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Blavod Extreme Spirits

  • BY: Andrew Hore |
  • POSTED: 30/08/2007 |

Less than four years after buying the Players Extreme spirits brand Blavod Extreme Spirits is selling it back to its original owner. 

Black Diamond Spirits, a company controlled by Blavod’s chief executive Jeff Hopmayer, is buying the US-based business. Since it was acquired in January 2004 it has entered into a tequila joint venture with Suntory but it has consistently lost money.

Blavod will receive $800,000 (£400,000) and the purchaser will take on the loan facility of $3.2m (£1.6m). The business was acquired for an initial £2.4m in shares – at an issue price of 24.5p each. At the time Blavod raised £10m via a placing at 24.5p a share – the share price is currently 3.625p. The cash raised was more than the £8m the company originally wanted. Much of this cash went into the US business.

The US business needed more cash but sales growth is slowing and gross margins are falling. Management adds that the management of the US business and the UK-based Blavod business was cumbersome and costly. Hopmayer and three US directors will step down from Blavod’s board and the finance director has left.

After the sale the group won’t have significant debts and the remaining business is making money before central overheads. It will be small, though, and will need to acquire more brands. They will need to be in the UK and Europe in order to be easy to manage. The UK operations generated revenues of £790,000 in the three months to June 2007. The money from the disposal will give Blavod cash “somewhat in excess of its working capital requirements”.

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