DME Resumes Operations in Charlottetown Under New Ownership

Diversified Metal Engineering (DME) has returned from the brink of collapse.

CIMC Enric Tank & Process B.V. yesterday closed on a deal to acquire the financially troubled Canadian brewing equipment manufacturer.

CIMC, a Netherlands subsidiary of CIMC ENRIC Holdings in China, which operates brewing equipment businesses Ziemann Holvrieka and Briggs, reached an agreement last month with court-appointed receiver Alvarez & Marsal for DME Group’s business in Charlottetown.

The Superior Court of Prince Edward Island approved the sale on February 22. Financial terms of the transaction were not disclosed, but the deal included the Charlottetown property as well as machinery, equipment, inventories, customer lists, brewery “works-in-progress” projects, and the intellectual property for DME and Newlands Systems Inc., among other assets.

CIMC, however, did not assume any of DME’s liabilities.

Moving forward, the company will operate under the name DME Process Systems Ltd. and produce equipment under the DME and Newlands brand names. According to a press release, the company officially resumed “full” operations today.

Marc de Jong, DME Process Systems managing director, did not respond to questions from Brewbound about the company’s plans for outstanding projects, safeguards being implemented to prevent clients from losing their deposits or the rehiring of employees.

In a press release, CIMC said the acquisition would help the company “strengthen its position in the overall brewing market and increase its manufacturing footprint in Canada.”

“The DME Group brings us an experienced team as well as a great customer base, which allows us to further increase our presence in North America,” Ko Brink, CEO of CIMC, said via the release. “Adding DME/NSI to our group brings two strong brands in the (craft) brewing industry that will highly contribute to our existing brand portfolio.”

The news comes after 27-year-old DME fell into receivership in late November after defaulting on loan payments to the Royal Bank of Canada. The collapse of the company blindsided hundreds of breweries that had paid millions of dollars in deposits for brewing equipment.

Those companies are among hundreds of unsecured creditors that were unlikely to be made whole. That’s left several brewers in limbo, including Big Bend Brewing Co., which had paid DME more than $1 million for equipment. The Texas craft brewery suspended operations at the end of 2018.

Speaking to Brewbound, Mahala Guevara, Big Bend’s vice president of operations, said DME’s sale “may be too little, too late for us, but it’s too soon to tell.”

“We are still trying to figure things out,” she added.

Meanwhile, Carson Souza, brewmaster and general manager of Illinois-based Pig’s Mind Brewing, told Brewbound that the company may have to pay hundreds of thousands of dollars more just to receive the 30-barrel brewhouse it had ordered.

According to Souza, Pig’s Mind already paid $330,000 in deposits for the equipment, which was part of a nearly $3 million brewery expansion project at a yet-to-be-constructed neighboring building.

“They want me to make a final payment, and then they want me to pay another $180,000 on top of that to get this brewery,” he said.

All in, Souza said Pig’s Mind would be on the hook for about $280,000 more to DME, which was supposed to complete the project by December 25. Now, he is debating whether to submit the additional payments to DME or purchase a new brewing system from another manufacturer.

“I don’t know which way we’re going to go,” he said. “I would 95 percent say I’m probably going to put another wire into DME and get this brewery. Hopefully it’s not a 25-week lead time, too.”

In other DME news, Infinity Asset Solutions Inc. and Joiner Sales Corp.’s auction for the assets of the former Newlands factory in Abbotsford, British Columbia, commenced on February 27.

Brad McQuhae, who founded Newlands and merged with DME following the 2016 sale of his business to venture capital group Clearspring Capital, told Brewbound that he acquired some of the equipment assets from last month’s auction. He declined to share his future plans for those assets, but said CIMC’s acquisition of Newlands was in name only.

“What they’ve got is the brand name, the plaque, you might say,” he said. “But as far as the talent goes, the knowledge, the expertise of the people and everything else, they chose not to keep any of that.”

McQuhae left DME in August, 2017, prior to the company’s financial troubles becoming public.

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