Eastside Distilling Inc. of Portland, Oregon, recently announced it has entered into a non-binding letter of intent to terminate its amended and restated license agreement with Rich Marks LLC and John D Rich Tisa Trust and to sell certain assets to Redneck Spirits Group, LLC (RSG). Eastside anticipates proceeds in excess of $8 million including a non-refundable “Good Faith Deposit” if RSG fails to meet certain closing conditions. Eastside expects to reach a definitive agreement and close the transaction in the current quarter. The transaction encompasses the Redneck Riviera products including Redneck Riviera Whiskey, Granny Rich Reserve, and Howdy Dew! finished and dry goods as well as a portion of the Redneck Riviera barrel stock. The Redneck Riviera partnership with John Rich has transformed Eastside into a national distributor of craft spirits. The divestiture of Redneck Riviera aligns with Eastside’s previously stated intent to focus its resources on its core growth platforms of craft spirits, cocktails, and mobile canning.
Eastside appointed Roth Capital Partners, LLC, as exclusive financial advisor, and Harriton & Furrer LLP, as legal advisors, to assist with the transaction. Eastside will further discuss the transaction’s impact on its fiscal year 2021 outlook when it releases its second quarter results in November.
Preliminary Third Quarter Financial Results and a Sustainable Growth Plan
Eastside expects 3rd quarter consolidated revenues between $4.5-$5 million and anticipates reporting an improvement in EBITDA from Q2 2019 and a sequential improvement over the prior quarter. Eastside continues to believe it will make more improvements in EBITDA in Q4.
With the exit of Redneck Riviera, Eastside now turns its focus to five key objectives for sustainable growth. These five objectives include (1) achieving cash neutral quarterly operating results, (2) restructuring and extending remaining debt, notes, and the Azuñia earnout beyond 2021, (3) adding liquidity for short term working capital, (4) building spirits brand portfolio plan that grows volume with profit focused on the Azuñia Brand, and further depletion of remaining barrel inventory, and (5) implementing a strategic growth plan for Craft Canning.
To enable the achievement of the growth plan, Eastside will professionalize the enterprise platform with an ERP system that will emulate best practices in packaged goods, build a structure that is collaborative yet proficient, and place the right people in the right places throughout the company.
“We are evolving the focus of the company to operate with speed, focus, and discipline, and we will succeed with an aligned mission and vision that focuses the overall company while simultaneously empowering teams and individuals. The overall market for craft spirits and canned beverages is expanding, and Eastside will carve-out a share of the market that will fulfill our business objectives for growth,” said Paul Block, Eastside Chairman and CEO. “Today’s announcement helps position the Company to further grow our core businesses and unlock value for our shareholders,” continued Block.