USA: Investor gets in line against brewery bailout
Bankrupt Pittsburgh Brewing Co., which says it needs a $500,000 line of credit to continue operating, is facing more opposition to its attempt to win court approval of interim financing, Pittsburgh Tribune-Review published December 20.
Investor Jack R. Cerone is the latest creditor to object to the brewery's quest for the line of credit from a mysterious investor, identified in court documents only as Pittsburgh Brewing Acquisition LLC.
The brewery is expected to plead its case Thursday before U.S. Bankruptcy Judge M. Bruce McCullough. The company wants an immediate $250,000 cash infusion and another $250,000 by Jan. 1.
Cerone, who owns a 20 percent interest in the brewery, opposes the deal because his claims will fall behind those of the new investor, according to court documents. Cerone said he may agree to the interim financing after he reviews Pittsburgh Brewing's financial reorganization plan, which is expected to be filed today.
Cerone, a Chicago attorney who has handled labor negotiations for the brewery, denied Pittsburgh Brewing's claims that he agreed on how his stake in the brewery would be handled once the new investor joins the organization.
Cerone has spent $1.5 million over the past three years to buy $6.2 million of brewery debt. Cerone holds the only court-approved claim on Keystone Brewers Holding Co., which owns the trademark rights to the Iron City and IC Light brands.
Pittsburgh Brewing has yet to reveal how much money the new investor is willing to offer the brewery for permanent financing to allow it to emerge from bankruptcy, which is projected to be in mid-February. That amount is expected to be revealed today.
The U.S. Alcohol and Tobacco Tax and Trade Bureau opposes the interim financing plan because under it the agency would take a backseat to the new investor's claim. The bureau, which collects excise taxes on beer, said it would withdraw its objection if the brewery pays it $49,130, and posts a bond to cover future excise taxes.
Duquesne Light Co. last week filed a motion to force Pittsburgh Brewing to pay a $10,000 security deposit it promised to pay the utility in January. The brewery said the issue of the security deposit is moot.
MeadWestvaco Packaging Systems, which leases a beer packaging system to the brewery, opposes the interim financing because the brewery has not revealed if it will pay for leases of company equipment.
The creditors committee said in documents filed Monday that it did not object to the interim financing. It has met with the new investor several times and "meaningful steps" have been taken toward developing a viable reorganization plan, said attorney Robert Sable, who represents the committee. The identity of the investor is known to creditors, Sable said.
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