FAQ

Terrapin Beer has requested that Tenth & Blake convert an existing loan into a minority stake. So what does this mean? In short, it means that Terrapin will now have the capital to expand our brewing capacity and keep up with the amazing demand for our beers in the marketplace. Other than that, nothing changes. In fact, we are more Terrapin than ever, and this loan conversion will allow us to become more crafty, not less. We remain classified as small, independent and traditional by the Brewer’s Association. We are not changing any of our current distribution channels, no matter their affiliation. We will continue to make the beers we want to make, when we want to make them, and sell them when, how and where we want to.

Q:  What happened?

A:  Terrapin invited Tenth and Blake to become a minority investor, and Tenth and Blake took them up on the deal.

Q:  Does that mean Tenth and Blake/MillerCoors buy Terrapin?

A:   No, Tenth and Blake, which is the unit of MillerCoors that specializes in craft and imported beers, became a minority investor.

Q:  How much of Terrapin does Tenth and Blake own?

A:  The amount has not been disclosed, but it is below the 25% limit that the Brewers Association requires for small brewers to maintain their independent “craft” status.

Q:  So will Terrapin remain a member of the Brewers Association?

A:  Yes, absolutely.

Q:  Does Tenth and Blake/MillerCoors now run Terrapin?

A:  No, Terrapin continues to operate as an independent beer company, run by founders Spike Buckowski and John Cochran.

Q:  Does this mean that Terrapin will be changing its beers, or making them more mainstream?

A:  No.  In fact, the investment will enable Terrapin to brew an even greater diversity of distinctive craft beers.

Q:  Why did Terrapin sell part of the company to Tenth and Blake?

A:  Last year, Tenth and Blake provided a substantial loan to Terrapin that allowed the founders to buy out some of the other investors, who did not share our long-term vision for Terrapin.  By converting that loan into an ownership stake, Terrapin now has much greater financial strength.

Q:  Why did Terrapin need more money?

A:  Terrapin’s biggest challenge has been meeting the full demand for its beers, the funds from the investment will enable Terrapin to invest in new production capacity, as well as invest more in more different kinds of great beers.

Q:  Are the founders cashing out?

A:  No, the vast majority of the funds will be invested directly in the business.

Q:  Are employees going to be fired, or forced to change the way they work?

A:  No, the company will continue to operate in the same unique way that has made it so successful.  The only difference is that Terrapin will be able to substantially improve the benefits it provides to employees, including enhanced.

Q:  Will Terrapin sales be taken over by the Tenth and Blake or MillerCoors sales force?

A:   No, the Terrapin sales team will continue to sell Terrapin the same way they always have.

Q:  Will Terrapin now use only MillerCoors distributors?

A:  No, Terrapin will continue to make its own decisions on distributors.

Q:  Will Terrapin beers now be brewed by MillerCoors breweries?

A:  No, all brewing of Terrapin beers will continue to be done at the Terrapin brewery.

Q:  Is this just the first step?  Will Tenth and Blake eventually buy Terrapin?

A:  No, there have been no discussions or plans about that.

Q:  Why is Tenth and Blake putting so much money into Terrapin, and yet asking for no control?

A: They believe that the unique things that made us successful in the past are essential to our ability to be successful in the future.  They are in it for the long term, and they know that craft beers succeed based on their distinctiveness, authenticity and personality.

Below is a letter sent to Terrapin employees and the press on October 5th.

Dear Terrapin Team:

When we Spike and I started Terrapin, we wanted a few simple things.  We wanted to make a huge variety of beer styles.  We wanted to do it in Athens, GA.  We wanted to have fun doing it, and we wanted good music to be a big part of that fun.  We also wanted Terrapin to be a great place to work and a healthy company where people who cared about great beer could not only have a fun job but also the opportunity to grow professionally.

As you know, the past year and half has been stressful for us at Terrapin. While business has been good, we had a major disagreement with our investors about the future direction of the company.  As founders, both Spike and I felt strongly committed to the original vision we had for Terrapin, and we were determined to stick to our guns.

Fortunately we were able to eliminate the issue with our investors by securing a loan from Tenth & Blake to buy out the investors. During the loan discussions, it became clear that we and the Tenth & Blake leaders shared a common view of the long-term potential of Terrapin. Those conversations have now led to Spike and I inviting Tenth & Blake to convert a portion of its already existing loan to a minority stake. This allows Terrapin to significantly reduce our debt burden and enables us to invest more intensely in production capacity and innovation. We will also now have the opportunity to improve the workplace by looking into substantially better employee benefits and an employee bonus and profit sharing program.

We structured the loan conversion to protect our independence and creativity.  Tenth & Blake will convert to a minority stake in the company. According to the Brewers Association and our peers in the craft beer industry Terrapin will remain a small, traditional and independent brewery. Tenth & Blake absolutely believes and understands that our independence is essential to our success.

Having Tenth and Blake as a partner will allow us to take advantage of synergies between the two companies and we will continue to grow in a smart, controlled way. In fact, as a sign of things to come, we are excited to announce the following innovations that we will make happen over the next few months.

First, the loan conversion will allow Terrapin access to more capital from the banking market to fund a $4.5 million expansion to double our brewing capacity. Everyone knows that due to buying the company back from our previous investors we were unable to expand capacity this past year. This has led to severe shortages in several markets of all of the Terrapin beers and even in our home state we have been unable to make enough of our more limited and specialty beers to meet demand. This expansion will allow us to get all our beers back in stock in the 9 states where Terrapin is available and get those high-end, innovative beers such as Hopzilla,Wake-n-Bake, and Moo-Hoo into the hands of more Terrapin fans.

Second, Terrapin will begin a full time barrel aging program.  We have played around with barrels one or two at a time just for fun. But now we can begin a full fledged barrel aging program and really show people what innovative beers Terrapin is capable of crafting.

Third, Terrapin will invest in expanding and enhancing our brewery tour experience for visitors.  We believe that a brewery should not just be a place for brewing beer, but also for enjoying and learning about beer, and getting to know the people who brew it.  We will now be able to have more specialty beers available on our tours, and do even more to help educate our visitors about the wonders, mysteries and history of this great beverage.

I know many of you probably have questions and at the same time some of you may have concerns about our autonomy. We’re eager to talk about all of those things, and we’ll be happy to meet with each of you one-on-one to discuss this further.

As we talk things through, we’re confident that you will quickly come to the same conclusion that we did:  this is a great step forward for Terrapin and for all our employees.  In fact, we’re going to become more of a craft brewer, not less, because we now have the ability to invest in ideas that were out of our reach before.

We look forward to talking with everyone.  We appreciate everything you have done to get us where we are today, and we look forward to working together with this new strength behind us.

Thanks.

John & Spike