As it navigates the Chapter 11 bankruptcy process, Utah-based direct selling company NewAge, Inc. announced last week it has entered a definitive agreement to sell its DSD distribution business to Colorado-based Legacy Distribution Group.
The DSD house, which is run independently of the core NewAge business through subsidiary companies NABC, Inc. and NABC Properties, LLC, is one of the largest independent beverage distributors in Colorado, servicing more than 5,000 outlets. The distributor services over 100 beverage, snack, spirits and beer brands such as Essentia, AriZona, Liquid Death, Black Rifle Coffee Company, Fiji Water and 5-Hour Energy among others and delivers to retail chains including Walmart, Target, 7-Eleven and Costco.
Legacy Distribution Group is a subsidiary of CBD Global Sciences Inc. which distributes both CBD-infused and non-infused CPG products through its DSD network in Colorado. According to its website, the distributor carries brands such as LifeAID, Defy, Mad Tasty and former NewAge portfolio brand Marley.
“Over the past several months, we have conducted a comprehensive strategic review of our company as we endeavor to simplify our business, scale our operations and position NewAge for sustained growth in the direct selling industry,” said NewAge chairman and interim CEO Ed Brennan in a press release. “DSD had humble beginnings and has grown to be one of the largest independent distributors in the country. This proposed sale offers what we believe to be an excellent outcome for stakeholders in the DSD business, including our employees and our customers. Legacy Distribution Group has a deep understanding of the industry and the market in which DSD operates, and we believe they will be able to provide strategic ownership of the business moving forward.”
The deal is expected to close in Q4 and is subject to court approval in the pending bankruptcy case.
Last month, publicly traded NewAge, Inc. filed for Chapter 11 bankruptcy relief and agreed to a stalking horse bid to sell the business and assets to DIP Financing LLC for $28 million. While NewAge subsidiaries ARIIX, Morinda and Morinda Holdings were included in the filings, the distribution arm was deliberately excluded. According to the release, the proposed sale of the DSD arm to Legacy is “part of the Company’s overall effort to align its assets and focus the business on maximizing revenue and cash flow generation for its larger scale Direct/Social Selling division.”
A spokesman for NewAge told BevNET at the time of the bankruptcy announcement that the DSD business was kept financially separate from the core NewAge business, although it was counted towards the company’s total assets in its bankruptcy filings.
In a letter sent by the distributor to brand partners on August 31, the company said the “DSD business remains a healthy business operation” and that it would continue to operate as normal, stating that “Most of our stakeholders, including employees, vendors, and key contract counterparties with the entities through which we conduct the DSD business, will be unaffected” by the bankruptcy.