Two weeks after Gage Roads Brewing Co cancelled its distribution deal, the brewer has agreed to supply beer to major retailer Woolworths, which will take a 25 per cent interest in the company.


Two weeks after Gage Roads Brewing Co cancelled a distribution deal, the brewer has agreed to supply beer to major retailer Woolworths, which will take a 25 per cent interest in the company.
Gage Roads said on Friday it has entered into an agreement with Woolworths to supply 350,000 cartons of beer each year to the supermarket chain if the offer is successful.
Under the offer, which is subject to shareholder approval, Woolworths will acquire a 25 per cent stake in the brewer through a placement of 76.4 million fully paid ordinary shares to raise up to $1.9 million.
Following the placement, Woolworths will have an appointee on the brewer's board with Woolworths Liquor Group general manager Steven Greentree becoming a non-executive director.
Gage Roads' chief executive Nick Hayler said the company was delighted to welcome Woolworths as a major shareholder and customer.
He said planning had commenced to maximise brewing capacity from the company's WA brewery operations.
Gage Roads will hold a general meeting in late June at which shareholder approval will be sought.
Shares in Gage Roads jumped 54 per cent or 2.7 cents to a high of 7.7 cents before easing to 6.6 cents at 11:07 AEST.
Late last month, Gage Raods cancelled its distribution agreement with VOK Beverages, deciding to go it alone in order to provide products to a broader customer base at a more competitive price.
The announcement is below:
Gage Roads Brewing Co Ltd (ASX: GRB) is pleased to announce that it has entered into a subscription agreement with Woolworths Limited (Woolworths) under which Woolworths will become a cornerstone investor in the Company.
Under the Subscription Agreement, which is subject to shareholder approval and other conditions, Woolworths will acquire 25% of Gage Roads, a leading Western Australian based craft brewery, through a placement of 76,410,890 fully paid ordinary shares to raise up to $1.9 million.
The proposed issue price of these shares is payable in two components. The first component of 1.62 cents per share is payable upon the issue of the shares, to raise $1,237,856. The second component, which is subject to the satisfaction of various financial performance requirements, is 0.88 cents per share, payable upon the satisfaction of those requirements, to raise an additional $672,415.
Funds raised from the placement will be used for CAPEX and working capital. Please refer to the annexure to this announcement for further details of the terms of the Subscription Agreement.
Following the placement, Woolworths will also have an appointee on the Gage Roads board with Steven Greentree, General Manager Woolworths Liquor Group becoming a Non-Executive Director.
In addition to the placement, Gage Roads has entered into a supply agreement with Woolworths whereby Gage Roads will contract brew 350,000 cases of beer per year for Woolworths. The Supply Agreement is conditional upon Woolworths acquiring shares in Gage Roads under the Subscription Agreement.
This Supply Agreement provides Gages Roads with the opportunity to substantially grow its current production volume and realise a greater economy of scale.
Gage Roads' Chief Executive Officer Nick Hayler said the Company was delighted to welcome Woolworths as a major shareholder and customer.
"We are very pleased to have attracted the interest and support of such a well recognised company in Woolworths," said Mr Hayler. "This is a win-win situation for all parties."
Mr Hayler said planning had commenced to maximise brewing capacity from the Company's West Australian brewery operations.
A General Meeting (GM) will be held in late June 2009 at which shareholder approval for the placement will be sought. A Notice of Meeting and explanatory materials in relation to the GM to approve the placement are expected to be mailed to shareholders in due course.