{"id":20359,"date":"2018-05-02T07:53:23","date_gmt":"2018-05-02T14:53:23","guid":{"rendered":"https:\/\/archives.csusm.edu\/westcoastersd\/?p=20359"},"modified":"2018-05-02T20:10:01","modified_gmt":"2018-05-03T03:10:01","slug":"a-recap-green-flash-alpine-and-wc-ipa-llc","status":"publish","type":"post","link":"https:\/\/archives.csusm.edu\/westcoastersd\/2018\/05\/02\/a-recap-green-flash-alpine-and-wc-ipa-llc\/","title":{"rendered":"A Recap: Green Flash, Alpine, and WC IPA LLC"},"content":{"rendered":"

Green Flash Brewing Company<\/a> rose to prominence through their style-defining West Coast IPA. Founded in Vista in 2002, the company had outgrown that location, which was capable of producing 14,000 barrels of beer per year, in less than a decade. The new Mira Mesa facility, with a production capacity of 100,000 barrels per year, was the site of a grand opening party on July 23, 2011.<\/p>\n

The month prior, on June 1, then-Mayor Jerry Sanders took to a podium in the tasting room to declare June as \u201cCraft Beer Month\u201d in the City of San Diego. At the time, around 35 breweries were operating countywide.<\/p>\n

\"\"<\/a>
Then-Mayor Jerry Sanders announces June as “Craft Beer Month” during a June 1, 2011 press conference, along with (l-r) Lisa White (White Labs), Colby Chandler (Ballast Point), Adam Carbonell (SD Brewers Guild), and Mike and Lisa Hinkley (Green Flash).<\/figcaption><\/figure>\n

One year later, in June 2012, Green Flash announced the \u201cBrewing It Forward\u201d series of beers that supported grassroots charities in San Diego. A portion of proceeds from case purchases of 30th Street Pale Ale, Park West Porter, and East Village Pilsner went to locals like David \u201cWater Man\u201d Ross, a longtime homeless advocate who died on April 9 at the age of 83.<\/p>\n

In January 2013, the Hop Odyssey lineup of six bi-monthly beers was unveiled, including a cedar-aged version of 30th Street Pale Ale.<\/p>\n

Two months later, Green Flash announced plans to build a $20 million brewery capable of producing 100,000 barrels per year in Virginia Beach. At the time,\u00a0The Virginian-Pilot<\/a>\u00a0<\/em>reported that Green Flash would buy the land from the Virginia Beach Development Authority (VBDA) for $1.35 million, and in 2018\u00a0The Virginian-Pilot<\/em><\/a> confirmed that VBDA gave Green Flash a $275,000 grant for fulfilling specific investment terms. Additionally, the state gave VBDA $500,000 to build Craft Lane leading up to the site.<\/p>\n

In November 2013, with a \u201chandshake agreement\u201d between Green Flash\u2019s CEO Mike Hinkley and Alpine Beer Co\u2019s co-founder Pat McIlhenney, the former began brewing the latter\u2019s recipes to help satiate demand for wider distribution of Alpine\u2019s prized hoppy beers. One year later, Green Flash purchased Alpine outright.<\/p>\n

\"\"<\/a>
L-r: Pat McIlhenney (Alpine co-founder), Chuck Silva (former Green Flash brewmaster), Pat Korn (background – former Green Flash barrel master), and Mike Hinkley (former Green Flash CEO) in 2014. Photo by Tim Stahl<\/figcaption><\/figure>\n

In July 2014, European production and distribution of West Coast IPA began via another handshake agreement, this time with Belgium-based St-Feuillien. The two companies had created a series of collaboration beers together since 2010.<\/p>\n

In February 2015, Green Flash presented plans for a barrel-aging facility in Poway called Cellar 3. Just three months later, Cellar 3 opened with barrelmaster Pat Korn at the helm.<\/p>\n

In September 2015, Green Flash brewmaster Chuck Silva resigned, electing to move back to San Luis Obispo County, his birthplace, to build a brewery and be closer to family. Silva had overseen production at Green Flash since 2004, and many credited his recipes and skills for spurring Green Flash\u2019s growth.<\/p>\n

