SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 30, 1997
Date of Report (Date of earliest event reported)
Bayhawk Ales, Inc.
(Exact name of registrant as specified in its charter)
Delaware 33-82208-LA 33-0606860
(State or other (Commission (IRS Employer
jurisdiction of ) File No.) Identification No.)
of incorporation
200 Main St - Suite A Irvine, CA 92714
(Address of principal executive offices)
(714) 442-7565
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
On January 30, 1997, Nor'Wester Brewing Company, Inc.
("Nor'Wester") and Willamette Valley, Inc. Microbreweries Across
America ("WVI"), a public holding company comprised of three
partially-owned public subsidiaries, Aviator Ales, Inc. ("AAI"), Bayhawk
Ales, Inc. ("BAI"), and Mile High Brewing of Denver ("MHB"), Colorado,
announced the signing of a definitive investment agreement with United
Breweries of America, Inc. ("UBA"), an affiliate of The UB Group
of Bangalore, India.
Under the terms of the agreement, UBA will invest $8.63
million in cash in exchange for a 45% equity interest in a new
entity comprised of the consolidated businesses of Nor'Wester
(which includes Nor'Wester Brewing of Portland, Oregon and North
Country Brewing of Saratoga Springs, New York), WVI and WVI's
partially-owned public subsidiaries. The consolidation is
expected to occur by the end of the second quarter of 1997,
pending approval by the various companies' shareholders. The new
entity will be a holding company for five craft breweries being
consolidated and will operate under the name, United Craft
Brewers, Inc.
Of the $8.63 million investment by UBA, $2.75 million is in
the form of bridge loans conditionally available to Nor'Wester
during the consolidation phase to cover any shortfalls in
operating cash or payments required to be made to existing
creditors. Of this amount, $1,000,000 has previously been
loaned. In addition to obtaining a perfected security interest
in all the assets of North Country Brewing, among other
conditions, all advances under the bridge loan are conditioned
upon there being no material adverse change in the business of
the various brewing companies taken as a whole. At closing, the
$2.75 million in loans and the remaining $5.88 million cash
investment will be converted into shares of United Craft Brewers.
Jim Bernau, President of Nor'Wester and WVI, is transferring
to UBA part of his existing equity stake in the regional
breweries. He will receive no cash consideration in this
transaction, and as a result of the transfer, UBA will own 45% of
United Craft Brewers, with Bernau owning 10% of the new company.
The public shareholders of Nor'Wester and WVI, Aviator Ales,
Bayhawk Ales and Mile High Brewing will own the remaining 45% of
United Craft Brewers. The terms of UBA's investment as set forth
in the definitive investment agreement differ from and supersede
the terms of a Letter of Intent between the parties dated
September 18, 1996, previously disclosed by the Company.
Mr. Bernau will serve as President of United Craft Brewers
and will be a member of the Board of Directors. Vijay Mallya,
Chairman of The UB Group, will serve as Chairman of the Board of
United Craft Brewers.
United Craft Brewers intends to acquire other craft brewers
in the U.S. to expand its alliance of breweries. Furthermore,
United Craft Brewers intends to utilize The UB Group's experience
and resources to pursue international opportunities for its craft
beer alliance.
The UBA investment is subject to several closing conditions
including (i) registration with the Securities and Exchange
Commission of the United Craft Brewers shares to be issued to the
public shareholders of Nor'Wester, WVI and WVI's subsidiary
breweries in the consolidation as well as to UBA in its
investment, (ii) successful completion of the consolidation of
the regional breweries including approval by the shareholders of
Nor'Wester, WVI and each of WVI's subsidiary breweries, and (iii)
the achievement of certain designated or agreed operating results
by the breweries. The investment is expected to close on or
about June 1997.
