E-Malt.com News article: USA: Molson Coors Brewing Co. group seeks a seven-year tax break for its Memphis plant

A group of investors interested in buying Molson Coors Brewing Co. plant in Memphis will seek a payment-in-lieu-of-tax freeze this week, Memphis Commercial Appeal reported August 15. Plant manager Carolyn Hardy and a group of unnamed investors are seeking a seven-year tax freeze from the Memphis and Shelby County Industrial Development Board (IDB).

The IDB's evaluation committee will hear the request August 16 in an emergency meeting, and the full board could vote on the project later that afternoon.

Hardy's group is promising 255 jobs over three years and capital investment - including purchase and improvement costs - of $14 million.

Hardy, who is a member of the IDB, said her team is working to secure a contract to warehouse and distribute 1.3 million barrels of Coors products.

"The primary focus of the facility initially is warehouse and distribution," she said. "We'll be distributing their full line of products to the southeastern part of the United States."

Molson Coors officials could not be reached for comment, but Memphis Regional Chamber officials expressed excitement at Hardy's bid to purchase and operate the plant.

"We go back a long ways with that Coors plant and were involved in recruiting Coors to Memphis originally," said Dexter Muller, senior vice president for community development at the Memphis Regional Chamber. "With Carolyn Hardy, the one thing we've learned about her is there is no better professional in the United States.

"We are working with her in every way we can to try to help her get business and to put the deal together, and certainly the PILOT is an important piece of it."

Hardy said it would probably be two to three years before the Raines Road facility brews anything, but that it could have a future in contract beverage packaging, essentially operating a third-party service for beverage manufacturers.

"The facility probably won't get back into brewing for years," Hardy said. "In order to brew at this facility you need about one million barrels, which is about 12 million cases of beer.

"To turn the brewery on will cost $5 million or $6 million. To blend a beverage doesn't cost you hardly anything because it's hot water."

Hardy said the plant is set up to blend and package almost any liquid, from water to sports beverages, coffee and soft drinks.

"Manufacturing jobs have continued to exit Memphis, and there are no other contract packers of this type in Tennessee," Hardy said. "It's an opportunity to not only save a facility, but take advantage of a market that is growing."

The investment group is trying to hammer out a labor agreement with the employee union.

Wisconsin-based City Brewing Co.'s bid to purchase the facility collapsed in May after negotiations with plant employees came to a halt.

Hardy has said previously that even if a labor agreement isn't reached, the investment group would not walk away from buying the plant. Instead, it would pursue other business opportunities.

An air of uncertainty has been hanging over the plant since February 2005, when Molson Coors announced that the 1.3- million-square-foot plant would be closed.

The Memphis plant brewed Coors Light for export, plus Zima XXX, Keystone Light, Coors Non-Alcoholic and Blue Moon.

The brewery started out as a Schlitz brewery in 1971, and was sold to Stroh Brewery Co. before it became part of Adolph Coors Co. in 1990.

Coors said the closure of the Memphis plant is part of a larger savings plan that was expected to save the company $35 million a year beginning in 2007.

Molson Coors, the world's fifth-largest brewer by volume, said its second-quarter earnings quadrupled, although pretax income on U.S. operations plummeted.

The brewing company reported higher sales volume in Canada, the United States and Europe, and higher net sales in U.S. and Canadian operations. The pretax income on U.S. operations declined 44 percent, including special charges, which was blamed on higher transportation, labor, energy and packaging costs.

During the quarter ending June 25, the company reported net income of $156.2 million, or $1.81 per share, compared with net income of $38.5 million, or 45 cents per share, a year ago.

Molson Coors reported $25.8 million in special items, including a $26.4 million pretax charge associated with the planned September closure of the Memphis plant.



16 August, 2006