Maui Brewing had accepted defeat and was ready to move on in June when BX MT BAMF LLC – an affiliate of Anaheim, California-based Brewery X – was named the winning bidder in the auction of San Diego’s Modern Times Beer, Maui CEO Garrett Marrero told Brewbound.
Maui dropped out of the bidding about halfway through the auction, and despite its final bid of $15.3 million being accepted as a backup bid, the ensuing post-auction court drama between Brewery X and fellow bidder MTD Asset Acquisition seemed to leave out the Kihei, Hawaii-based brewery.
“We had moved on, frankly,” Marrero said via email. “We never expected that the auction would’ve gone to the backup bidder.”
The unexpected happened July 1, when Brewery X backed out of the sale, and Modern Times announced that Maui was now in the buyer’s seat. Maui did not confirm that it would be the ultimate buyer until Thursday – three weeks after the “unexpected” move by Brewery X was announced.
“The two other parties clearly did a great deal of posturing and had either not done their homework or not had actual capability or intent to close on the transaction,” Marrero said. “Given the turmoil that the other two auction participants created, we felt the responsible action was to step back, evaluate all opportunities, and wait until we had a concrete decision moving forward.
“This was done mostly out of concern for the MT team and ours as well,” he continued. “There has been a lot of emotion[al] whiplash in this process, and we didn’t want to be the source of more.”
The deal is expected to close on or before October 29 – 120 days after Brewery X pulled out of the sale, per the sale approval order signed by Orange County Superior Court Judge John Gastelum on June 24. The sale is moving forward with Maui’s bid of $15.3 million, nearly $5 million less than Brewery X’s initial winning bid of $20 million.
What’s Next for Modern Times?
At this very moment, nothing is changing. However, that does not mean there won’t be changes in future, Marrero said.
“Change is inevitable given the situation,” Marrero said. “Things must change. We are being thoughtful to determine what changes must be made in the now, near future and at later dates and what these changes entail.”
Maui has been funding Modern Times’ operations since Brewery X pulled out of the sale, which is part of the sale agreement and Maui’s agreement as backup bidder, Marrero said. As far as he is aware, there “will not be any further funding from other sources outside of [Maui] and normal MT operations.”
Modern Times’ has had all its financial decisions overseen by a court-appointed receiver since April, after the brewery defaulted on several loans. As part of his role as receiver – which included overseeing the sale process – Thomas C. Hebrank borrowed at least $1.5 million to keep the brewery going through the sale process, $1.1 million of which was quickly “exhausted” to meet supply demands ahead of the summer selling season, according to court filings. The remaining $400,000 was borrowed to meet payroll and “fund materials purchases,” according to an ex parte order filed on June 23.
Despite its money woes, Modern Times “can and will return as a highly successful and profitable brand,” Maui said in a press release.
Modern Times’ tumultuous year began in February, when the company announced it would close its taprooms in Portland, Oregon; and Oakland, Santa Barbara, and Los Angeles California. As previously reported by Brewbound, Modern Times also owed a total of $222,938 in back rent across its nine open leases in June.
There are “no immediate changes” coming to Modern Times’ remaining four taprooms in San Diego, Encinitas, and Anaheim, California, Marrero said. However, “[landlord] negotiations could drive some decision making,” he added.
As for Modern Times CEO Jennifer Briggs, Marrerro said Maui would “very much like to have the continuity with Jenny during and perhaps after transition,” but ultimately left the decision to Briggs.
Briggs has been a member of Modern Times board of directors since July 2021, and was appointed interim CEO in October 2021, following the May 2021 resignation of Modern Times founder and former CEO Jacob McKean. She was officially appointed CEO in January.
And What About Maui’s Own Operations?
Maui is on track to produce 90,000 barrels in 2022. The brewery produced more than 60,000 barrels in 2021 according to the Brewers Association (BA) in the May/June issue of the New Brewer. Maui also makes hard seltzer and operates a spirits brand, Kupu Spirits, which also sells ready-to-drink canned cocktails; neither is included in BA production data.
Maui’s production increase has been aided by a partnership with Denver, Colorado-based Sleeping Giant Brewing Company, which began brewing all of Maui’s bev-alc offerings distributed on the mainland earlier this year.
While the purchase of Modern Times will “not provide immediate capacity” for all of Maui’s “mainland needs,” it will allow for “future capacity,” Maui said in Thursday’s release. What that future capacity will be “is unknown,” Marrero said.
“The priority is making sure MT has everything it needs to be able to meet the strong demand it has for our MT beers before we go too far on a MBC brewing focus there,” Marrero said. “We’re stoked that MT has such strong demand and loyal supporters and our aim is to focus on that. Naturally as we evaluate capex to do the above we’ll layer additional potential capacity and costs over that as well.”
Asked if that added capacity would affect Maui’s partnership with Sleeping Giant, Marraro said “currently, this does not directly affect any other arrangements we have.”
Maui transitioned part of its production to Sleeping Giant to meet mainland demand and support distribution expansion, as well as counteract supply chain constraints and freight costs, Marrero told Brewbound in November 2021. At the time, he said Maui would be in search of its own facility to take on production again at some point.