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UK/US: Blavod Extreme Spirits prepares sale of US unit

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Blavod Extreme Spirits is planning to sell its US subsidiary to its CEO.

The UK-based spirits group said today (30 August) that it will hold an EGM next month to vote on the proposed sale of Blavod Extreme Spirits USA to Black Diamond, a company controlled by Jeff Hopmayer. The sale would cost Black Diamond US$800,000, with the company assuming liability for US$3.2m-worth of debt owed by the unit.

Should the sale go through, Hopmayer would resign from his position with BES, the company said.

Based in Tennessee, the US unit was acquired from Extreme Beverage Company in 2004. The subsidiary handles the marketing and selling of wines and spirits, including Blavod Black Vodka, in the US. In the year to the end of March, BES USA posted sales of US$3.8m, with an operating loss of US$1.96m.

Following a review of the US business earlier this year, directors at BES concluded that "the likelihood of the business growing into profit within an acceptable timescale was insufficient to justify asking shareholders for further capital", the company said.

"Having reviewed possible alternatives … the directors concluded that the company as it is currently constituted is not attractive as there are few synergies between its UK operations and the US business, with Blavod the only brand sold in both geographic markets. The management of these two geographically diverse businesses within a single, AIM-quoted company has proved complex, cumbersome and costly. Most importantly, the US business continues to lose money, while the UK is operating profitably on a monthly basis before allocation of central overheads."

While overall turnover would be halved, BES would benefit from the sale in that ongoing losses would be "almost entirely eliminated". The company would then focus entirely on its opoerations in the UK.

The EGM is scheduled for 24 September in London.

Separately, Blavod said today that its finance director, Tony Murphy, has left the company with immediate effect to pursue other interests.


Sectors: Spirits, Wine

Companies: Blavod Extreme Spirits

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