1812 Brewing Company Inc (OTCMKTS:KEGS) is one of the leading players in the craft beer space and on August 2 it made a key operational decision that investors could consider looking into. On Wednesday the company announced that it had mutually agreed with its debt investors Trillium Partners LP to terminate the 3(a)10 debt restructuring transaction that had been approved by a court.
The termination would be completed at the end of the current partial debt paydown. On October 17 last year, the company had gone into a Settlement Agreement with the debt investor, which had later been approved by the District Court of Maryland. At the time 1812 Brewing Company Inc had agreed to issue shares of its common stock to Trillium in line with the Section 3(a) 10 exemption. That was for the purpose of taking care of its outstanding debts.
In the past few months, a number of factors had made it difficult for the company to fully adhere to the previously agreed-upon arrangement in its entirety. Hence, Trillion and 1812 Brewing Company mutually agreed that it was in the best interests of the shareholders to terminate the agreement following the first payment of $500000 to Trillium.
The first payment had been made in compliance with the terms that had been agreed upon. Once the first tranche of payment is made in its entirety to Trillium, the debt would be transferred to the original CD holders. It was also noted at the time that the company was looking to get into negotiations with the CD holders as well.
Tom Scozzafava, who is the Chairman and Chief Executive Officer of the company, spoke about the latest development as well. He noted that when the discussion had first started between the company and Trillium 18 months ago, the situation was entirely different. The continued rise in interest rates and the possibility of a recession had made markets weaker too, which had also been reflected in the price action in the 1812 Brewing Company stock.
Hence, in an effort to relieve the company’s shareholders from the pressure and to enable the management to focus its efforts on the continuation of growth, it had been decided to cancel the debt reduction initiative.
On the business side of things, matters seem to be positive for 1812 Brewing Company. On May 2 the company announced that the ‘Brew Pub’, its restaurant and pub, had recorded strong sales in 2023 when compared to 2022. The total sales for the first four months of the year had gone up by as much as 44% as compared to last year during the same period.
The company noted that there were some key factors that may have contributed to the performance. One of those was the offering of the most diverse ever collection of 1812 Brewing Company beers and that was coupled with aggressive marketing and advertising. The success that the company’s beers continued to have in international beer competitions was also a factor in the performance.