Blue Ribbon is expected to refinance about $369 million of outstanding loans in the next 30 days following a $90 million debt prepayment as part of a deal with lenders, according to sources. The brewing company’s lenders on Wednesday agreed to amendments to allow the sale
of the Irwindale Brewery operations and equipment to City Brewing - an alcoholic beverage manufacturer owned by an investor consortium including Oaktree, Charlesbank and Blue Ribbon’s chairman and CEO - after some pushback on the original amendment, which was launched a few weeks ago, according to sources. Continue reading as our Americas Middle Market team analyzes the Blue Ribbon LLC refinancing agreements and Request a Trial for access to our coverage of thousands of other stressed/distressed debt situations as well as access to the linked documents.
As part of the agreement with lenders, $45 million of proceeds from the sale of Irwindale’s operations to City Brewing, combined with $45 million of equity contribution from Blue Ribbon’s existing shareholders, will be used to partially repay the $455.2 million first lien term loan due Nov. 30, according to sources. The shareholder could potentially raise additional funds to repay debt by selling Blue Ribbon Partners’ minority stake in City Brewing, they added.
The company’s debt stack also includes a $36.4 million RCF due June 30. The facility was undrawn as of the end of the third quarter.
Blue Ribbon also agreed to adhere to certain milestones concerning the debt paydown and fee schedules, according to the sources, who added that the refinancing has to be transacted by mid-May or a 1% quarterly fee will become payable. According to a press release issued March 16 by the buyers, the Irwindale sale transaction is expected to close in April.
The repayment should enable Blue Ribbon to obtain a B3 rating for the refinancing of the remaining debt, which should total $369 million, $354 million on a net debt basis, the sources said. Blue Ribbon would be 4.4x levered on a pro forma basis based on LTM EBITDA of $81 million, they added.
Blue Ribbon’s first lien term loan is quoted at 97.5/98.5, unchanged since the beginning of the year, according to sources.
Facility agent JPMorgan, which led the amendment process, is also expected to arrange a refinancing of the company’s 2021 bank debt, which could total up to $400 million, sources said.
In the Irwindale transaction, Blue Ribbon will retain the land and property at the facility while selling the equipment and operations to City Brewing, according to sources. City Brewing is now owned by Charlesbank Capital Partners, Oaktree Capital Management, Blue Ribbon Partners LLC and management. City Brewing released a press release
detailing the acquisition and its investment plan.
The company had entered into an option agreement with Molson Coors to purchase the Irwindale facility for $150 million and closed the purchase on Nov. 5, 2020. The group had been expected to sell the facility in a “back-to-back transaction” after acquiring it but said
during an earnings call in November that “some limitations” have “made it fairly complicated.” Without going into specifics, Blue Ribbon Chairman and CEO Eugene Kashper said that during the diligence period, the company discovered “various information” about the property and the loan that it took out to finance the purchase.
Blue Ribbon Partners LLC is “a new investment platform focused on the beer and beverage industry in the US. Blue Ribbon owns Pabst Brewing Company and holds a significant ownership interest in City Brewing,” and is led by Kashper, according to the release.
According to City Brewing, “Once operational, the newly named ‘Irwindale Brew Yard’ will be the largest full-service, low-alcohol beverage contract production facility in the western United States. The plant will have an initial capacity of approximately 55 million 24 x 12-oz cases per year and is expected to grow to 110 million cases per year by 2024. The facility is expected to begin production in the third quarter of this year and to hire over 150 employees within the next 12 months.”
The company and agent JPMorgan declined to comment, and City Brewing did not immediately respond to a request for comment.
--Ellen Schneider, Adelene Lee