Panache Beverage Inc. has come to a forbearance agreement with a lender that ends on June 6.
New York-based Panache is an alcoholic beverage company that specializes in developing and growing spirits brands. The company's brands include Wodka Vodka, Alibi American Whiskey and Alchemia Infused Vodka. The company also owns a distillery in Florida, where it is developing a high-proof vodka called Old South Shine. The company has a "build and exit" business strategy, and plans to sell the brands as they mature.
Under the agreement, lender Consilium Corporate Recovery Master Fund Ltd. will not charge the default interest rate or late fee on $6.1 million of outstanding debt. Consilium could have charged 17 percent interest during the period of default, plus a late fee equal to five percent of a monthly payment. Consilium is secured by a second priority interest in Panache's distillery, plus interests and trademarks of the company.
Consilium also agreed to release funds that were being held in escrow to Panache.
The company has limited working capital and has incurred losses from operations, raising substantial doubt about its ability to continue as a going concern, or without the threat of liquidation, Panache's accountant Silberstein Ungar PLLC says in an April 10 filing with the U.S. Securities Exchange Commission.
Panache says it is working to reduce overhead, revise its sales strategy and hire a new executive team. After consulting with Consilium about the company's business strategy, the company accepted resignations from CEO James Dale, COO Agata Podedowrny and vice president of sales Sjoerd de Jong. Managing director Michael Romer is serving as interim CEO.
In October, Panache announced a three-phase growth strategy that included building the foundation, which has been completed; organic growth, which Panache is currently working on; and accelerated growth, a future phase in which Panache will make acquisitions.
The company was able to increase its net revenues from 2012 to 2013 from about $3.3 million to about $3.7 million. As of Dec. 31, Panache had an accumulated deficit of about $10.4 million. Panache says it may seek an additional $1 million in funding to use as working capital.
In March, the company had previously amended agreements with Consilium to extend the maturity dates of several notes for $4 million, $1.4 million and $2.1 million. The notes now mature on May 9, 2017.
For the previous edition of Turnaround Tuesday, see "Troubled Overland Storage Finds Buyer, Will Receive $5M Loan."
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.