Canada: Leading brewing equipment manufacturer DME Group goes into receivership

DME Group, a company that builds brewing systems for the craft beer industry, was put into receivership after Royal Bank of Canada (RBC) reported DME had defaulted on secured payment of more than C$ 18.1 million (US$13.5 million). This incident comes a little bit more than two years after the merger of Canadian brewing equipment manufacturers Diversified Metal Engineering (DME), from Canada’s smallest province, Prince Edward Island, on the East Coast and Newlands Systems from Abbotsford, British Columbia. More than 2500 breweries across the globe have been designed, built and installed by the DME Group. Alvarez & Marsal

The receiver, , has listed hundreds of open claims  that amount to a grand total of C$27 million (US$ 20.1 million). Creditors for not yet delivered brewing equipment include breweries like 10 Barrel Brewing, Anchorage Brewing, Diageo, Foam Brewers, Labatt, Lord Hobo, Maine Beer Company, Monday Night Brewing, Moosehead Breweries, New Belgium Brewing, Night Shift Brewing, Notch Brewing, Tired Hands Brewing, and Wicked Weed, among many others.

It is believed that the default will lead to a number of smaller breweries going out of business, which are usually in urgent need for cash in their early stages of business.

DME has 150 employees at its Prince Edward Island operation and 100 employees at its location in Abbotsford, B.C. but all of the directors of DME have either resigned or will be resigning. The bank said the company would have required C$5 million (US$3.73 million) in new capital to have continued.

Reason for DME being in administration is the fierce competition in the brewing equipment market driven by the growing number of players, especially those from China which work on very low margins.

Alvarez & Marsal plans to sell the business as a going concern and is accepting bids from potential buyers through January 7, 2019.

 

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