City Brewing & Beverage has completed a transfer of control to a new ownership group made up of some of the multistate contract manufacturer’s existing lenders.
The move has been in the works for several months as City has attempted to fix its financial situation. Terms of the deal and names of the involved financial partners were not disclosed.
News of City’s money troubles arose in early 2024, when the company overhauled its capital structure to borrow $115 million. Later in the year, Bloomberg reported the company was in negotiations for an additional $50 million loan to help with restructuring efforts.
In January, S&P Global reported City had missed quarterly principal payments on loans due at the end of 2024. City entered into a forbearance agreement with its lenders to temporarily pause payments, and received a $35 million bridge loan.
In March, Bloomberg reported City was considering transferring ownership to its lenders.
The ownership change has allowed City to reduce its debts, lower annual cash interest costs and secure new capital, according to a press release.
With the transfer, City executive chairman David Taylor has stepped down from his position, but will “continue to support the business in the near term to facilitate a seamless transition,” according to the release. The rest of City’s executive leadership team, including CEO Ross Sannes, will remain in their roles, along with a new board of directors.
Along with Sannes, the new board includes:
- Former MGP Ingredients and SunOpta president and CEO David Colo (previous roles at Diamond Foods, ConAgra Foods and Nestlé-Purina);
- Former Keurig Dr. Pepper president Derek Hopkins (previous roles at Bacardi, The Coca-Cola Company, Anheuser-Busch InBev [A-B] and Diageo);
- Former City chairman and CEO (2007-2021) George Parke;
- And existing board member and Bluerose Associates president Michael Wartell.
“As we transition to new ownership, I look forward to working closely with our new partners to steward City Brewing into its next chapter,” Sannes said in the release. “With a stronger financial position and clear strategic vision, we are well-positioned to continue serving as the go-to producer in the beverage manufacturing space while pursuing sustainable growth in the years ahead.
“I am thankful for the dedication of our team, the support of our financial partners, and the continued trust of our customers, all of which have brought us to this milestone.”
City’s clientele includes bev-alc giants such as A-B, Mark Anthony Brands, Boston Beer Company and Pabst Brewing Company, as well as emerging brands such as Garage Beer. The company also co-packs several beyond-beer and non-alcohol offerings, operating 12 warehouses across La Crosse, Wisconsin; Latrobe, Pennsylvania; Memphis, Tennessee; and Irwindale, California.
This is City’s second ownership change in less than five years. In 2021, a group of investors including Charlesbank Capital Partners, Oaktree Capital Management, City management and Blue Ribbon Partners, including chair Eugene Kashper, took 100% ownership of the company. With the change, CEO George Parke III retired and Sannes took over the position.
One year later, nearly 200 workers from City’s Latrobe operations – represented by IUE-CWA Locals 22 and 144 – went on strike, alleging long hours, the elimination of overtime pay and refusal to bargain with union members. A new four-year contract was tentatively passed one week later.
More recently, some brewers have started to pull back their contract production at City, including Boston Beer. Boston has actively been moving much of its production inhouse and away from City, which is its only third-party contracting partner. In a 10K filing earlier this year, Boston Beer said it expects 20% of its domestic shipment volume to be brewed at City this year, notably down from the 32% that was produced in 2021.
Pabst has also reportedly tempered its production expectations for City. Pabst ended its production arrangements with Molson Coors in December, and announced a deal with City that would see the co-packer produce the majority of Pabst’s volume through 2040. However, Pabst’s production is now also being supplemented through an agreement with A-B, announced in January, providing Pabst with “greater supply chain flexibility and improved efficiencies.”