\n

On November 12, 2016, on the cusp of opening the Virginia Beach brewery, Hinkley commented on a story for the\u00a0San Diego Reader<\/em><\/a>.\u00a0“When we start [brewing in Virginia], the San Diego brewery will have the opportunity to slow down, which is a good thing \u2014 it will enable a few upgrades we’ve been talking about.” When asked if layoffs could be a consequence, Hinkley replied, “Absolutely not.\u201d He added, \u201cWe don’t have a staff reduction of any kind coming. As a matter of fact, we have positions we’re trying to fill both in San Diego and Virginia right now.”<\/p>\n

Two months later, in mid-January 2017, reports<\/a> surfaced<\/a> from multiple employees that approximately 25 people, mainly in the administrative and marketing departments, were let go. At the time, Mike Hinkley stated, \u201cWe do not make statements about specific personnel changes. Green Flash is not reducing the number of employees. In fact we will continue to increase the number of employees.\u201d<\/p>\n

\"\"<\/a>
Brewing It Forward event in 2012<\/figcaption><\/figure>\n

However, a year later, in mid-January 2018, a \u201cstrategic re-focus\u201d resulted in 15% \u201cof the Company\u2019s work-force transitioning out of the Company,\u201d including Cellar 3 barrelmaster Pat Korn and 32 others. Green Flash also pulled distribution from 32 states.<\/p>\n

One month after that, on February 20, Hinkley described the company\u2019s current capital structure to\u00a0Brewbound<\/em><\/a>\u00a0as \u201ca bit of mess\u201d and the decision to finance Virginia Beach with debt instead of equity as a \u201cmistake.\u201d The website noted that Green Flash was \u201con the hunt for new investment\u201d with the help of SSG Capital Advisors. \u201cHowever Green Flash goes forward, I will be here, and I\u2019m not selling,\u201d Hinkley also told\u00a0Brewbound<\/em>,\u00a0adding, \u201cWe got caught in what everyone is referring to as the squeeze. Our direct competitors were getting bigger at the same time as the broad market below was becoming more crowded.\u201d<\/p>\n

Just over one month later, on March 24,\u00a0The Full Pint<\/em><\/a>\u00a0reported that Green Flash\u2019s Virginia Beach brewery was up for auction.\u00a0The Virginian-Pilot<\/a>\u00a0<\/em>spoke with employees who were caught off guard. \u201cThis all happened so fast and no communication whatsoever so lots of people standing around confused,\u201d one employee texted the newspaper, on the condition of anonymity.<\/p>\n

On March 26, just over 16 months after opening, the news of Virginia Beach\u2019s closure was confirmed with a press release that also included mention of a \u201ctransaction involving a new investor group committed to maintaining Green Flash\u2019s status as an iconic independent craft-brewing interest.\u201d<\/p>\n

\"\"<\/a>
Green Flash Virginia Beach, via Facebook<\/figcaption><\/figure>\n

\u201cWe have faced a host of significant challenges since expanding our operations to the East Coast and, though a rewarding endeavor in many ways, we feel this course-correction is prudent at this time and will ensure the independence, fiscal viability, identity and quality of the Green Flash and Alpine brands,\u201d Hinkley said in the release.<\/p>\n

Four days later, on March 30, Cellar 3 in Poway closed and Comerica Bank foreclosed on Green Flash\u2019s loans, selling the assets to investor group WC IPA LLC. Hinkley notified shareholders that \u201cin early 2018, the Company defaulted on its loans with Comerica Bank.\u00a0 While we took substantial efforts to recapitalize the Company over the past several months, both before and after the bank default, we were ultimately unable to close a transaction.\u201d The Virginia Beach brewing equipment was sold in a separate transaction to Atlanta-based New Realm Brewing.<\/p>\n

\n

Richard Lobo, president of WC IPA LLC, spoke to\u00a0West Coaster<\/em> about \u201cmisconceptions\u201d circulating since the acquisition.<\/p>\n

\u201cOne misconception out there is that something is happening with the Alpine brands, which is just not true,\u201d Lobo said, referring to recent conversations at bars and restaurants where industry members believed that Green Flash, and specifically Alpine, were shuttered or in the process of shuttering. \u201cWe acquired all of the West Coast brewing operations, including the assets in Alpine and the assets at the Green Flash brewery, and we\u2019re planning to continue to make the same great beers that both companies have been making.\u201d<\/p>\n

As for the future of the company, Lobo told\u00a0The San Diego Union-Tribune (U-T)<\/em><\/a>\u00a0that WC IPA LLC \u201chas no intent\u201d to sell Green Flash to Anheuser-Busch InBev (ABI). \u201cWe have zero intention to sell the business to them or to anybody,\u201d Lobo told\u00a0West Coaster<\/em>, adding that he\u2019d learned Green Flash\u2019s distribution setup \u201cis not aligned at all with Anheuser-Busch.\u201d<\/p>\n

