Benzinga | Feb 8, 2021 09:06AM EST

Eastside Drilling Reports Completed Termination Of Amended, Restated License Deal With Rich Marks, John Rich TISA Trust, Co. Received $7.8M In Net Proceeds

Eastside Distilling, Inc. ("Eastside" or the "Company") (NASDAQ: EAST) announced today it has completed the termination of the Amended and Restated License Agreement, as amended, with Rich Marks, LLC and John D. Rich TISA Trust U/A/D March 27 2018, collectively ("Rich Marks"), and has sold certain assets to Redneck Spirits Group, LLC ("RSG"). The Company received net proceeds of approximately $7.8 million. The transaction encompasses the Redneck Riviera products including Redneck Riviera Whiskey(r), Granny Rich Reserve(r), and Howdy Dew! (r), finished and dry goods as well as a portion of the Redneck Riviera barrel stock.

The divestiture of Redneck Riviera is a significant milestone in the planned transformation of Eastside Distilling and impacts its strategy in several aspects: (1) the Company has now shifted to a portfolio of fully owned and operated spirits brands, (2) the spirits portfolio will move to more premiumization, (3) the distribution strategy will change to focus "up and down the street" with our three-tier national distributor network and (4) the Company focus on whiskey will shift to artisanal products. In addition, the divestiture has several significant economic implications as well: (1) the Company fiscal cash burn rate will be reduced, (2) the whiskey barrel inventory will be reduced by 50% or 4,000 barrels, (3) the Company will increase its cash balance and (4) overall Live Oak debt will decrease by $4.0 million.

Paul Block, CEO of Eastside, commented, "Eastside has taken the first step to reinvention and turnaround with this transaction. We will be sharing our next steps in overall company transformation with the details of our 2021 fiscal budget finalized this February and eventually a three-year growth plan completed in the Spring of 2021. Management's focus continues to be on innovation, brand building, and new packaging, in the context of artisanal products and experiential brands."

John Rich, Founder and Owner of the Redneck Riviera brand, commented, "As a brand owner in the highly competitive whiskey space, I have never been more excited about moving all Redneck Riviera Whiskey production, bottling and business operations to Kentucky. It's in the heartland of America...and is the whiskey/bourbon capital of the world. This will allow me, as well as our new team, much greater oversight and to further capitalize on our incredible growth. It's a move that will benefit distributors, retail partners and our patriotic customers. As always, we will continueto be 100% American Made... from the juice to the glass to the cork!!"

Roth Capital Partners, LLC acted as exclusive financial advisor to the Company, and Harriton & Furrer, LLP acted as legal advisors to the Company, to assist with the transaction. The Company will further discuss the transaction's impact on its fiscal year 2020 call in March.