Former president of Capital Brewery leads attempt to buy company

Former president of Capital Brewery leads attempt to buy company

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Carl Nolen

Carl Nolen, former president of Capital Brewery in Middleton

Capital Brewery, one of the state’s largest and oldest craft brewing companies, is being pursued by a group of private investors.

Carl Nolen, who was asked to leave the company July 6, said Thursday he is leading a group of investors who want to buy the brewery, currently owned by more than 1,400 stockholders.

The proposed purchase, along with a new infusion of money into the 25-year-old business, is designed to double or even triple the brewery’s annual production of 25,000 barrels of beer and increase the size of the Middleton brewery.

Details of an offer were not made public, but Nolen, 53, who is joined by his brother Mark Nolen, 63, a longtime banking executive, said it would take millions of dollars to grow and expand the business, which had $5.3 million in sales in 2010. He declined to disclose the other investors in the group.

“I’ve been thinking about how we grow this company for a long time,” Carl Nolen said. “Our plan is to tender a fair and equitable offer to all the stockholders of Capital Brewery as soon as possible.”

The board’s chairman, Scott Wiener, said he was unaware of Nolen’s plans until a reporter contacted him on Thursday. He is the company’s largest shareholder and was appointed president after Nolen’s removal. He declined to say why Nolen was removed.

Wiener was unsure if the proposal, which he had not seen, would be considered hostile.

“This is the first of I’ve heard of it,” Wiener said. “I don’t have anything to say until I find out more about what’s involved. This is news to me.”

A purchase price would likely be based on the company’s revenue and earnings before interest, taxes, depreciation and amortization, said Ryan Buckley, a vice president with Livingstone Partners in Chicago, an international investment banking firm that specializes in raising capital and unique transactions.

Both Nolen and Buckley said that expanding by taking on debt could be risky, as cash flow could be tied up in debt payments rather than in sales, marketing and creating new products.

The move by Nolen is meant to capitalize on the continued double-digit growth of the craft brewing industry while overall U.S. beer sales were down an estimated 1 percent in 2010, according to the Colorado-based Brewers Association.

Despite the growth, the 9.9 million barrels of craft beer amounted to less than 5 percent of total beer sales.

Nolen said craft beer could get 10 to 15 percent of the market.

“I don’t see it going backwards anytime soon,” Nolen said. “There’s no question the (craft beer) category is set up for growth.”

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