E-Malt.com News article: 2674

US: Microbrewer Redhook Ale Brewery Inc. said on May 18 it agreed with Anheuser-Busch Cos. on the major financial terms of a restructured distribution agreement, which should help ensure Redhook's survival. Woodinville, Washington-based Redhook in Oct. 1994 had entered into a 20-year alliance with St. Louis-based Anheuser, but either company may terminate their distribution agreement without cause on Dec. 31.

Redhook said that under the new agreement, Anheuser would increase its stake in the company to 34 %, from 29.8 % as of March 12. Redhook would also pay $2 million in cash to Anheuser by Dec. 31, and pay higher fees in connection with the distribution of Redhook products. Redhook said it expects the new agreement to be completed before June 30.

In March, Redhook's auditor, Ernst & Young LLP, had warned that ending the distribution agreement early could cause Redhook to default under a bank credit agreement or force it to buy back some preferred stock. These matters, it said, raised "substantial doubt about (Redhook's) ability to continue as a going concern."

Redhook on May 5 reported a first-quarter loss of $920,538, or 15 cents per share. The company's shares rose 21 cents, or 9.4 %, to $2.45 in Tuesday trading on the Nasdaq.


21 May, 2004