Beer are also working on a potential merger.