The consolidation is expected to be accomplished through a
series of stock-for-stock mergers whereby shareholders of
Nor'Wester, WVI and its subsidiaries-Aviator, Mile High and
Bayhawk-will each exchange their respective shares for shares of
United Craft Brewers according to the following exchange ratios
(based on an average closing price for Nor'Wester's common stock
of $2.63 for the 20 trading days immediately preceding execution
of the definitive investment): Nor'Wester-1:1, WVI-1.99159:1;
Aviator-2.98739:1; Mile High-2.98739:1; and Bayhawk-1.99159:1.
Following consolidation and UBA's investment, the combined entity
will have approximately 13 million shares outstanding.
The Company believes that the information set forth in this
Form 8-K and the Press Release dated January 30, 1997, and
attached as an exhibit hereto include "forward looking
statements" within the meaning of Section 27A of the Securities
Act and are subject to the safe harbor created by that Section.
In particular, there can be no assurance that the consolidation
will be approved by the shareholders of the various companies,
that each of the other closing conditions to the definitive
investment agreement will be met in time to close or that the
investment will ultimately close. Furthermore, even if the UBA
investment closes, there can be no assurance that UCB will have
adequate capital to pursue acquisitions of, or alliances with,
other craft brewers in the U.S. and internationally, nor can
there be any assurance of continued or additional market
acceptance in the U.S. or internationally of UCBs' beers and
ales. Finally, during the consolidation phase, there can be no
assurance that BAI will meet each of the conditions
required to receive a bridge loan advance from UBA at the time
such advance is needed. There are additional risks and
uncertainties that could cause the actual results to differ
materially from the forward-looking statements including, but not
limited to, the factors discussed in AAI's Securities and
Exchange Commission filings.
BAI's press release regarding UBA's investment in
BAI is incorporated herein by reference and filed as an
exhibit to this Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
Exhibits
Number Description
99.1 Press Release dated as of
January 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned thereunto duly
authorized.
BAYHAWK ALES, INC.
Date: January 30, 1997 By:/s/ James W. Bernau
James W. Bernau
President
EXHIBIT INDEX
Exhibit No. Description Page
99.1 Press Release dated as of January 30, 1997
UB GROUP SIGNS DEFINITIVE INVESTMENT AGREEMENT
WITH FIVE U.S. MICROBREWERIES
U.S. Craft Breweries to be Subsidiaries of New Holding Company;
UB to Hold 45% Stake in Consolidated Entity
Portland, OR January 30, 1997 -- Nor`Wester Brewing Company
(Nasdaq: ALES) and Willamette Valley, Inc./Microbreweries Across
America, a non-listed public holding company comprised of three
partially-owned public subsidiaries -- Aviator Ales, Inc. of
Woodinville, WA; Bayhawk Ales, Inc. of Irvine, CA; and Mile High
Brewing of Denver, CO. -- today announced the signing of a
definitive investment agreement with United Breweries of America,
Inc. ("UBA"), an affiliate of The UB Group of Bangalore, India.
Under the terms of the agreement, UBA will invest $8.63
million in cash in exchange for a 45% equity interest in a new
entity comprised of the consolidated businesses of Nor`Wester
Brewing Company -- including Nor`Wester Brewing of Portland, OR
and North Country Brewing of Saratoga Springs, NY -- and
WVI/Microbreweries Across America. The consolidation is
currently expected to occur by the end of the second quarter of
1997, pending approval of the various companies' shareholders.
The new entity will be a holding company for the five craft
breweries being consolidated and will operate under the new name,
United Craft Brewers, Inc.. The company will be traded on the
Nasdaq National Market System under the symbol ALES.
Of the $8.63 million investment by UBA, $2.75 million is in
the form of bridge loans conditionally available to Nor`Wester
during the consolidation phase ($1,000,000 has already been
loaned). At closing, the $2.75 million in loans and the
remaining $5.88 million cash investment will be converted into
shares of United Craft Brewers.
Jim Bernau, founder and president of both Nor`Wester Brewing
and WVI-Microbreweries Across America, is transferring to UBA
part of his existing equity stake in the regional microbreweries.
