Administrators win approval for Goulburn's Tribe Brewery sale

The company went into voluntary administration on February 28 but at a second creditors meeting this week, the majority accepted a buyout proposal from the Elsie Cameron Foundation and VBS Investments on behalf of the Convertible Note Holder Group.

The $5.5 million to $6.7m agreement effectively avoids the company's liquidation and guarantees a small return - five cents in the dollar - to unsecured creditors.

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Goulburn's Tribe Breweries goes into voluntary administration

Goulburn's Tribe Brewery becomes centre of company attention

FTI Consulting voluntary administrator, Chris Hill, said the deed of company arrangement meant employee entitlements were guaranteed in full and the return to creditors was greater than liquidation.

"This outcome means that Tribe will continue as a going concern, which is a great outcome for Tribe's employees and customers," he said in a statement.

The administrators' report stated the "majority" of employees would be retained.

Goulburn Chamber of Commerce and Industry president, Darrell Weekes, described it as a "tremendous outcome."

"The local brewery has always been a strong business, one of the strongest in the group (of five entities)," he said.

"It's looking good from a business perspective and will only improve what is a strong local economy. Currently we also have the lowest vacancy rate in Auburn Street since 2003."

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The Goulburn facility (Tribe Partner Brewing), started in Ducks Lane in 2019, has continued operations since administrators were appointed. It produces its own Mornington Peninsula, Stockade Brewco and Wilde brands but 82pc of its revenue is derived from contract brewing for outside parties.

The operation had a 35 million litre capacity, but capability for 110 million litres, with investment.

FTI's report gives insight into the depth of financial difficulties. It details $72 million in debts to unsecured creditors and $30.7m to secured creditors. Just $1m is available for unsecured creditors.

The administrators attributed the collapse to "trading losses, strong competition and under-capitalisation."

"Since production commenced at Goulburn, the group (of companies) has been unable to generate sufficient production volumes on a consistent basis to reach cash-flow break-even. These ongoing trading losses have essentially been funded via debt, in the form of convertible notes and shareholder loans," the report stated.

But COVID-19 had also impacted production, labour and supply chains, resulting in trading losses. In addition, an onsite wastewater treatment plant failure in six weeks in August and September, 2022, added $2.5m in costs as the material was transported offsite.

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Since 2020, the group's balance sheet had "deteriorated significantly." It registered trading losses of $18.9m, $15.3m and $21.2m in the three financial years to June, 2022. This was despite a debtor financing agreement in 2019.

The report details $7m in unpaid excise duties to the Australian Taxation Office.

Goulburn Mulwaree Council will not say whether it is one of the unsecured creditors. In 2018, the council granted a $3.28m reduction in water and sewer fees over three years as an incentive for the company to establish in Goulburn. This was conditional on local employment targets, which the company exceeded.

Earlier, it had also granted Tribe a special industrial water usage rate.

General manager Aaron Johannson said it would be "inappropriate" for the council to comment on The Post's questions, "due to the commerciality of the administration process."

"(The) council looks forward to continuing its relationship with this significant employer to the region," he said.

The administrators revealed that all shares in Tribe Brewing were sold to Tribe Noteholders Group on February 27, 2023, the day before the former entered voluntary administration.

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FTI shut down the Stockade Brew Co Barrel Room at Marrickville and called for expressions of interest in overall sale. Nineteen parties registered but the administrators recommended the Convertible Noteholder Group's deed of company arrangement be accepted because it guaranteed continued operation, employee entitlements and a return to unsecured creditors.

This was accepted at Tuesday's meeting.

The Goulburn operation employs up to 60 people. The Post has sought comment on whether all employees would be retained.

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