Top Shelf International, owner of brands such as Act of Treason and Ned Whiskey, has enlisted EY's Melbourne Mergers and Acquisitions team for advice regarding the sale of some or all of its assets.
The news follows on from a difficult year that has seen the ASX-listed drinks company focused on managing debts and securing working capital following a net loss after tax of $48.3 million in Financial Year 2023.
This included a $5 million sale and leaseback deal on its Eden Lassie agave farm, which was first announced in April. More recently on 31 October, Top Shelf told shareholders that this deal "will not proceed as planned, as certain conditions precedent were not satisfied, including the security release.”
The announced intention to sell also follows on from Top Shelf’s Annual General Meeting, at which the first of two Resolutions “was not put to the AGM because the Annual report was not made available to shareholders before[hand]” due to not being finalised or audited.
“The Company is in the process of negotiating with its senior lender and its largest creditors, but as a result of those continuing negotiations will not be in a position to release audited financial statements,” wrote a spokesperson for Top Shelf International ahead of the AGM.
“The Company continues to progress discussions with a number of parties regarding the provision of funding and potential transactions to address its short- to medium-term operating needs and the repayment of outstanding creditors.”
Over the course of the 2024 calendar, Top Shelf’s share price dropped 81.82%, leading to it halting share trading on Friday 27 September. Since launching onto the stock market in late 2020, its share price has dropped from $2.21 to just $0.04 each.
Despite this, its recent end of year financial results showcased an underlying EBITDA improvement of 51% when compared to the year prior, with Act of Treason Agave sales “exceed[ing] initial expectations.” This progress has continued with an improvement of 14%, or $0.4 million, in the first quarter of FY25.
The first of its kind on the market, Act of Treason is the most important brand in Top Shelf’s portfolio and stands as a proof of concept in an agave market that IWSR analysis believes will grow at a CAGR of 7-9% up until 2027. In FY24, Top Shelf International invested $6 million into its Australian Agave program, or almost two thirds of its overall $9.3 million spend, adding to the $7 million it invested into Agave in FY23. As a result, its sales volumes in Endeavour Group stores have grown 36% following its successful national ranging debut in July.
“We’re approaching this as an opportunity to create something new and expand the horizons of a category that has been geographically limited for centuries,” said Trent Fraser, CEO.
“Act of Treason symbolises the pioneering spirit of a project that will create a new region of agave spirit. The dry tropics of north Queensland are the ideal place for that to occur.”
NED Whiskey has also experienced a notable growth of 8% over the last six months in Coles. Top Shelf accredits this to innovations such as the recently launched Golden Bickie presented by NED flavoured whisky liqueur - which is says has successfully been “capturing the flavoured whisky trend” - and to NED's 12% RTD range.
A summarised list of Top Shelf’s assets include brands Grainshaker Australian Vodka, Act of Treason Agave, and Ned Whiskey; production facilities such as a whisk(e)y brew house, column and pot stills, and flexible packaging for beverage cans and bottles; and a 430 hectare farm in the Whitsundays.
According to the Australian Financial Review, Top Shelf International has already received multiple non-binding offers from local and offshore buyers over the past month.
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