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Unsecured creditors of the collapsed beer and spirits group Mighty Craft are facing a significant loss, with administrators indicating that the best possible recovery could be less than 1¢ for every dollar owed. Ankura, the administrators overseeing the situation, estimated that creditors might receive between 0.5¢ to 0.9¢ in the dollar.
Creditors owed around $40 million have approved a proposal from the company’s backer, Pure Asset Management, to keep Mighty Craft operational. This decision also results in the complete loss of shareholder equity. The alternative would have been an immediate liquidation of the company’s assets.
Mighty Craft entered administration on July 22, and trading of its shares on the ASX was halted from that date. On August 28, the ASX officially suspended the shares, as Mighty Craft was among 30 companies that had not paid their listing fees.
The most valuable asset of Mighty Craft is its 25.5% stake in Better Beer, a zero-carb brand launched in 2021 and brewed at the Australian Beer Co plant in Griffith, NSW. The brand has gained popularity and is associated with The Inspired Unemployed’s Matt Ford and Jack Steele, who hold a 46% combined stake in Better Beer. Pure Asset Management owns 7.5% of Better Beer following a debt-for-equity swap in June.
Ankura's report concluded that Mighty Craft was "likely to have only been insolvent in July 2024, shortly before the administrators’ appointment." The report also noted that the Kangaroo Island Spirits business, another asset of Mighty Craft, could continue under Pure Asset Management's proposal. This plan would also maintain value in Better Beer shares.
The report highlighted that Better Beer operates a “capital-light model” through partnerships with the Casella family and Endeavour Group, which owns Dan Murphy’s, BWS, and a chain of hotels that exclusively retail the brand. Following years of losses and mounting debt, Mighty Craft had made several management changes and sold off parts of its portfolio to reduce debt. However, these actions were not sufficient, and appointing voluntary administrators became the most viable option.
A potential merger between Better Beer and Mighty Craft was explored last year, with plans for a significant capital raise. However, this merger did not move forward as Pure Asset Management expressed concerns about the associated risks.
