Stroh To Acquire Heileman press release
The Stroh Brewery Company and G. Heileman Brewing Company, Inc., announced today that Stroh and Heileman have signed a letter of intent providing for the acquisition by Stroh of all Heileman assets.
The transaction, which is expected to be completed by July 1996, includes Stroh's acquisition of Heileman's five breweries located in LaCrosse, Wisconsin; Baltimore, Maryland; Portland, Oregon; Seattle, Washington; and San Antonio, Texas; and a beverage manufacturing facility in Perry, Georgia. Stroh also will acquire all of Heileman's brands, including Special Export, Old Style, Rainier, Henry Weinhard, Schmidt's, Lone Star, Champale, Colt 45, and Mickey's.
"We are extremely pleased to be acquiring Heileman," said William L. Henry, President and Chief Executive Officer of The Stroh Brewery Company. "The combination of the companies' employees, high-quality brand portfolios, and strategically located breweries will create significant strengths. We will become a stronger competitor in a highly competitive industry, both domestically and internationally."
Thomas O. Hicks, Chairman and Chief Executive Officer of Hicks, Muse, Tate & Furst Incorporated, Heileman's current controlling shareholder, said: "Since we acquired Heileman in 1994, we have awaited a rebound of the beer industry and an improvement in Heileman's financial performance, neither of which, for various reasons, has yet occurred. Accordingly, we have determined to focus our resources elsewhere. While the performance of our investment in Heileman has been disappointing, we are proud that, reflecting the outstanding performance of the rest of our investment portfolio, the overall performance of our Equity Fund "Even after our loss on Heileman of approximately $54 million, it is an indicated internal rate of return of at least 30 to 40 percent."
M. L. Lowenkron, President and Chief Executive Officer of G. Heileman Brewing Company, Inc. said: "Although this was a difficult decision to make, I believe that, in light of our current financial position, this transaction is not only a positive move for Stroh, but also for many employees of Heileman. It helps to ensure that our fine beer brands will continue to be available to our customers and it strengthens the position of the combined enterprise as a viable, long term competitor in the beer industry."
Under the letter of intent, Stroh, upon consummation of the transaction, will retire Heileman's bank debt, assume all trade and other specified liabilities of Heileman, and issue a combination of Stroh debt and equity securities that Heileman will exchange for its outstanding bonds and common stock. The Stroh securities to be issued include an estimated $60 million to $70 million of ten-year senior subordinated notes bearing interest at 425 basis points over treasury securities of corresponding maturity (with the exact amount of such notes to be determined by a formula); $5 million of 11 % junior subordinated notes; and ten-year warrants for 7.5% of the outstanding Stroh common stock. The warrants would be subject to a put-call arrangement in five years based upon appraised fair market value.
The letter of intent is subject to negotiation of definitive agreements, regulatory approvals, Heileman stockholder and bondholder approval, and other conditions. The closing of the transaction is expected to take place by July 1, 1996, subsequent to a pre-arranged bankruptcy filing by Heileman, which will be used to confirm the restructuring of Heileman's existing senior subordinated notes and of its equity. All trade liabilities will be assumed by Stroh. A majority of Heileman's stockholders, and an informal noteholder committee consisting of holders of approximately 50% of Heileman's outstanding senior subordinated notes, have indicated their full support of the transaction and the restructuring.
"The acquisition of Heileman is an integral part of Stroh's long-range plans," Mr. Henry said. "We recognize the challenges facing the combined company, but are confident that we can lead an expedited, smooth transition and meet those challenges effectively and efficiently," he concluded.
The Stroh Brewery Company, family owned and operated since 1850, is the nation's fourth largest brewing company, with brewing facilities in St. Paul, Minnesota; Longview, Texas; Lehigh Valley, Pennsylvania; Winston-Salem, North Carolina; and Tampa, Florida. Stroh produces a number of high-quality beer brands including Stroh's, Old Milwaukee, Schlitz, Schaefer and Schlitz Malt Liquor.
G. Heileman Brewing Company, Inc., founded in 1858, is the fifth largest brewing company in the United States. Since January 1994, the controlling shareholder of Heileman has been an affiliate of Hicks, Muse, Tate & Furst Incorporated, a private investment firm with offices in Dallas, New York, St. Louis, and Mexico City.