Publicly traded canning company Wildpack Beverage announced this week it has entered an agreement to receive a $20 million 12-month secured loan from Manna Capital Partners, which will go towards scaling operations across its six U.S. manufacturing plants. The deal is expected to close on April 10.
Founded in 2018 by CEO Mitch Barnard and chief growth officer Thomas Walker, Wildpack owns beverage canning facilities in California, Colorado, Georgia, Maryland, Michigan and Nevada. Based in Canada, Wildpack brokers cans through Ball and other material manufacturers and offers a number of services, depending on location, to alcoholic and non-alcoholic beverage brands, including co-packing, label printing and warehousing.
Reached by phone this week, Barnard said Wildpack is focusing towards expanding this year after spending much of 2022 “shoring up the growth” from 2021, and the capital from the loan will go towards improving its existing facilities via the addition of new higher speed lines and increasing the number of packaging formats it can produce.
“From our perspective now, it’s just about standardizing across the platform,” Barnard said. “So, if a brand is co-packing over at our Vegas facility, or our Baltimore facility, they end up with the exact same process, exact same product [and the] exact same equipment running their products. So it just makes it a little bit easier for those that we serve to scale and reliably understand what they’re going to get.”
While Wildpack had previously structured its growth strategy around M&A and acquiring canning facilities around the country, Barnard said that plan has been paused as it works to improve its existing locations and drive new customer acquisition.
The loan was conducted through a subsidiary of Wildpack called Thirsty Cat, LLC, which Barnard said was created to facilitate the deal, and Manna-affiliated company MBV-WP, LLC.
Terms of the agreement include an option for Manna to acquire a majority equity interest (up to 59.44%) in Wildpack and it also has the right to pay $6.2 million for an additional 6.33% of the company. Manna may also make an offer to buy the company outright, which Wildpack must honor depending on the verdict of a third party fairness opinion assessing the offer.
Barnard said he wouldn’t speculate on what Manna executives’ plans are in regards to Wildpack, but said he views the equity purchase option as being favorable for both parties. He noted that a partial or total acquisition of the company would likely come down to how well the business does over the next year. Manna could just as well demand a repayment of the loan at the end of the term – which would come with a 8% interest rate – but Barnard believes the decision will come down to Wildpack’s growth and performance over the next year.
“Frankly, our team’s focus is to be as successful as we can,” he said. “It’s pretty simple math, right? If you’re really, really good and you do a really, really good job, people typically want to be around it.”
In its most recent monthly company update, Wildpack reported 245 confirmed customer orders totaling over $7.2 million in February (up from $5.2 million in January), reflecting an annualized run rate of $86.5 million. Across all facilities, its total throughput was over 28 million cans with plant utilization of 32%, up 22% month-over-month.
As of this week, Barnard said Wildpack is operating at a theoretical utilization “just shy of 40%” and the company aims to grow utilization to more than 60% by the end of 2023. Currently, co-packing operations are sold out through the end of the year, but the loan will allow the company to increase capacity by this summer.
While the business has about “five or six large anchor customers,” Barnard said Wildpack has a total 1,200 active customers currently and remains committed to creating capacity to work with emerging brands who are more regularly struggling to find affordable and available co-packing and manufacturing in the current market.
“We’re always leaving a good chunk of capacity available for on-demand, small production runs, because those are the future Red Bulls, Monsters, and so on and so forth,” he said. “But there’s a lot of capacity actually turning off in the next six months, because a lot of co-packers can’t handle cost of capital in the 15% to 20% range, so we’re seeing that inflow.”
Even as the company grows Barnard said that hiring will be minimal with some expansion to its middle management and supply chain teams, but the company doesn’t anticipate a significant increase in headcount.
While Wildpack is continuing to move ahead with its expansion efforts, the business is also now caught in a legal battle with former board member Kim Murray, who resigned from her position last month. Murray came into the company after Wildpack acquired her previous business, Michigan-based Land and Sea Packaging, in 2021.
On February 16, Murray filed a lawsuit against Wildpack in the United States District Court, Western District of Michigan, alleging that the company had failed to pay out over $3 million in payments related to the acquisition. Roughly two weeks later, Wildpack announced it had filed its own complaint against Murray and former Land and Sea COO Tim Murray in Michigan, alleging they had made “misrepresentations in connection with the acquisition.” The company filed an additional lawsuit against Murray in Vancouver, claiming she had breached her fiduciary duties during her time as a board member.
Murray voluntarily dismissed her lawsuit on March 9. Copies of the lawsuits filed by Wildpack were not immediately available to view. Barnard declined to comment on the litigation.