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Inertia Beverage Group Acquires/Merges With New Vine

Inertia Beverage Group has emerged the winner in the financial rugby scrum to snag the remains of New Vine Logistics.

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Observers said that IBG laid a winning body check on front-runner WTN Services Thursday when Bob Ackerman, Managing Director and Founder of Allegis Capital agreed to substantially increase his existing investment.

The financial details were not available, nor any sort of new capitalization table among the many investors in both companies. New Vine alone had at least nine major rounds of funding.

How the cap table and subsequent ownership percentages are finally sorted out will determine whether this is a merger or an acquisition.

SIMILAR PARTNER ROSTERS

Not coincidentally, IBG — like WTN –  brings to the table venture capital backing and a very similar team of partners including:

IBG HAS RECEIVED $10 TO $15 MILLION IN VENTURE CAPITAL SINCE FOUNDING

IBG went live on the Web on April 2, 2003, with Chameleon Cellars. Today, the IBG site lists approximately 225 wineries.

Founded by Wineshopper/wine.com veteran Paul Mabray, Inertia Beverage Group has raised $10 to $15 million since then. The largest round was an $8 million series B funding in April 2007 led by Allegis Capital and Sid R. Bass Associates.

Earlier fundings included established venture capital funds and  a number of small “angel” investments. Those participating in those rounds as investors and/or advisors included:

  • Advance Ventures
  • AVI Management Partners
  • Golden Gate Capital
  • BlackInc Ventures
  • Teifeld & Associates
  • Toktumi

ACQUISITION/MERGER FORGED UNDER PRESSURE

For six days, the existing investors conducted a speed-dating circus with potential suitors underneath a storm cloud of angry customers, unpaid employees and an exodus of New Vine customers.

Wine Industry Insight interviewed a wide range of laid-off employees, all of whom said they had already filed complaints with the Division of Labor Standards (DLSE) Enforcement of the California Department of Industrial Relations. The Oakland DLSE office confirmed a “large number” of complaints about New Vine.

Other employees said they were pooling their money  and searching for a class-action labor attorney.

Additional pressure was brought by the exodus of winery customers from New Vine that accelerated as vintners grew angrier and angrier about the inability to ship orders or to take possession of their wine.

AMAZON LURKED ALWAYS IN THE BACKGROUND

Amazon — with the contract rights and other ties to New Vine — was omnipresent in the proceedings. The mammoth Internet retailer had already gone “live” with a stealth version of its New Vine-based wine sales site which was being tested by those issued passwords. Those involved in that process said that only minor tweaks and content revisions remained before opening its doors to the cyber public.

Wine Industry Insight had no details on Amazon’s possible role in the merger/acquisition process at the time this article was being written Thursday night.

MORE DETAILS EMERGE ABOUT THE NEW VINE MELTDOWN

Knowledgeable sources say that the event precipitating the sudden shutdown of New Vine was a presentation by interim CEO Roy Kim who had been brought in by investors to give them an independent assessment of the company’s position.

In going over New Vine’s operations, Kim, the sources say, found substantial debts that were not on the company’s balance sheet. At that time, New Vine had been operating without a Chief Financial Officer for about two years, despite the fact that the company’s financial structure and cash flows are more complicated than the average company.

“ThomVest (the largest single investor) was not happy with the debt discovered by Roy Kim, so they shut it down,” said the source. “Kim then resigned because there was no saving the company with the newly uncovered debt.”

FORMAL ANNOUNCEMENT EXPECTED BY FRIDAY MORNING

A formal announcement was expected to be released by the morning of June 5.

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Comments

5 Responses to Inertia Beverage Group Acquires/Merges With New Vine

  1. Hidden debt…

    One would think the management at NV could be held criminally liable…

    Thanks for your reporting on this again Lewis.

  2. With-held

    Hopefully this will mean the employees will get paid. Since today is “pay-day” and the current employees didn’t get paid either, management has a lot of explaining to do. Howcome the interim CFO didn’t know about the hidden debt? Hmmm, lots of questions!

  3. Not-Saying

    It is a shame that a company that portraid themselves as a “world class operation” pulled the rug from underneath their high profile customers and betrayed their employees by closing the doors without a warning and being told that, it was undertermined if they would get their last paycheck or not. Considering today’s economy, it is adding insult to injury. –It is unethical, irresposible and unacceptable.

  4. former finance employee

    The “interim CFO” had full knowledge of the financial situation at New Vine. Nothing was hidden from the internal perspective. Criminal is an appropriate word when speaking of New Vine Logistics.

  5. Deep Wine

    How is it that Carol Thompson, COO of New Vine, is not mentioned anywhere? Those within the company witnessed how she allowed operational blunders to repeatedly occur. She was also responsible for coming up with the action plan to close operation of New Vine – down to details of how the employees would be dimissed and how existing inventory would be released (or not).

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