Shares in local brewer Gage Roads have jumped more than 10 per cent after announcing it had secured a $4.2 million credit facility and kicked off previously announced expansion plans which will raise its annual brewing capacity.
Shares in local brewer Gage Roads have jumped more than 10 per cent after announcing it had secured a $4.2 million credit facility and kicked off previously announced expansion plans which will raise its annual brewing capacity.
The $4.2 million credit facility with the ANZ has been secured by the company's assets and a guarantee from Woolworths to facilitate the accelerated expansion program of the existing Palmyra-based production facility, associated working capital requirements and refinancing existing secured debt.
The expansion will take production capacity to 1.2 million cases of beer and cider per annum.
Gage has already engaged the services of brewing and packaging process engineers and brewers from around Australia to design and implement the expansion of the brewery and packaging line.
And procurement of plant and equipment for the expansion project has already begun to ensure a target completion date of April 2010 is met.
The company said the strong growth of demand from Woolworths for contract brewed products has been a major contributor in the decision to embark on the expansion program.
Gage Roads chief executive, Nick Hayler said the company is delighted with the progress it has made in the last 12 months and is looking forward to continuing its growth strategy.
"The increased capacity will provide Gage Roads with the opportunity to realise greater economies of scale and move to a profitable operation in the near-term," he said in a statement.
Following a query from the ASX about the company's spike in share value at the start of the month, Gage Roads said the jump was most likely driven by a positive market update about bringing forward the expansion of its brewing capacity, to deliver a capacity of one million cases per annum, after better than expected initial sales of new brew Dry Dock and growth in sales revenue and volume as compared to the previous year.
The ASX queried the company's gains after the stock jumped almost 42 per cent.
Shares in Gage Roads were up 1.5 cents per share, or 11.11 per cent, in trading today, sitting at 15 cents at 1530AEST.
Full announcement below:
Gage Roads expanding capacity to 1.2 million cases per annum, $4.2 million raised via ANZ flexible credit facility
Highlights
- GRB secures a credit facility for $4,200,000 from ANZ.
- Procurement of plant and equipment for the accelerated expansion program has begun.
- A team of brewery and packaging specialists have been engaged to design and help install the most efficient and cost effective upgrade possible.
- Gage Roads to contract brew an estimated 1,000,000 cases of beer per year for Woolworths.
Gage Roads Brewing Co Ltd (ASX: GRB) is pleased to announce that the Company has executed an agreement with the ANZ Banking Group Limited to provide a $4,200,000 credit facility. The facility is secured by Company assets and a guarantee from Woolworths Limited.
The funds will be used to facilitate the accelerated expansion program of the existing Palmyra (WA) based production facility, associated working capital requirements, refinancing existing secured debt, and other related costs.
The Company's accelerated expansion program will take the Company's production capacity to 1.2 million cases of beer and cider per annum.
The Company has engaged the services of highly qualified brewing and packaging process engineers and brewers from around Australia to design and implement the expansion of the Palmyra (WA) brewery and packaging line with a focus on delivering the efficiencies required while maintaining the highest standard of beer production possible.
Procurement of plant and equipment for the expansion project has already begun to ensure a target completion date of April 2010 is met. The increased capacity will be used immediately to supply the growing demand for both contract brewed products and Gage Roads' own brands. The strong growth of demand from Woolworths for contract brewed products has been a major contributor in the Board's decision to embark on the expansion program.
Gage Roads' Chief Executive Officer Nick Hayler said "the increased capacity will provide Gage Roads with the opportunity to realise greater economies of scale and move to a profitable operation in the near-term. The Company is delighted with the progress it has made in the last 12 months and is looking forward to continuing its growth strategy."
