IBG Looking For $24 to $29 Million, “Do Or Die” To Acquire New Vine Assets

IBG has been working since late 2008 to raise additional funds for its operations which lost more than $5 million last year on revenues of $1.2 million. According to page 11 of the company’s current Series C offering circular [$VIP] the company is looking to raise $15 to $25 million “to complete development of next generation marketplace platform and consummate strategic acquisitions. ” The same circular shows that New Vine, which IBG is trying to acquire by buying its assets on July 14, lost $3.3 million in 2008 on revenues of $19.8 million. The financials are broken out separately for both companies in the 14-page offering circular [$VIP] available to premium VIP Content subscribers in Wine Industry Insight’s Data Cellar.

According to the financials in the Series C circular (one table of which is above) the IBG/NV combination would break even in 2011 and become a nearly $80 million company in 2012. Those projections, however, rely on revenue growth of 50%, 93% and 61% in fiscal years 2010, 2011 and 2012 respectively.

IBG BETTING THE FARM ON ACQUIRING NEW VINE ASSETS JULY 14

A close look inside the IBG Series C offering circular clearly shows that New Vine is the dominant entity in the IBG/New Vine merger.

“IBG’s biggest worry is that someone will show up and out-bid them,” said a financial source close to the process. “New Vine did almost $20 million last year; IBG only did a bit over $1 million. IBG has got to have the New Vine assets or they’re in serious trouble.”

KEY $9 MILLION BRIDGE LOAN SET TO CLOSE ON SAME DAY AS NEW VINE ASSET AUCTION

IBG documents and communications show that the company has been in the process of raising additional working capital since late 2008. That process accelerated when IBG became the surprise winner in early June’s hard-fought sweepstakes to acquire New Vine.

(See Wine Industry Insight’s round up of its coverage for more details.)

BRIDGE ROUND EXPANDED TO ACCOMMODATE PEI FUNDS & EXISTING STOCKHOLDERS

IBG documents show that on June 8, IBG’s two largest investors, Allegis Capital and Sid R. Bass Associates invested $4 million in the bridge funding round which had previously been on the table. Then, on June 12, The board increased the size of the bridge round to $$9,116,781 in order to accommodate a request from New-York-based Private Equity Investors, Inc. (PEI Funds) to invest $2 million. The board has also set aside $2,516,781 for current stockholders. The $9 million bridge loan is scheduled to close on July 14: the same day as the New Vine asset auction.

JULY 14 IS DO OR DIE FOR IBG

Because IBG bought New Vine’s  $3.2 million note from Silicon Valley Bank, they became the senior secured creditor, but did not acquire NV itself. While IBG has reportedly put $800,000 into New Vine to keep it afloat, that position falls short of ownership. Thus, IBG is counting upon being the high bidder when New Vine’s assets are auctioned on July 14.

SUCCESS WOULD MEAN GLOBAL REACH

Among many charts, flow diagrams and tables, the Series C Offering creates a road map for global reach by 2012 for the combined IBG/NV.

See related WII article: “Creditors Charge IBG/New Vine Asset Sale Is Improper”