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From: lewis.perdue@wineindustryinsight.com

Subject: IBG Closes $14 Million Round, Small Investors Riled - WINE INDUSTRYINSIGHT - EMAIL EDITION - Jan 26, 2010

Date: 2010-01-26 19:55:28

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EMAIL EDITION - VOLUME II, NUMBER 4 - January 26, 2010

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 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.

VIP Subscribers click here to read the complete, un-redacted article.

NEW PREFERRED STOCK & 100-to-1 REVERSE SPLIT ON COMMON
(The rest of this section is available to VIP Premium Subscribers).

BB PREFERRED STOCK ON SALE, AA GOES TO EXISTING INVESTORS
(The rest of this section is available to VIP Premium Subscribers).

ALL CONTROL TO VEST IN NEW PREFERRED SHAREHOLDERS
(The rest of this section is available to VIP Premium Subscribers).

MERGER, ACQUISITION, GOING PUBLIC ALL ON THE TABLE?
(The rest of this section is available to VIP Premium Subscribers).

$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

New Vine, IBG Deal To Be Examined By Bankruptcy Trustee

Silicon Valley Bank (SVB) and Sherwood Partners have been ordered to appear at separate January examination sessions to answer detailed questions and produce hundreds of documents regarding Inertia Beverage Group’s acquisition of New Vine’s (NV) debt and all its assets.

The examinations call for “the most knowledgeable person” at each company to appear and produce documents[...] - Written on January 10, 2010

Inertia Beverage Group Raises $14MM in New Capital

COMPANY NEWS RELEASE: 40 New Customers In Past 90 Days, Dave Manougian, Former Golf Channel CEO, E& J Gallo Winery and Nike Executive Joins As Chairman of the Board

NAPA, December 17, 2009 – Inertia Beverage Group (IBG) today announced it has secured $14 million in new capital, from existing investors Allegis Capital and [...]- Written on December 17, 2009

New Vine Liquidation - The Final Act For Amazon’s Biggest Direct-Shipping Victim

The biggest victim of Amazon’s dithering and ultimate desertion of its “partners” in the direct wine shipping business is now set to have its day in court with the filing of Chapter 7 bankruptcy liquidation papers ( available here for VIP Premium Content Subscribers).

New Vine Logistics slammed the doors and headed for the hills [...] - Written on October 29, 2009

New Vine Files For Chapt 7 Liquidation

New Vine Logistics has filed for Chapter 7 liquidation in the U.S. Bankruptcy County for the Northern District of California.

The filing was made Oct. 23 — the same day that Wine Industry Insight reported Amazon’s sudden silent abandonment of its online wine sales partners.Amazon has made no comment on its abrupt departure. However, the New [...]- Written on October 29, 2009

AMAZON PULLS PLUG ON WINE?

While Amazon has not officially confirmed its exit from the field of direct wine sales, numerous executives in the wine trade have received an email this afternoon, purportedly from Dini V. Rao, Amazon’s Senior Account Manager for Business Development - Wine.

Unless the email turns out to be a hoax, the unexpected exit of America’s largest [...] - Written on October 23, 2009

IBG Launches Direct-To-Consumer CollectiveVine.com

Inertia Beverage Group has launched a live beta of CollectiveVine.com, a direct-to-consumer web site designed, according to CEO Ted Jansen, “to aggregate the broadest selection of high quality, limited production wines on the web.”

In an email updated to IBG clients, Jansen said that CollectiveVine.com is designed to “provide wineries with the ability to market and [...] - Written on September 17, 2009

Inertia Beverage Group and Compliance Leader Compli Announce Strategic Alliance

Inertia to Provide Full Suite of Compliance Tools for Both Direct-to-Consumer and Direct-to-Trade Wine Sales

NAPA, Calif.–(BUSINESS WIRE)–Inertia Beverage Group announced today a strategic alliance with Compli, a leader in wine industry compliance services. The new relationship will [...] - Written on August 12, 2009

IBG Begins New Vine Management Transition

Inertia Beverage Group has begun its integration of upper-level personnel by offering positions to all of New Vine’s former executives.

