ASX asks beer brewer Broo where the money is coming from
Food & Agriculture
Beer brewer Broo has told the ASX it may need to raise more money in response to a query over negative operating cash flows.
Stockmarket authorities pointed to Broo’s (ASX:BEE) September quarterly update, which showed negative operating cash flows of $1m and only $832k in the bank — along with estimated spending of $1.5m in the December quarter.
It asked Broo whether it would be able to continue funding its operations.
Broo shares were trading at all-time low of 8.5c in early Thursday trade — well short of a year ago when its shares rose 30pc to 38.5c after signing a $120 million distribution partnership in China.
“The board is satisfied that if required the company will be able to raise sufficient capital to continue to fund its business activities,” Broo said.
The Mildura-based brewer of Australia Draught said it could raise funds without shareholder approval under ASX Listing Rule 7.1, which allows companies to issue up to 15 per cent of their share capital without shareholder approval.
Broo said it had sufficient capacity to “raise funds promptly via a private placement”.
It also said it expects cash receipts to “significantly increase” in this quarter, and “now anticipates that cash outflows for the current quarter will be less than forecasted”.
But by May this year, shares had more than halved to 16c.
Broo is one of two ASX-listed small cap beer stocks. The other is Gage Roads, whose shares are at 9.5c. It posted higher revenues when last we checked in.