Australian alcohol company, ASX-listed Top Shelf International (TSI), has enlisted the M&A team from EY to sell some or all of the business. Its brands include Ned Whiskey, Grainshaker Vodka, and Act of Treason Australian Agave.
TSI has spent much of this year looking to pay down debt and secure working capital, after recording a net loss after tax of ($48.3) million in FY23 - a 194 per cent increase on FY22.
The CY started off with much promise as TSI released the first batch of Age of Treason.
In April, the company signed a $5 million sale and leaseback agreement with then director, Stephen Grove, on its Queensland Eden Lassie agave farm in a bid to free up funds. That has now been put on hold.
The following month TSI launched a capital raise, offering shares at a 43 per cent discount. The goal was to raise $13.9 million and use $5-6 million reduce its debt load.
The retail entitlement offer had a 7.2 per cent uptake, with institutional investor pre-commitments covering the $1.3 million shortfall.
Meanwhile, in the space of three weeks from 16 August to 5 September, three non-executive directors resigned, leaving a board/leadership team of chair Julian Davidson, executive director, Adem Karafili, and CEO Trent Fraser.
John Selak – with 40 years’ experience in financial and advisory services, a stint in an independent, statutory advisory role to the Victorian Gambling and Casino Control Commission and state government as the Deputy Special Manager for risk governance and compliance in the Office of the Special Manager for the Melbourne Casino Operator, and 16 years at EY as a registered auditor, liquidator and tax agent – resigned after 11 weeks.
Three days later (19 August), non-executive director Stephen Grove stepped down but retained his 15.7 per cent share in the company. At that stage, TSI said it intended to proceed with the sale and leaseback of Eden Lassie Agave Farm with Grove.
Then on 5 September, a third non-executive director, Philip Baldock, resigned but TSI said he would continue to act as an advisor to the company.
By the end of September, the company’s shares had been suspended. TSI said it was negotiating with its senior lender and largest creditors and would not be able to release audited financial results by 30 September (as required by the ASX).
The suspension would give the company time to review its operating strategy and “finalise a funding pathway while conserving cash”, it said, adding it was having “discussions with a number of parties regarding the provision of funding and potential transactions to address its short- to medium-term operating needs and the repayment of outstanding creditors”.
Then on 7 October, CFO Ben Kennare resigned, and Dimitrios Argyriou was appointed as his interim replacement.
In its Q1 FY25 report, the company announced the sale of Eden Lassie was on hold, and that it had engaged EY to explore “some more recent opportunities”. It reported an underlying EBITDA loss of ($2.6) million, but with some positive momentum in the retail market.
Its debt facility position was $22.2 million, with cash reserves of $1.2 million. TSI made a $2.8 million debt principal repayment in July. It also amended its existing facility with Longreach Credit Investors, adding two new tranches of available debt of $1.75 and $4.2 million, subject to conditions and at an interest rate of 20 per cent per annum. $2.65 million had been drawn down against them both in October.
TSI was founded in 2014 and listed on the ASX in 2020. It completed a $47.2 million IPO when it listed and its recent $13.9 million raise. Its share issue price was $2.21, at close of trade today they were worth 4 cents.
The AFR today (2 Dec) reported special situation players have looked at the business over the last year but decided the $13 million market cap company was too small for a buyout.
But TSI does have production and manufacturing facility with a state-of-the-art fitout for whiskey and vodka production.
It also has the 374-hectare farm with more than 600,000 blue weber agave plants and what TSI termed “Australia’s newest and most progressive distillery”. A farm-to-bottle production set-up with “upcycled shipping containers, spectral drone technology, geo-tagged plants, energy-saving sub cooler, a custom-designed ultra-small batch still, gravity-fed water preservation, double copper pot distillation, and a repurposed basket press”, was how the company described it when the long awaited first batch of its agave spirit, Act of Treason, was released in January.