He will receive no cash consideration in this transaction, and as
a result of the transfer, UBA will own 45% of United Craft
Brewers, with Bernau owning 10% of the new company. The public
shareholders of Nor`Wester Brewing and WVI-Microbreweries Across
America will own the remaining 45% of United Craft Brewers. The
terms of UBA's investment as set forth in the definitive
investment agreement differ from and supersede the terms of a
Letter of Intent between the parties dated September 18, 1996.
Bernau will serve as President of United Craft Brewers and
will be a member of the Board of Directors. Vijay Mallya,
Chairman of The UB Group, will serve as Chairman of the Board of
the new company.
"The signing of this agreement puts our goal of creating a
national craft brewing alliance one large step closer to
realization," said Bernau. "And because we will be benefiting
from the experience and resources of The UB Group, I firmly
believe that the alliance is also a very large step closer to
success."
Bernau noted that The UB Group and Vijay Mallya have pursued
an operating philosophy similar to that of the microbreweries in
the alliance. "The UB Group is India's largest beer producer,
but it is comprised of twelve smaller, individual breweries that
each pursues a craft beer approach to producing lagers and ales,"
he explained. "This emphasis on smaller scale brewing will be at
the heart of United Craft Brewers. We couldn't have found a
better partner to join us as we build this national alliance of
leading microbreweries."
Mallya agreed that the investment will significantly
strengthen -- and potentially expand -- the craft brewing
alliance.
"Nor`Wester and the other breweries being consolidated in
the new company make some of the best ales and lagers in
America," Mallya said. "Our goal now is twofold: first, to
enhance the financial, marketing and operating strength of these
breweries, and second, to bring other like-minded U.S. craft
brewers under the UCB umbrella. In addition, UCB intends to
leverage the UB Group's strengths to pursue international
opportunities for the craft beer market.
"By expanding the size of this unique microbrewery alliance,
we will gain important economies of scale in manufacturing,
marketing and distribution -- all while maintaining and enhancing
the unique character and individual excellence that have made
craft brewed beer increasingly popular in America and elsewhere."
Successful consolidation of the regional breweries is a
precondition for closing of the investment by UBA, as is the
achievement of certain operating results by the five breweries.
The investment is expected to close shortly after the
consolidation is completed.
The consolidation is expected to be accomplished through a
series of stock-for-stock mergers whereby shareholders of
Nor'Wester, WVI/Microbreweries Across America and its
subsidiaries -- Aviator, Mile High and Bayhawk -- will each
exchange their respective shares for shares of United Craft
Brewers according to the following exchange ratios which are
based on an average closing price of $2.63 for Nor'Wester's
common stock for the 20 trading days immediately preceding
execution of the definitive investment : Nor'Wester -- 1:1; WVI
- -- 1.99159:1; Aviator -- 2.98739:1; Mile High -- 2.98739:1; and
Bayhawk -- 1.99159:1. Following consolidation and UBA's
investment, the combined entity will have approximately 13
million shares outstanding.
The Nor`Wester Brewing Company and WVI--Microbreweries
Across America were founded by Jim Bernau with his first
microbrewery, Nor`Wester in Portland, Oregon in 1993. Bernau is
also founder and president of Willamette Valley Vineyards in
Salem, Oregon (Nasdaq: WVVI).
The UB Group is a global beer and spirits company operating
in 20 countries on four continents.
[Note: this press release contains forward-looking
statements that are made pursuant to the safe harbor provisions
of The Private Securities Litigation Reform Act of 1995. The
forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from the forward-
looking statements, including, but not limited to, the factors
detailed in the Securities and Exchange Commission filings of
Nor'Wester, Willamette Valley, Inc. Microbreweries across America,
Aviator Ales, Inc., Mile High Brewing Company, Inc. and
Bayhawk Ales, Inc. The forward-looking statements should be
considered in light of these risks and uncertainties.]