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Sharpe sets record straight about ailing brewery

BY IAN ROSS Northern Breweries president and CEO Bill Sharpe says Sudbury’s Lorne Street plant will be mothballed until the cash-strapped regional brewer gets a fresh injection of private investment to pay down a $7 million debt and install a high-sp

BY IAN ROSS

Northern Breweries president and CEO Bill Sharpe says Sudbury’s Lorne Street plant will be mothballed until the cash-strapped regional brewer gets a fresh injection of private investment to pay down a $7 million debt and install a high-speed production line.

SHARPE “If we get a new investment group, it could go forward fairly quickly. If not it could be put on hold because we don’t want to run up any bills.”

The Sudbury plant hasn’t operated since Sharpe took over the plant in December, 2004. Beer production has been centralized at their 39-employee Sault Ste. Marie headquarters on a “stop-start” basis as operating funds become available to brew, bottle and sell.

Sharpe admits it’s been tough slogging to find a “solid equity partner” or consortium of investors who are willing to take on a $7 million debt before he can modernize the Sudbury plant and grow the business.

He estimates he’s talked to a minimum of 25 different companies - including pension funds, private investment groups, corporations and beverage industry people - in the last 21 months in North America and Europe.

Sharpe, the former Lakeport Brewing head, was brought in by major shareholder Leo Schotte of Toronto to run the near-dead company, upgrade the package imaging and change the beer formulas. After re-launching the company last spring, sales and advertising started to roll through to August, but funds dried up when Schotte was unable to secure additional investment.


Schotte, who holds 88 per cent of Northern’s shares, assured Sharpe he would raise the money from some of his business friends. “That didn’t come to be and it kind of fell off the tracks last summer. There’s people out there that want to get into Northern Breweries, no question about it,” says Sharpe. “But they’re not willing to take on the debt.”

Sharpe stepped in last November to help in the investor search but at the expense of his other duties.

“The problem is you can’t sell a lot of beer when you spend half your time putting out fires all the time.”

Sharpe says the public perception from media reports of being a fallen “White Knight” has done little to spur potential investor confidence and nervous suppliers are asking for “cash up front.”

“When you start paying out before you earn it, it sure cleans out your bank account,” he says.

“We’re getting to the point where we’re running lower in inventory and I’ve got to find more funds somewhere to keep the company going.” He told Sault Ste. Marie city councillors on Monday that Northern could “tip over” into bankruptcy.

Some have advised him to seek protection under the Companies’ Creditors Arrangement Act, but Sharpe considers that option too risky and expensive.  By going into straight bankruptcy, Sharpe says the company could be broken up with the physical assets and intellectual properties likely sold off. 

Sharpe says he has discussed securing government loans from FedNor and the Northern Ontario Heritage Funds through the Grow Bonds program but doubts that money would available if the company doesn’t secure private equity.

He refutes other media claims that Greater Sudbury city council waived $640,000 in municipal back taxes on the condition 80 jobs would be created. 

“The city had already written the taxes off after no one came forward following a tax sale of the brewery. No offers came in and we proposed to take over the brewery and put jobs in Sudbury and I said, ‘We’ll make this thing work.’

If we hadn’t come in, the city would have owned the brewery and torn it down or rented it out.”

Doug Nadorozny, general manager of development for the City of Greater Sudbury, was not available for comment.

Sharpe continues to have big plans for Sudbury where he wants to install a high-speed canning and bottling line. Last year, he sourced some late-model production equipment for Sudbury, but didn’t have the cash to make payment on it.

“We couldn’t raise the money by Dec. 1 (2005), so the machinery went elsewhere.”

He also wants to create some co-packing opportunities with international non-alcohol beverage makers. But with Northern on shaky financial ground, he’s reluctant to bring in any offshore interests.

Sharpe says seven people remain working on Lorne Street in the retail store, as drivers, sales representatives and in the office.

“We lay off a couple every week if we don’t need them but they get paid on a guaranteed wage plan...in the union contract.”

Sharpe says because of the shortage of funds, pension plans are not being paid into. And he says it doesn’t help that they were being squeezed by their former insurance company on their benefits plan to the tune of $25,000 a month.

Though he still has faith in the brewery’s potential, Sharpe says northerners need to better support the product.

“In Northern Ontario, I’ve asked the question, What’s in your ‘fridge?”

After crunching the numbers of 2005 beer sales throughout the north and as far south as Barrie, Northern counted for only 150,000 cases of the estimated 11 million sold. And he has diminished projections for this year.


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