On 12th April 2019, Gage Roads Brewing Company Limited (ASX: GRB) announced that it has successfully completed a bookbuild and received irrevocable commitments to raise $8 million at an issue price of $0.095 per share (84,210,526 shares) from institutions and sophisticated investors.
The placement was very well supported by both existing and new high-quality investors. The capital raised will be applied towards the implementation of the company’s packaging line expansion program. The program includes the installation of a new commercial scale canning line, a new high-speed bottle filler and other plant improvements. These improvements drive increased plant efficiencies that will result in lower operating costs and improved earnings. The market for beer in can format is in significant growth, currently representing 11% of the craft beer market and growing rapidly at 134% per annum.
Using our small-scale pilot canning line, the company has released Single Fin Summer Ale, Alby Draught and Alby Crisp in a can format and received overwhelmingly positive feedback and support from its independent retail customers and consumers. GRB is further looking to launch a number of exciting new brands in a can format for this upcoming summer season. Over time, the company expects beer in a can format to form up to 25% of its proprietary brand sales.
The new can filler, bottle filler and plant improvements provide cost efficiencies and reduced waste. With this new machinery installed, GRB is targeting additional earnings of $1.5 million to $2.5 million by FY2022.
The company’s Managing Director, John Hoedemaker stated that they are pleased with the strong support from the investment community, which is indicative of the success of its proprietary brand strategy, as well as a vote of confidence for the company’s capital expansion program that is designed to deliver incremental earnings to all shareholders.
The placement will comprise the issue of 84.2 million fully paid ordinary shares (“New Shares”) at an issue price of $0.095 per new share to institutional and sophisticated investors, raising $8.0 million (before costs).
The new shares issued under the Placement will be issued under the company’s existing capacity under ASX Listing Rules 7.1. The New Shares will rank equally with existing fully paid ordinary shares. Settlement of the Placement is expected to be completed on Tuesday, 23 April 2019. Argonaut Securities Pty Ltd acted as Lead Manager, and Hartleys Limited acted as Co-Manager to the Placement.
At the time of writing (15 April 2019 AEST 02:04 PM), the stock of Gage Roads is trading at $0.096, with a market capitalisation of ~$101.04 million. Its current PE multiple is at 35x, and its last EPS was noted at A$0.003. Today, it made day’s high at $0.098 and day’s low at $0.096, with a daily volume of more than 725,733. Its 52 weeks high was at $0.145 and 52 weeks low at $0.071, with an average volume of 1,517,561. Its absolute returns for five years, one year, six months, and three months are -43.59%, 28.95%, -10.91%, and 1.03%, respectively.
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