The sale of Broo brewery's development site in Ballarat has struck a new barrier after Development Victoria (DV) declined to approve it disposing of its land at BWEZ.
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Broo's proposed $100 million brewery, powered by renewable energy at the industrial hub, with solar panels, wind turbines, bio-gas and an underground aquifer for water, was supposedly capable of producing an estimated 480 million bottles of 'environmentally-sustainable beer' per annum.
The brewery plans included a 10,000-seat music venue, museum and massive zipline on a 15-hectare site.
The land lay untouched as the troubled brewer lurched from one investment crisis to another. According to Broo's recent quarterly results, the company lost $2.9 million in the past financial year, with a $44,000 profit in the last quarter derived from share sales - not beer.
Broo has lost over $20 million since listing on the ASX in 2016. Its latest cash flow report shows just $116,000 cash and equivalents available to the company at the end of the June quarter.
The company announced it would sell the BWEZ site in June to Ballarat's Bentley Property Group, hoping to make a $5 million-plus profit on the original $2.16 million it paid for it in 2017.
The sale was conditional on approval from DV, and the purchaser entering an approved-use agreement with the government body.
In a statement to the ASX, Broo's CEO Kent Grogan said the company had been notified by DV the current proposed terms of the sale of the BWEZ site and terms for the new section 49 Agreement to be entered into by the purchaser had been declined.
FOLLOW THE COURIER'S BROO COVERAGE:
- From 2017: Broo coming to Ballarat with world's greenest brewery
- From 2017: Broo proposes to build 10,000-capacity live music venue in Ballarat West
- From 2017: Future BWEZ brewer lands huge distribution deal in China
- From 2018: Broo abandons Delacombe bar but looks to expand BWEZ presence
- From 2019: Ballarat Council says no planning application received for development at BWEZ
- From 2019: Broo may sell industrial plot in Ballarat's west after losses
- From 2019: Broo's Ballarat brewery project on ice as company reaches for funds
- From 2019: Broo Brewery's land at Ballarat West Employment Zone subject to potential buy-back clause
- From 2019: Ballarat brewery must be built within five years, state government reiterates
- From 2020: Broo in Ballarat: Uncertain plans as Chinese deal falls apart
- June 2021: Broo announces intention to sell Ballarat property
- July 2021: City of Ballarat advocates for takeback of Broo BWEZ property
"The Company has agreed with the purchaser to a 30-day extension of the relevant period for obtaining the relevant approvals for the sale from Development Victoria," the statement said.
"The Company is currently in communications with Development Victoria in relation to the matter and will provide a further update to shareholders in due course."
However in a statement to The Courier, DV group head of property development Penny Forrest said "Development Victoria has analysed all options available and has concluded that it if the conditions of the original contract cannot be met, Development Victoria has the contractual right to buy back the land and go back out to the market."
"There is high demand for industrial land in Ballarat and BWEZ and we are confident we will be able to deliver a quality development for this prime land."
The Courier understands Bentley Property Group sought to alter the terms of the s.49 agreement for the land to allow the sale to go ahead. The Courier also understands DV may buy back the land and offer it as an expression of interest project in conjunction with the City of Ballarat. No repurchase price for the site was available.
Liquor industry journalist Matt Kirkegaard says the Broo site is subject to a call option under the original purchase agreement, with the vendor having the option to buy back the land in the event Broo defaulted on obligations to complete the development of a commercial brewery at the site, ensuring at least 100 full-time employees are employed within five years of settlement. This is due to expire in February 2022, he writes in the independent journal BrewsNews.
Broo had been producing its beer under a contract arrangement with CUB since last August, and was forced to pay for its first order through a capital raise last year, Mr Kirkegaard wrote.
Its latest quarterly results showed the company had generated $1.99 million in revenues from sales for the year, while spending $2.3 million making beer and $2.1 million on administration and corporate costs.
Broo has never lodged any planning applications for its brewery with the City of Ballarat. While some councillors and council officers expressed support for the ambitious project in the past, they are now calling for the site to be returned to DV.
"I think it's disappointing they've actually looked to on-sell it at a higher amount," Cr Ben Taylor said in July.
"That's land banking and trying to make profit out of it, which goes against any intention of what BWEZ has been set up to do,"
The Courier attempted to contact Broo and the Bentley Property Group for comment, but no answer was forthcoming.
Broo's share price is currently 1.6c.
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