Colorado-based beverage distributor Legacy Distribution Group, a subsidiary of CBD Global Sciences Inc., has completed its previously announced purchase of NewAge, Inc.’s direct store distribution business for over $2.2 million, according to a press release issued last week.
The deal, first revealed in September, was completed with an asset-based line of credit obtained by Legacy from a U.S.-based private lender, to be leveraged by up to 90% of eligible accounts receivable and inventory. The purchase price was approximately $2.04 million. After adjustments, including a $250,000 payment due within 60 days of closing, the aggregate price was $2.29 million.
In August, NewAge Inc. filed for Chapter 11 bankruptcy relief. The DSD segment – an independent division run through subsidiary companies NABC, Inc. and NABC Properties, LLC – was not included in the filings and was kept separate from the bankruptcy process, though it did count towards the company’s total assets.
The DSD house is one of the largest independent beverage distributors in Colorado, servicing brands including Essentia, AriZona, Liquid Death, Black Rifle Coffee Company, Fiji Water and 5-Hour Energy to more than 5,000 outlets across channels.
According to the release, NewAge’s DSD house will continue to be “operated by the management team in place, along with hundreds of existing employees.”
“This is a positive achievement for both Legacy Distribution and the team at the DSD,” said Brad Wyatt, CEO and Chairman of the Board at Legacy Distribution, in the release. “The team at the DSD has accomplished a herculean effort to keep the wheels on at the DSD during the tumultuous period of time that led up to the parent company’s bankruptcy and through the transition to new ownership. I can’t say enough about how much we appreciate their accomplishments and that we look forward to supporting their efforts to get the DSD Operation back to the Best-In-Class status it once held, and continuing the legacy.”
Wyatt went on to praise NewAge’s DSD business for doing “an incredible job at growing brands in its market.”
“I have complete confidence in the leadership team of the DSD and we intend to support them in achieving our collective goals for continued growth with a focus on profitability in the years to come. I must also share my appreciation for the longstanding, key vendor accounts that are vital to the business. They weathered the storm with the DSD; we appreciate you and look forward to growing your brands.”
The sale was subject to approval by the United States Bankruptcy Court for the District of Delaware in connection with bankruptcy proceedings initiated by NewAge in August.
In October, the U.S. Securities & Exchange Commission (SEC) charged former NewAge CEO Brent Willis with fraud and securities violations, claiming that he had “orchestrated a multiyear fraud” to create the “illusion” that NewAge had major sales agreements in place with clients including Walmart, Safeway and the U.S. Military. Willis resigned as both CEO and a member of the board at NewAge last January.