Broo’s Ballarat Land Sale Sunk By Red Tape

Not too many Australian beer companies are owned by Australians. Broo, the publicly listed micro-brewery, is the exception that empathically proves the rule. You can’t own shares in Fosters (aka Carlton & United) or Lion Nathan (aka Tooheys) anymore unless you buy shares in Asahi or Kirin on the Tokyo stock exchange, and where is the joy in that?!?

Late last week, Broo announced to the ASX that the sale of its Ballarat land (which could have brought in a profit of some double the initial price paid for that site) has fallen through. It did not come as a surprise to me – the required approvals to sell that land for development to another party have been held up for many months, and obviously do not look like being forthcoming.

Here is some more informed beer related journalism on this topic:

As I am a long standing shareholder of this company, with my colourful share certificate from the 2011 Australia Day promotion (buy a slab and get 10 shares!) newly framed and occupying pride of place in my water closet, I do pay more than passing attention to the activities of this company.

After the commencement of the recent board room ‘putsch’ (an apt but still unfortunate term to describe such machinations in a beer company), I started reading which is a website dedicated to the Australian beer industry. It has various interesting and quite fascinating articles on the subject of how Broo has attempted various ambitious undertakings, which have all seemed to remain unfulfilled. The attempt to develop a high tech brewery in Ballarat is the most high profile of those.

Where now for Broo? 6 years ago, when they were about to IPO, I felt fair value for the shares was 2 cents each, rather than the 20 cents of the float price. Now, with the tangible real estate assets only worth about $3.5 million, and a potential fire sale in front of them, I think that the 0.8 cents the shares are currently trading at is a somewhat optimistic valuation.

Published by Ernest Zanatta

Narrow minded Italian Catholic Conservative Peasant from Footscray.

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