IBG Closes $14 Million Round, Small Investors Riled At Terms

Inertia Beverage Group (IBG) has closed on the $14 million funding round announced in December and should have the money in the bank Jan. 26, CEO Ted Jansen told Wine Industry Insight today.

“It’s been a long tough series of months,” Jansen said, “so this is a good news day for us.”

Jansen said the offering still has $3 million more authorized, “to take care of existing, historical investors or to accommodate new small investments.”

SMALL INVESTORS RAISE FLAGS, FEEL UNFAIRLY TREATED

Not everyone, however, has viewed the process with the same sense of relief as Jansen. Wine Industry Insight received a flood of emails and calls from existing investors who were spooked by documents they received in the past week. Those documents, they said unanimously,  stated that the company was out of cash and will not be able to continue operations without an additional funding round.

“That was true last fall,” Jansen said, “which is why we needed this offering.”

The severity of the financial crisis, however, has forced IBG to make numerous and substantial concessions to the new investors. Those concessions  have essentially forced the original angels, venture capital firms and founders out of any substantial role or control.

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NEW PREFERRED STOCK & 100-to-1 REVERSE SPLIT ON COMMON
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BB PREFERRED STOCK ON SALE, AA GOES TO EXISTING INVESTORS
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ALL CONTROL TO VEST IN NEW PREFERRED SHAREHOLDERS
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MERGER, ACQUISITION, GOING PUBLIC ALL ON THE TABLE?
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$24 TO $39 MILLION RAISED TO DATE

IBG began scrambling for cash in early June, 2009 when it bought New Vine Logistics’s Senior Secured Debt from Silicon Valley Bank. IBG reportedly purchased the $3.2-million note for $1.2 to $1.5 million.

Shortly thereafter, sources reported to Wine Industry Insight that Venture Capitalist Bob Ackerman of Allegis Capital provided $5 to $8 million for the debt purchase and to fund a re-start of operations. WII has consistently asked company officials for confirmation of details, but those have not been forthcoming.

In December 2009, Inertia issued a press release indicating that it had raised $14 million from Allegis Capital, Sid R. Bass Associates, and PEI Funds. That round includes the June/July bridge funding.

Allegis and Bass also led an $8 million series B funding in April 2007.

The current round means that IBG has raised $24 to $39 million to date.

Earlier fundings also included established venture capital funds and a number of small “angel” investments. Those participating in those rounds as investors and/or advisors included:

• Advance Ventures
• AVI Management Partners
• Golden Gate Capital
• BlackInc Ventures
• Teifeld & Associates
• Toktumi

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PREVIOUS WINE INDUSTRY INSIGHT COVERAGE OF IBG

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Inertia Beverage Group Secures New Vine Assets
—Statement by Inertia CEO Ted Jansen—

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FOR IMMEDIATE RELEASE

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