Problems mount for bankrupt brewer
Friday, August 24, 2007
By Len Boselovic, Pittsburgh Post-Gazette
The proposed saviors of bankrupt Pittsburgh Brewing, who last month
were given an additional 45 days to complete their takeover of the
troubled Lawrenceville brewer, are confident they'll meet the latest
deadline extension.

However, the investor group headed by Connecticut businessman John N.
Milne has yet to obtain a brewery license from the Pennsylvania Liquor
Control Board or meet the bonding requirements of the U.S. Alcohol &
Tobacco Tax & Trade Bureau, the federal agency that collects excise
taxes on beer.

Meanwhile, production continues to be sharply curtailed during the
crucial summer drinking season because of the brewery's chronic cash
shortage, a shortage workers and others familiar with the company say
has become worse in recent weeks.

Many workers are laid off or working only a few days each week because
most vendors are demanding cash on delivery, terms current owner and
President Joseph R. Piccirilli can't meet.

"It's a mess down there," said one union worker who asked not to be
identified.

Several distributors said brewery officials recently told them
operations would be shut down for several weeks, either because of
cash shortages or paperwork problems transferring the state brewing
license from Mr. Piccirilli's ownership group to Iron City Brewing,
Mr. Milne's group.

Timothy Hickman, a member of Mr. Milne's group and Mr. Piccirilli's
designated successor, disputed reports of a shutdown.

"To be clear, there is no shutdown. The brewery is making beer today
and will be shipping tomorrow," Mr. Hickman said in a prepared
statement released yesterday.

Several union workers confirmed yesterday that bottling will resume
for one day today.

Distributors and industry observers say Pittsburgh Brewing's
protracted bankruptcy and continuing production problems will make it
more difficult to revive Iron City and IC Light, its major brands.

"You've got to resurrect this from the ground up now," said one
distributor who asked not to be identified.

Pittsburgh Brewing sought bankruptcy protection in December 2005 after
the Pittsburgh Water and Sewer Authority threatened to terminate
service because of more than $2 million in unpaid bills.

Some of the brewery's creditors continue to be vexed by unpaid bills
and bounced checks.

Mr. Hickman said Pittsburgh Brewing last month issued a company check
-- personally guaranteed by an attorney for Pittsburgh Brewing -- to
Duquesne Light to cover $20,800 in overdue bills. Payment of the bill
eliminated the need for an Aug. 14 hearing before U.S. Bankruptcy
Court Chief Judge M. Bruce McCullough, who has been angered by the
slow pace of the brewery's rehabilitation.

S. James Wallace, Duquesne Light's attorney, wrote the judge that the
bill was paid by a personal check. Mr. Wallace did not return a call.

Part of the problem was caused when Pittsburgh Brewing bounced an
$8,200 check to Duquesne Light on July 3. Court records indicate Mr.
Milne wired $61,000 to the brewery two days later, money Mr. Hickman
says was part of the financing the new owners agreed to provide until
the company emerges from bankruptcy.

Mr. Hickman also dismissed persistent rumors that Mr. Milne is seeking
an additional $3.7 million from investors to back his venture.

"All equity has been raised," Mr. Hickman's statement read.

Union workers disputed Mr. Hickman's statement that a new labor
agreement ratified by union workers earlier this year will take effect
once Mr. Milne's group assumes command. While workers' pay has not
been reduced by the 15 percent the contract calls for, health care and
vacation benefits provisions have been implemented, the workers said.

George Sharkey, business agent for the IUE/Communications Workers of
America, said the union has filed claims in bankruptcy court to
recover the cost of losing those benefits prior to the contract taking
effect.

Mr. Hickman also said he is unaware of problems in getting clearances
from state and federal regulators.

A spokeswoman for the PLCB said the agency is waiting to receive
additional information it asked for from Mr. Milne's group. The
proposed owners applied for the brewery license July 13, more than a
month after Judge McCullough approved their reorganization plan.

Mr. Milne's group has received a permit to distribute the brewery's
products in West Virginia and is close to settling on terms of a small
loan from Allegheny County. The county, city and state tentatively
have agreed to provide $750,000 in assistance.

Robert Hurley, the county's deputy director of economic development,
hopes to have a commitment letter for the loan in time for an Aug. 28
hearing before Judge McCullough.

"We're really close to making a loan to them," Mr. Hurley said this
week.

Mr. Sharkey hopes that's true.

"Things are progressing and hopefully they're going to close by the
end of the month," the union official said.

Separately, the Moon School District is suing Mr. Piccirilli over four
years of unpaid taxes on his home. A claim filed in Allegheny County
Common Pleas Court indicates the school district is seeking $25,700 in
taxes, penalties, interest and other costs for 2001 through 2004.