\"\"<\/a>
The Green Flash mobile<\/figcaption><\/figure>\n

Still, locals expressed concern over the inclusion of Josh Yelsey on WC IPA LLC\u2019s board of directors. Yelsey previously worked as a manager in ABI\u2019s mergers and acquisitions department, as well as head of finance for craft breweries bought by ABI.<\/p>\n

\u201cJosh has been out of AB InBev for a few years,\u201d Lobo told the\u00a0U-T<\/em>. \u201cHe came on to help all of us understand the opportunities here.\u201d<\/p>\n

What opportunities?<\/p>\n

\u201cJosh came in to help us understand the business and the industry, generally. There weren\u2019t specific opportunities that we asked him to evaluate,\u201d Lobo told\u00a0West Coaster<\/em>, describing how he came to join the board: Yelsey works for a WC IPA LLC investor.<\/p>\n

\u201cWhen that investor was interested in evaluating the company, he asked if a guy that happens to work for him that used to be in the craft division of Anheuser-Busch could poke around a little bit to help him decide if it was a good opportunity. And that was Josh\u2019s role. And because he knows the industry pretty well from his prior experience at Anheuser-Busch, we thought he\u2019d be a great value added board member for us.\u201d<\/p>\n

Lobo elaborated on the makeup of WC IPA LLC: \u201cThe investor group Muirlands Capital — that\u2019s me. There\u2019s one person at Muirlands Capital, and that\u2019s Rich Lobo,\u201d he said. \u201cMuirlands Capital, the entity, is not an investor. Rich Lobo is, along with about 20 other individual investors. There\u2019s not one institutional or corporate owner. So the idea that a venture capital firm or a private equity firm bought the company is also not true.\u201d<\/p>\n

According to his LinkedIn page, Lobo joined Green Flash\u2019s board in April 2017. He told\u00a0West Coaster<\/em>\u00a0that he resigned from that position earlier this year.<\/p>\n

Lobo would not disclose details of the investor group’s asset purchase. At time of publication, WC IPA LLC employed nearly 150 people, and the goal now is to \u201cre-focus\u201d on its core market after \u201can unsuccessful attempt to go national.\u201d<\/p>\n

That effort was led by Hinkley, who oversaw growth for years, including breaking into the Brewers Association\u2019s list of the top 50 craft breweries by sales volume in 2014, remaining on the list each year since, and reaching as high as #37 in 2016.<\/p>\n

Currently, Hinkley is a vice president on the new board, which gives no solace to original GFBC, Inc. investors whose shares were zeroed out when Comerica Bank foreclosed.<\/p>\n

\u201cMike\u2019s ultimate role is evolving,\u201d Lobo said. \u201cMike, as we know, is the founder of the business. I think he did a lot of great things building the company, and I think there\u2019s an important role for him within the company. We haven\u2019t quite figured out exactly what that is.\u201d<\/p>\n

\n

Since the foreclosure, Alpine co-founder Pat McIlhenney made guest appearances on three Southern California podcasts\u00a0\u2014 YEW!,<\/em><\/a>\u00a0The Full Pint<\/a>, and San Diego BeerTalk Radio<\/a><\/em> \u2014 to express deep displeasure with the company, even before the public troubles. He discussed owing more than $200,000 in 2017 federal tax liability from an employment contract buyout, which included cash and stock.<\/p>\n

\"\"<\/a>
Pat McIlhenney (left) with Chuck Silva in 2014. Photo by Tim Stahl<\/figcaption><\/figure>\n

McIlhenney brought up selling shares with Hinkley, and told\u00a0West Coaster<\/em>\u00a0that \u201cin February, when I checked in with him to see if I was still on track to cash in on the stock, I was flat told \u2018no\u2019 and that \u2018we\u2019ll have to get together again\u2019 \u2014 another promise to get together and explain it to me. He never made an attempt to contact me to resolve the issues of why this needed to happen and why I had to take a hit for it.\u201d<\/p>\n

In response, Mike Hinkley told\u00a0West Coaster<\/em>,\u00a0\u201cThe McIlhenney’s sold Alpine Beer Company for over $2 million in cash. They also received about 2% of GFBC, Inc. stock, which didn’t turn out as the McIlhenney’s, or any other shareholders, hoped it would.\u201d<\/p>\n

