Three investor groups are interested in acquiring Pittsburgh Brewing Co., but its financial books are in such disarray that none can make an informed decision on how much the brewer of Iron City beer is worth, its unions claim in court documents.
The International Union of Electrical Workers Locals 22B and 144b representing production, maintenance and truck driver employees at the Lawrenceville brewery on Thursday asked U.S. Bankruptcy Court Judge M. Bruce McCullough to approve the hiring of a forensic accountant to figure it out.
Pittsburgh Brewing filed for Chapter 11 bankruptcy protection in December. Management and the union have been negotiating over wage and benefit concessions for about six weeks.
More than a regular accountant, a forensic accountant uses accounting, auditing and investigative skills when examining a company's books. Such experts are trained to look beyond the numbers and deal with the reality of a situation, and they are often used in fraud cases.
"We have three independent sources of capital, and all three are looking to acquire the brewery," said Leo A. Keevican Jr., president and managing director of investment and business advisory firm Renaissance Partners LLC.
The company was hired by the state in September to assess Pittsburgh Brewing's operations. New management would be brought in by a new owner, Keevican said.
"One of the three groups is made up of high-net-worth local individuals, while the other two are well-known names, private equity funds on both coasts," Keevican said. He would not identify the investors.
The problem, Keevican said, is that when his firm assessed the brewing operation, one of the glaring deficiencies was the state of its books.
"We do not believe there is a sufficient level of cost data," Keevican said. "A lot of businesses we find do not have a handle on their costs. They think they are making money on a particular product when, in fact, they are losing money."
"We want to have a Plan B in place in case current ownership cannot reorganize," said Michael Healey, an attorney with Healey & Hornack representing the union. "Potential investors need more information."
"The union is concerned that there wouldn't be an operation in Lawrenceville," said Robert O. Lampl, an attorney representing Pittsburgh Brewing. "It's our intention to make a go of it in Lawrenceville."
"We are negotiating in good faith with the union and are optimistic that an agreement will be forthcoming," said Joseph Piccirilli, Pittsburgh Brewing president, in a statement. "Today's filing is not unusual and, in our view, it's a way for the union to explore other options."
Pittsburgh Brewing's latest financial report filed with Bankruptcy Court shows the company still is operating with a slim cash margin. It ended April with a bank balance of just under $89,000.
Last week, Rahr Malting Co., of Shakopee, Minn., asked the court to order Pittsburgh Brewing to pay $79,311 for three shipments of malt, two of which the brewery received before it filed for bankruptcy Dec. 7.
The motion by the union locals states that at the time Renaissance completed its assessment, Pittsburgh Brewing had not had financial statements reviewed or audited by independent certified accountants "for any of the preceding several years."
"PBC must have a credible business and operating plan that defines its strategic course and enables it to finance continuing operations," the report states. "The business faces multiple threats because of the age of its plant and the dynamics of the industry.
"PBC must find its niche where it can survive," the Renaissance report states. "Notwithstanding that, its financial position is such that this will be extremely difficult."
Piccirilli's Keystone Brewers Inc. investment group paid $31 million to purchase Pittsburgh Brewing from the failed business empire of Uniontown financier Michael Carlow's Pittsburgh Food & Beverage Co. in a Bankruptcy Court-supervised sale in 1995.
Carlow eventually went to jail for illegal financial dealings.
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