Eastside Distilling unveils plans to divest Redneck Riviera Spirits business

US-based craft spirits producer Eastside Distilling has entered into a non-binding letter of intent (LoI) to terminate its license agreement with Rich Marks and John D Rich Tisa Trust and to sell certain assets to Redneck Spirits Group (RSG).

Under the deal, Eastside Distilling intends to divest Redneck Riviera products including Redneck Riviera Whiskey, Granny Rich Reserve, as well as Howdy Dew! finished and dry goods and a portion of the Redneck Riviera barrel stock.

Eastside Distilling expects more than $8m proceeds including a non-refundable ‘Good Faith Deposit’ if RSG fails to meet certain closing conditions.

The craft spirits producer intends to close the deal this quarter by reaching a definitive agreement.

By divesting certain assets to RSG, the company aims to focus on five key objectives for sustainable growth.

The five objectives include building spirits brand portfolio plan that grows volume with profit focused on the Azuñia Brand, achieving cash neutral quarterly operating results, restructuring and extending remaining debt, notes and the Azuñia earnout beyond 2021.

It also intends to reduce barrel inventory, as well as add liquidity for short term working capital and implement a strategic growth plan for Craft Canning.

The divestiture of Redneck Riviera is allegedly in line with Eastside’s plan to focus on its core growth platforms.

Eastside chairman and CEO Paul Block said: “We are evolving the focus of the Company to operate with speed, focus, and discipline, and we will succeed with an aligned mission and vision that focuses the overall company while simultaneously empowering teams and individuals.

“The overall market for craft spirits and canned beverages is expanding, and Eastside will carve-out a share of the market that will fulfil our business objectives for growth.”

“Today’s announcement helps position the Company to further grow our core businesses and unlock value for our shareholders.”

In March, Eastside Distilling expanded the distribution footprint of its brands, including Azuñia Tequila, Burnside Bourbon and Hue-Hue Coffee Rum, into Florida and California.