E-Malt.com News article: 2411

USA, New York: The auditor for Redhook Ale Brewery Inc. has questioned whether the microbrewer can survive if a distribution agreement with Anheuser-Busch Cos. is terminated early, Redhook said on March 29, according to Reuters. Woodinville, Washington-based Redhook entered into an alliance with St. Louis-based Anheuser in Oct. 1994. It said its distribution agreement runs for 20 years, but may be terminated by either party without cause on Dec. 31, or upon other conditions.

In Redhook's annual report, auditor Ernst & Young LLP said an early termination would cause a default under a Redhook bank credit agreement, and force Redhook on Dec. 31 to redeem Series B preferred stock. "These matters raise substantial doubt about the company's ability to continue as a going concern," Ernst said. Redhook Chief Executive Paul Shipman said his company is in talks with Anheuser on the matter. "We believe that the relationship with Anheuser-Busch and its distributors is good," Shipman said in a statement. "Neither Redhook nor Anheuser-Busch has given any indication that it intends to terminate the distribution agreement."

Last month, Redhook said it recorded a loss of $881,260, or 14 cents a share, in the fourth quarter, as net sales rose 2 percent from a year earlier to $9,271,430. Redhook shares fell 16 cents to $2.53 in Monday trading on the Nasdaq. Trading was halted after-hours. The company went public in 1995.


30 March, 2004