Shares in ASX-listed distiller Top Shelf International are priced at an all-time low after the company confirmed an unexpected capital raise.
Top Shelf had in March declared plans to undertake a sale and leaseback of its Eden Lassie agave farm that it believed could free up $25 to $30 million worth of capital.
Perhaps there were no takers, as on Wednesday it announced the capital raise reported by the AFR as targeting up to $40 million.
Top Shelf shares last traded at an all-time low of 26c on Friday May 19, down from 39c on Tuesday May 16, suggesting some investors got wind of the development.
The shares subsequently went into a trading halt pre-market on Monday morning.
New CEO cutting costs
Meanwhile, Top Shelf has announced a plethora of cost-cutting measures as it pursues profitability more aggressively under newly appointed CEO, Trent Fraser.
Fraser, who joined Top Shelf as president of its emerging agave division in September 2021, was anointed as CEO on April 21, 2023.
“While the Top Shelf brands continue to shine in market and in awards, it is evident we need an immediate transformation of the existing business plan and model,” Fraser declared one week later in the company’s Q3 results announcement.
“A full strategic review is underway with a vision to set a clear pathway to profitability.
“There are a number of initiatives and gains we have already enacted that are reflective in this quarterly result, and I can assure you of a similar improvement for FY23 Q4.”
Top Shelf lost a further $4.7 million last quarter on revenue of $6.4 million, bringing losses so far in FY23 to $16.6 million.
But its normalised losses in Q3 and the year-to-date – after exclusion of discontinued and non-recurring expenditure – were $3.5 million and $10.1 million respectively, the company said.
These costs included $2.7 million spent on its agave distillery, which is targeted for commissioning by August 2023.
Top Shelf said it has prioritised cash preservation with a “disciplined business simplification program” that has realised labour savings of $2 million.
Other savings of $5 million were achieved through measures including reduced investment spend, business activity changes, supplier tender processes and the removal of discretionary spend.
New deals announced
In some positive news for shareholders, Top Shelf today announced it had secured increased national ranging for NED Whisky and Grainshaker Vodka in Coles Liquor stores.
This follows the recent announcement of a new contract packaging agreement with “a multinational beverage producer”, which contributed more than 100,000 cases in Q3.
“The company expects to contract pack approximately 80,000-100,000 cases per month, improving the operating efficiency and asset utilisation of Top Shelf’s Campbellfield production site,” it said.