Empire's Mead plan still bubbling away

Has the rush to list boutique breweries left investors bloated?

The flood of boutique breweries rushing to join the stock market has claimed its first victim, Empire Beer Group, albeit in modest terms.

While Empire successfully raised $6.4 million to secure a stock market listing, it failed to whet the appetite of enough investors to bring in an additional $2 million, which means plans to build a Colonial Brewing Co site at Warren Mead’s Oyster Bar in North Fremantle are on hold, for the moment.

Meanwhile, brewer Gage Roads Brewing Co has had a mediocre run on the stock market since its debut last week. Its shares jumped 5 per cent above its 40-cent issue price on its first trading day but have since dropped to 39 cents. At the time of printing Gage Roads was trading at 39.5 cents.

It’s a far cry from the fanfare that surrounded the company behind Little Creatures when it listed in November 2005 with its shares, issued at $1, shooting to a 17 per cent premium. Shares in Little World Beverages kept charging, hitting a high of $1.60 in October. But even its shares have sagged after its status as Australia’s only listed boutique brewer came to a close last week. In the three trading days following Gage Roads’ debut shares in Little World Beverages fell 5.5 per cent to $1.40. Its shares recovered this week to $1.55.

Max Capital executive director Tony King, who is managing Empire’s float, said the brewery had accepted a “marginal” amount of oversubscriptions but not enough to acquire the beachside eatery.

And while the corporate adviser managed to lock in enough to secure the listing, it came after the company reduced its original capital raising for $10 million to $6.4 million after changing the purchase terms with Colonial Brewing Co from founder Ross Smith.

Instead of paying Mr Smith $3.6 million for the Margaret River brewery, the company opted to issue him more shares.

Empire has its sights set on finding alternative financing to fund the Oyster Bar acquisition. It has three months from listing on the ASX to negotiate exclusively with Mr Mead.

Mr Mead has been paid a $50,000 deposit and is also subject to getting various licensing approvals before Empire agrees to buy the property.

Mr King said Empire had received a number of approaches from various parties, including property companies, interested in financing the Oyster Bar development. 

Prolonging the Oyster Bar acquisition is the second setback for the brewery newcomer, which came close to securing a lease in Fremantle’s E Shed, but was knocked back by the venue’s landlord.

Oz Brewery will be the next to test the palate of investors. It closed its $1.5 million float oversubscribed earlier this month and aims to hit the ASX boards on New Year’s Eve. The brewer plans to open its Mad Monk brewery in the Fremantle strip by April.