Truett-Hurst, Inc. (NASDAQ: THST) rose sharply Tuesday, after the company reported the sale of its wholesale wine business to Precept Brands for $18 million in cash.
The company, based in Healdburg, Calif., says these wholesale brands are produced under a variety of labels and sold primarily to national retail chains. The Company will retain its Direct to Consumer business and Dry Creek Valley Estate in Healdsburg, California.
Precept has acquired from the Company all the assets comprising its wholesale wine business for approximately $18,000,000 in cash, subject to post-closing adjustments, and ongoing royalty payments relating to certain of the acquired wholesale wine brands pursuant to a Royalty Payment Agreement.
The transaction is expected to result in proceeds of approximately $15.9 million for the Company, net of taxes and transaction-related expenses and fees. In addition, the Company will continue to provide certain services to Precept relating to the wholesale wine business through the current harvest period under a Transition Services Agreement.
As of the closing, and after payment of bank debt and certain transaction expenses, the Company expects to have approximately $5.6 million of cash.
Following the completion of the Precept transaction and repayment of all outstanding debt obligations, Truett-Hurst, Inc. will retain unencumbered ownership of the 22.6-acre Truett-Hurst vineyard (including 13.5 planted acres) and the tasting rooms in Healdsburg
The company’s shares vaulted 99 cents, or 66.6%, approaching noon ET Tuesday to $2.47.
