Weyerbacher Sells Majority Stake to Private Investment Group, Files for Chapter 11 Bankruptcy

Weyerbacher Brewing Company today announced the sale of a majority stake in the company to 1518 Holdings LLC, a Philadelphia-based private investment group.

Financial terms of the deal were not disclosed.

Speaking to Brewbound, newly named president Josh Lampe, who previously served as chief operating officer and has supplanted brewery founder Dan Weirback as the company’s leader, said 1518 Holdings had acquired a 55 percent stake in the 24-year-old business. Lampe declined to name the investors within the firm, describing them as “a loose group of four or five people.”

“It gives us working capital to fund the things that we want to be able to do,” he said, adding that the new funding would help solve some of the cash flow issues that hampered production and marketing.

According to Lampe, he and his brother Chris Lampe will retain about 30 percent of Weyerbacher. The remaining 15 percent of the business is owned by a handful of other shareholders, including Weirback.

In addition to the new investment, the Easton, Pennsylvania-based craft brewery has also filed for Chapter 11 bankruptcy in an effort to restructure its debt. In a press release, Lampe said 1518 Holdings believed the bankruptcy filing “was necessary in order to move forward quickly.”

Lampe told Brewbound that the company is carrying $2.1 million in bank debt. It also has “a fair amount of outstanding accounts payable,” he added.

“We had to get out from under some of this debt that we’ve been carrying for a very long time,” he said.

Most of Weyerbacher’s financial issues stem from a 2014 expansion project that cost $2 million and included the addition of a 40-barrel brewhouse. Over the years, however, the company dealt with increased competition — particularly in the pumpkin beer category — as it struggled to grow sales and pay down debt.

“We were expecting to see double-digit growth for a number of years … and with the market saturation that happened in pumpkin and all of those other things, that just didn’t pan out,” he said.

Moving forward, Weyerbacher’s 50 full- and part-time workers will not be affected by the ownership change, Lampe said. In February, the company cut two Philadelphia salespeople as part of a reorganization effort that Lampe said was aimed at operating “leaner and stronger.”

Lampe added that “the ultimate goal is to eventually implement an employee stock ownership plan (ESOP), which he said is part of 1518 Holdings’ exit strategy over the next five years.

“We’ve got to get to the company to a point that the ESOP makes sense,” he said.

In the meantime, Weyerbacher will begin offering contract production for other Pennsylvania craft breweries — including Emmaus-based Funk Brewing — in order to fill excess capacity. Lampe said Weyerbacher has about 10,000 barrels of its 30,000-barrel capacity available for contract production.

Last year, Weyerbacher produced about 11,000 barrels, Lampe said, adding that the company could have produced around 16,000 barrels if it had the cash flow available to purchase all of raw materials. This year, Lampe is projecting 16,000 barrels of Weyerbacher beer.

Part of Weyerbacher’s turnaround strategy includes the addition of new taprooms. The company currently operates taprooms in Easton and New Hope, and is eyeing new locations that could be announced in the coming months.

Weyerbacher will also begin reevaluating its 23-state distribution network and look to expand its canned beer lineup.

“The company is positioned for growth but has been hampered by debt that the company has been holding for a long time,” Lampe said.

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