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Brewdog’s investors discover dilution

Summary:
Remember Brewdog? They’re the independent Scottish beer business who run obnoxious advertising campaigns, have a penchant for crowdfunding and have promised to never sell the company “to a monolithic purveyor of industrial beer”.Well, at the end of this month, Brewdog is holding a general meeting to approve several important changes to its articles of association, which it says will pave the way for an injection of cash from an unnamed investor.Those resolutions include the temporary removal of pre-emption rights, so current shareholders can’t stop their stakes being diluted by the fundraising, and, more exciting still, the creation of generous preferred shares that give the new investor a ton of downside protection.On a liquidation, return of capital, a sale of the Company or its business

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Remember Brewdog? They’re the independent Scottish beer business who run obnoxious advertising campaigns, have a penchant for crowdfunding and have promised to never sell the company “to a monolithic purveyor of industrial beer”.

Well, at the end of this month, Brewdog is holding a general meeting to approve several important changes to its articles of association, which it says will pave the way for an injection of cash from an unnamed investor.

Those resolutions include the temporary removal of pre-emption rights, so current shareholders can’t stop their stakes being diluted by the fundraising, and, more exciting still, the creation of generous preferred shares that give the new investor a ton of downside protection.

On a liquidation, return of capital, a sale of the Company or its business or a listing of the Company, they are entitled to receive the higher of (i) a preferred return preference of 18 per cent per annum compounding annually and (ii) such amount as would be applied to the holders of the C shares if they ranked pari passu with the A Ordinary Shares and B Ordinary Shares.

According to a letter to shareholders on Monday, Brewdog could sell up to 30 per cent of the company to the investor. Certain “significant shareholders” will be able to sell up 20 per cent of their holdings too.

Other, insignificant shareholders will just have to hold on and hope.

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Kadhim Shubber
He is a freelance journalist who first bought bitcoins so that he could buy a beer at The Pembury Tavern, Hackney’s bitcoin pub. He has reported for Slate, Wired, The Daily Telegraph, The Sunday Times and Ampp3d. He is currently studying for a Masters in Journalism at City University London.

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