The CEO of ASX-listed Broo has taken a pay cut following the announcement of a $3.6 million capital raise earlier this month.

Struggling Broo announced to the ASX this morning that Grogan had agreed to “restructure his remuneration package to further align with shareholders’ interests”.

Grogan will received a fixed salary of $180,000 including superannuation, down from $360,000. He will receive bonuses of $45,000 for every $2 million of sales revenue achieved after the $6 million mark.

According to the annual report released last month, Grogan had opted to reduce remuneration to $120,000 between January and June 2020 as “a short term response to the impact of the COVID pandemic” on the company’s performance, but his usual salary has been $360,000 per annum.

In addition he will receive 5 million class A performance rights if the company achieves $10 million sales revenue next year, and another 5 million of Class B performance rights if the company achieves at least $15 million in sales next year. Each performance right converts into one fully-paid ordinary share. Broo’s share price currently sits at $0.012 per share.

It was also noted that Matthew Newberry, also CEO at Catchment Brewing Co., is stepping down as a director at Broo, after it was announced it would not stand for re-election at the upcoming AGM.

The board will be joined by non-executive director David Zhu, currently director of 61 Corporate Advisory.

Annual report

In its annual report to shareholders at the end of September the company announced it had made a loss before income tax benefit of $1.9 million which it reported in its preliminary annual report – an improvement on the $3.5 million losses made the year before.

However, in its latest audited report, an income tax benefit of $1.4 million, in addition to profit from discontinued operations of $49,428, meant that total losses for the year were counted as $475,991.

This income tax benefit related to the expected capital gain on the disposal of the Ballarat property on which it was supposed to build “the world’s greenest brewery”.

“This has been on the basis that the realisation of the losses has been deemed probable,” said the company.

This is despite the fact that the land has not yet been sold because the deal was blocked by Development Victoria, the approval of which Broo needs to complete the sale. The deal is also conditional on the purchaser entering an approved use agreement with Development Victoria.

Capital raise

Last week, Broo also announced a capital raise.

The company said it had raised $3.6 million before costs via a secured convertible note financing “from a group of sophisticated and professional investors”.

According to the terms, the capital will be delivered in three tranches, the first of $1 million last week, another $1 million by 15th October and the final $1.6 million, subject to shareholder approval for the issuance of notes at its upcoming AGM in November 2021.

A total of 240 million notes will be issued. Each note is convertible into one ordinary share at a conversion price of $0.015 per note. The convertible notes have a term of 12 months, with interest payable monthly on the notes at 12 per cent per annum.

The raise will allow Broo to continue to grow its current operations and accelerate growth plans, the company said.

The funds raised will be used to fund beer production costs, marketing and distribution costs and as working capital.

Kent Grogan has been contacted for comment but did not respond by the time of publication.