HEALDSBURG -- A maker of private-label and "custom-label" wines has filed for an initial public offering of stock to raise up to $43.5 million.
Healdsburg-based Truett-Hurst Inc., the sole owner of vintner and wine marketing company HDD, LLC, on March 27 and April 3 filed with the U.S. Securities & Exchange Commission to hold an auction-style offering of 2.9 million shares tentatively priced at $11 to $15 each.
The IPO would allow HDD to pay down debt, obtain working capital, cover capital expenditures and allow for hiring, but other uses could be acquisitions of labels or vineyards, according to regulatory filings.
HDD was started by Phillip Hurst, a veteran of another publicly owned wine company Golden State Vintners and co-founder of Novato-based Winery Exchange, and Paul Dolan III, whose credits include building Hopland-based Fetzer Vineyards into a large environmentally sensitive vintner.
The company owns four brands -- Truett-Hurst, VML, Healdsburg Ranches and Bradford Mountain. It also has a "custom label" business that builds brands for exclusive sale through retailers while retaining brand ownership.
In fiscal 2012, ended June 30, 88 percent of gross wholesale sales were made through our direct retailer relationships to Trader Joe’s and Total Wines and More. Through Sept. 30, 93 percent was concentrated in Trader Joe’s, Safeway and Total Wines and More.
Direct-to-consumer sales come through through company tasting rooms and wine clubs as well as half-ownership of Internet "flash" retailer The Wine Spies.
In July, the company entered into $12.9 million in line-of credit, equipment and foreign-exchange financing with Bank of the West. In September and December, Truett-Hurst wasn't in compliance with minimum current asset and liabilities terms for the funds and had to raise funds from investors and subordinate grape payments under a waiver from the bank in March, according to documents.
Six months of sales totaled $8.57 million as of Dec. 31, compared with $8.38 million a year before. Sales in fiscal 2012, ended June 30, were $12.69 million, compared with $5.4 million a year before. The increase in net sales was attributed to the introduction of four three-tier brands, offset by dropping two brands.
The company had $17 million in assets as of Sept. 30, according to the IPO filing. Current capital expenditure plans call for $900,000 to $1,700,000 through mid-2014, largely for production equipment, documents said.
The company has annual grape-purchase contracts with more than 20 independent growers for substantially all production, according to filings. In fiscal 2012, E&J Gallo Winery and Robert Hall Winery were the largest suppliers of bulk wine, largely used in the direct-to-retail labels.
The proposed IPO would have 2.25 million shares of class A common stock, and certain named selling stockholders are offering 652,557 shares. Sale of those shares would buy equal "LLC units" in HDD. New investors would get nearly 44 percent voting power in Truett-Hurst, which has voting control over and 45.7 percent ownership of HDD. The founders and key investors would retain 52 percent voting power in Truett-Hurst and a 54 percent economic interest in HDD.
W.R. Hambrecht + Co. is the lead manager of the IPO, which is being made through Hambrecht's OpenIPO auction-based, open-participation process. CSCA Capital Advisors and Sidoti & Company are IPO co-managers.
Truett-Hurst shares would be traded in the Nasdaq Capital Market under the symbol "THST."