“We offered roles to all New Vine management,” said Ted Jansen, IBG’s President & Chief Executive Officer. “Two of those that we offered roles to — Katie Hoertkorn and Josh Langford — declined our offers in [...] - Written on August 5, 2009

IBG Gets New Vine In Auction With No Bids

The Inertia Beverage Group auction of New Vine Logistics assets was over before it began, according to the few who attended the 10 a.m. gathering today at the offices of IBG’s San Francisco law firm, Cooley Godward, Kronish.
THREE COMPANIES REPRESENTED

Those attending said that, other than IBG, three firms were represented: Wine.Com, WTN Services and American [...] - Written on July 27, 2009

Inertia Beverage Group Secures New Vine Assets

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

(NEWS RELEASE - Napa, CALIF)—Inertia Beverage Group is pleased to have obtained New Vine’s assets through the public auction process. This outcome ensures that Inertia Beverage Group will be able to service New Vine’s former clients on an uninterrupted basis, resulting in even greater opportunities for customers, the [...] - Written on July 27, 2009

Bidders For New Vine Assets Say Auction Process Biased To Favor IBG

The assets of New Vine Logistics (NVL) will almost certainly wind up in the hands of Inertia Beverage Group (IBG) say both currently registered bidders and those who have dropped out of the July 27 auction because of what they allege is a “stacked deck.”
PROCESS LIKENED TO “INSIDER TRADING”

While Silicon Valley auction house, Sherwood Partners, [...] - Written on July 22, 2009

IBG Lawyers Bully Wine Industry Insight Over Leaked Brochure

A law firm representing Inertia Beverage Group (IBG) sent a threatening letter on July 14 to Wine Industry Insight demanding that it remove IBG’s Series C offering brochure from an article published on its web site on July 8 (IBG Looking For $24 to $29 Million, “Do Or Die” To Acquire New Vine Assets)

The law [...] - Written on July 14, 2009

IBG Delays Auction, Threatens Potential Investors, Contends With NVL Palace Coup

Multiple sources noted Monday that the Inertia Beverage Group/New Vine saga has gotten weird enough to merit its own reality show. While developments have been sketchy, Wine Industry Insight has managed to corroborate the following with multiple sources familiar with the events:
NEW VINE AUCTION DELAYED

IBG has delayed the auction of New Vine’s assets until July [...] - Written on July 13, 2009

INERTIA OFFERS POTENTIAL NEW VINE AUCTION BIDDERS ADDITIONAL TIME

FOR IMMEDIATE RELEASE

(Napa, CALIF)—July 13, 2009 Inertia Beverage Group (IBG) announced today that the auction scheduled for the sale of New Vine’s assets will take [...] - Written on July 13, 2009

IBG Issues Comment on WII Auction Articles

July 9, 2009
Statement from Ted Jansen, President and CEO of Inertia Beverage Group
Inertia Beverage Group is proud of our recent cash advancement into New Vine, which ensured service for customers across the country and benefits creditors by preserving and protecting the value of the collateral being sold.

Next week’s auction, in which all of New Vine’s [...] - Written on July 10, 2009

Details of NVL Auction “Under Wraps,” Say Sources

Wine & Spirits Daily does an awfully good job day after day. Today’s coverage of the Inertia/New Vine auction is a good example.

“The memo from New Vine Logistics (NVL) released yesterday was rather vague as you’ll recall, particularly regarding the auction of NVL’s assets. Since then WSD has done some digging and we’ve come up [...] - Written on July 9, 2009

Creditors Charge IBG/New Vine Asset Sale Is Improper

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IBG To Dispose of New Vine Assets Within Two Weeks

Inertia Beverage Group will auction off the assets of New Vine Logistics Within the next two weeks, according to an email it sent to NVL’s clients today.
According to that letter (reproduced entirely, below):

“As the senior debt holder in New Vine, IBG has put New Vine into a foreclosure process and has scheduled an auction for [...] - Written on July 6, 2009

New Vine Logistics tells winery customers it’s back in shipping business

San Francisco Business Times - by Chris Rauber
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The sudden collapse and melt-down of direct shipping star New Vine Logistics precipitated a frantic, week-long struggle to find a way to get the company functioning well enough to resume operations for the winery customers who had not already fled the ruins.

With most of the 120-person workforce abruptly terminated on Friday, May 29 and winery [...] - Written on June 6, 2009

LIMBO! New Vine’s Interim Funding From IBG Raises More Questions Than Answers

Dante’s first circle of Hell has a special place called limbo which resembles an eternal dentist’s waiting room where you sit forever and never actually get your cavities filled.

Much the same could be said of the vague, deal-in-progress hammered out Thursday afternoon between New Vine Logistics and Inertia Beverage group.

DEBT AND DUE DILIGENCE NOW, SOME [...] - Written on June 5, 2009

Inertia Beverage Group Acquires/Merges With New Vine

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Observers said that IBG laid a winning body check on front-runner WTN Services Thursday when Bob Ackerman, Managing Director and Founder of Allegis Capital agreed to substantially increase his existing investment.
The financial details were not available, [...] - Written on June 4, 2009

UNDEAD! Suitors Sparring Over New Vine’s Bones

People with a lot of money rarely scurry as fast as the 20+ companies and other parties now clutching for a piece of New Vine’s body.
But unaccustomed as they might be, the tire-kicking and deal-floating have been described by several participants as “a frantic rush to own the body before the last breath has been [...] - Written on June 2, 2009


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