Shareholder Joe Cooke, who lost around $68,000 worth of shares, declined to speak on behalf of all shareholders, but said, \u201cAll I can say for a handful of small investors local to San Diego, that none of us saw it coming.\u201d Cooke further commented, \u201cThey are not closing. All they did was take all the money from the first set of investors and give it to a richer set of investors.\u201d<\/p>\n

\u201cPat pocketed over $2 million selling his company, and Mike Hinkley never sold one share of stock,\u201d said Richard Lobo after listening to the podcast on\u00a0The Full Pint<\/em>. \u201cSo it\u2019s a bit frustrating to have someone like Pat out there acting like the victim, when he sold his business. He cashed out. And now he seems to regret selling. I\u2019m not sure what his motivation is now.\u201d<\/p>\n

McIlhenney noted that \u201cthe taxes were over 50%, so the take-home was far less than that.\u201d\u00a0 He added, \u201cJust so we\u2019re clear, I don\u2019t regret selling the company. I regret the quality of the beer that they were putting out. I regret the dumb decisions that they made. I regret the stupidity of the way the business was run to the point that it failed miserably.\u201d<\/p>\n

\u201cI basically handed the keys to a Lamborghini to them,\u201d he told Danny \u201cFull Pint\u201d Becker. \u201cI knew that the demand was outrageously strong. I knew it was because of the quality of the beer.\u201d<\/p>\n

\"\"<\/a>
Green Flash Mira Mesa in 2014. Photo by Nikki Stout<\/figcaption><\/figure>\n

McIlhenney further claimed to\u00a0West Coaster<\/em>\u00a0that Mike Hinkley \u201calso handed out stock to not only me but to other employees, to entice the sales people to stay, fully knowing that the stock was going to become worthless.\u201d<\/p>\n

\u201cThat is completely false,\u201d Hinkley responded. Richard Lobo added, \u201cThis is another inflammatory and untrue statement. As is common in private companies, Green Flash rewarded certain employees with stock compensation over time. The expectation was always that the value of these shares would grow as the company grew. No one is more disappointed by how things unfolded than Mike.\u201d<\/p>\n

McIlhenney further argued, \u201cIt was all premeditated and it started with his [Hinkley\u2019s] move to Florida. He moved to Florida because that state does not confiscate your personal property when you face a bankruptcy. That\u2019s the sole reason that he moved to Florida – to protect his personal assets.\u201d<\/p>\n

\u201cThat is completely false.\u00a0 I have no reason to file for bankruptcy,\u201d replied Hinkley. Lobo added that neither Green Flash nor Alpine filed for any type of bankruptcy proceeding.<\/p>\n

As of late April, WC IPA LLC was moving forward with plans announced in August 2017 to open a Lincoln, Nebraska brewpub within the next few weeks.<\/p>\n

This post was updated to include mention of Pat McIlhenney’s appearance on San Diego BeerTalk Radio.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Green Flash Brewing Company rose to prominence through their style-defining West Coast IPA. Founded in Vista in 2002, the company had outgrown that location, which was capable of producing 14,000 barrels of beer per year, in less than a decade. The new Mira Mesa facility, with a production capacity of 100,000 barrels per year, was […]<\/p>\n","protected":false},"author":3,"featured_media":20367,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[1353,95,376,390,884,1739,61,1260,4953,2031],"class_list":{"0":"post-20359","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-san-diego-beer-beverage-news","8":"tag-sdbeer","9":"tag-alpine","10":"tag-beer","11":"tag-craft-beer","12":"tag-green-flash","13":"tag-india-pale-ale","14":"tag-mira-mesa","15":"tag-virginia-beach","16":"tag-wc-ipa-llc","17":"tag-west-coast-ipa","18":"entry"},"jetpack_featured_media_url":"https:\/\/i0.wp.com\/archives.csusm.edu\/westcoastersd\/wp-content\/uploads\/2018\/05\/1a-1.jpg?fit=1024%2C683&ssl=1","wps_subtitle":"","jetpack_shortlink":"https:\/\/wp.me\/pdtr4y-5in","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/posts\/20359","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/comments?post=20359"}],"version-history":[{"count":0,"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/posts\/20359\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/media\/20367"}],"wp:attachment":[{"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/media?parent=20359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/categories?post=20359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archives.csusm.edu\/westcoastersd\/wp-json\/wp\/v2\/tags?post=20359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}