Subiaco-based Empire Beer Group Ltd has agreed to sell two of its pubs to a shareholder company controlled by Computershare Ltd executive chairman Christopher Morris for $4.5 million.
Subiaco-based Empire Beer Group Ltd has agreed to sell two of its pubs to a shareholder company controlled by Computershare Ltd executive chairman Chris Morris for $4.5 million.
The Royal on the Waterfront in East Perth and the Colonial Brewing Company in Margaret River will be sold to Colonial Leisure Group Pty Ltd, a company controlled by Empire shareholder Finico Pty Ltd, the private company of Mr Morris.
Empire had hinted earlier this year that it was looking to move away from the pub business after it lost its second chief executive in six months.
"Over the last 18 months, the board have reviewed numerous proposals for stand-alone and multi-site venues with a view to distributing the Colonial brand and beer products through such venues," Empire chairman Mel Ashton said.
"Unfortunately, the board has been unable to reach terms with vendors which represented value and were satisfactory to Empire. The recent and continuing uncertain climate in capital markets has made financing deals difficult, and increasingly costly.
"As a result, Empire's strategy of creating economies of scale through establishing a multi-venue hospitality operation has not been achieved."
Mr Ashton added that the sale of two pubs will allow the company to "re-focus" its efforts in providing shareholder value.
The sale is subject to shareholder and regulatory approvals, with settlement expected in October.
Below is the full announcement:
The Directors of Empire Beer Group Limited (Empire) advise that Empire has agreed to sell its two leasehold businesses of The Royal on the Waterfront in East Perth and the Colonial Brewing Co, Margaret River, and all related business, assets, brands and intellectual property.
An agreement (Sale Agreement) has been entered into with Colonial Leisure Group Pty Ltd (Colonial Leisure) to purchase the businesses for a combined consideration of $4,450,000 plus stock at cost. A deposit of $250,000 will be paid by 25 August 2008, with the balance due on settlement.
The Sale Agreement is subject to shareholder approval and the standard conditions concerning liquor licensing and landlord approval, but is unconditional as to finance. Settlement is expected in the first half of October.
Colonial Leisure is controlled by Finico Pty Ltd, a shareholder of Empire.
As referred to in Empire's most recent quarterly update, the board has been undertaking a review of Empire's assets and overall strategic direction. Empire Chairman Mel Ashton commented:
"Over the last 18 months, the board have reviewed numerous proposals for stand-alone and multi-site venues with a view to distributing the Colonial brand and beer products through such venues.
Unfortunately, the board has been unable to reach terms with vendors which represented value and were satisfactory to Empire. The recent and continuing uncertain climate in capital markets has made financing deals
difficult, and increasingly costly.
As a result, Empire's strategy of creating economies of scale through establishing a multi-venue hospitality operation has not been achieved. The approach from Colonial Leisure was attractive to the board as it was a
package deal which included both the Colonial leasehold and Royal leasehold.
It will allow Empire to completely re-focus its efforts in providing shareholder value. Post-settlement of the Sale Agreement, the board expects to be reviewing significant opportunities for Empire."
Any new business which Empire acquires or enters into will likely involve a transaction which affects the capital structure of Empire. Any such transaction will be conducted in compliance with ASX Listing Rules including as necessary re-compliance with Chapters 1 and 2.
A General Meeting of Shareholders will be called to approve the Sale Agreement. As Finico Pty Ltd directly or indirectly holds over 10% of the voting securities in Empire, it is considered a substantial holder for the purposes of ASX Listing Rules. Because the sale is being made to a substantial holder, an independent expert's report in respect of the terms of the sale is required, and will be prepared in accordance with ASX Listing Rules.
