The cash-strapped G. Heileman Brewing Co., which owns the last large brewery in the Baltimore area, announced yesterday that it probably will be unable to make a January interest payment on $160 million worth of debt and has retained financial advisers to help it restructure the ailing company.
The action comes after the nation's fifth-largest brewing company, based in La Crosse, Wis., said it was unsuccessful in its bid to find a merger partner. Stroh Brewery Co., the nation's fourth-largest brewer, was widely considered as a likely candidate.
"Discussions concerning possible business combinations did not result in agreement on a mutually acceptable transaction and have therefore been terminated," the Heileman announcement said.
With sales of $778 million, the company lost $34.7 million last year. The trend continued in the first six months of this year, with the company losing $24.5 million on sales of $389 million in sales.
Heileman's financial woes have resulted in a reduction in overtime and other cost-cutting measures at the company's Halethorpe plant, which has about 500 workers, according to Charles H. Stansburge, secretary-treasurer of Teamsters Local 570, the union that represents 380 of the plant's workers.
Also, about 50 union workers have been on revolving layoffs in the last month, lasting a week or two at a time, Mr. Stansburge said. Such furloughs during summer -- the peak of the beer drinking season -- are "unheard of in that industry," he said.
Without a white knight on the horizon and interest payments looming, the maker of such beers as Colt 45 malt liquor, National Premium, National Bohemian and numerous other regional beers, was vague about its prospects. Heileman said it hopes to get additional lines of credit and other financing. But, "no commitments are currently in place for any such additional senior debt," the company said.
The company, which had been in Chapter 11 bankruptcy as recently as 1991, was bought in January 1994 by the Dallas-based investment firm of Hicks, Muse, Tate & Furst in a $420 million transaction, of which $340 million was in debt.
This huge debt put the company at a competitive disadvantage from the beginning, according to Jerry Steinman, publisher of Beer Marketer's Insights, a industry trade newsletter.
"What really happened was the total price they paid was too high," he said. "They certainly didn't realize some of the problems they would face."