Latest News

Bang Billionaire’s Empire of Caffeine Crashes Into Bankruptcy

0

S&P 500

3,621.61

+9.22(+0.26%)

 

Dow 30

29,502.46

+299.58(+1.03%)

 

Nasdaq

10,515.16

-26.94(-0.26%)

 

Russell 2000

1,705.42

+13.50(+0.80%)

 

Crude Oil

89.67

-1.46(-1.60%)

 

Gold

1,685.70

+10.50(+0.63%)

 

Silver

19.47

-0.15(-0.76%)

 

EUR/USD

0.9751

+0.0043(+0.44%)

 

10-Yr Bond

3.8880

0.0000(0.00%)

 

GBP/USD

1.1124

+0.0067(+0.61%)

 

USD/JPY

145.6740

-0.0170(-0.01%)

 

BTC-USD

19,099.28

-190.25(-0.99%)

 

CMC Crypto 200

434.18

+1.86(+0.43%)

 

FTSE 100

6,885.23

-74.08(-1.06%)

 

Nikkei 225

26,401.25

-714.86(-2.64%)

 

(Bloomberg) — It should have been a weekend of celebration for billionaire Jack Owoc.

Most Read from Bloomberg

Here’s How Weird Things Are Getting in the Housing Market

This Is What 7% Mortgages Will Do to the Housing Market

It’s Official: The Fed’s in the Red

The Most Powerful Buyers in Treasuries Are All Bailing at Once

Screening Procedure Fails to Prevent Colon Cancer Deaths in Large Study

On Instagram, he blew out the candles atop a massive birthday cake dedicated to his blockbuster product, Bang Energy. On TikTok rolled a medley of videos showing women clutching cans of the drink and of Owoc, crowdsurfing and pumping his fists in the air.

But the cheery posts from Sunday, which marked the energy drink’s 10-year anniversary, obscured a far more somber reality. That same day, Owoc signed papers to put his company into bankruptcy protection.

A combination of legal damages, a failed distribution deal and stagnant sales has overwhelmed the Miami-based energy-drink maker and its founder, unraveling what some observers call the most improbable success story in the beverage industry.

Court papers filed in Florida on Monday reveal that Bang’s parent company owes more than $500 million to its arch-rival, Monster Beverage Co., and a small California juice maker. It owes another $115 million to PepsiCo Inc., its old distributor.

Meanwhile, Bang’s share of the energy-drink market, once nearing 10%, now sits just above 6%.

In a statement, Owoc vowed to keep the business going and said the company will emerge stronger. He disclosed that Bang’s lenders have put up another $100 million, and that the firm has pieced together a new distribution network that will take over once PepsiCo stops shipping Bang Energy on its trucks this month.

“We are coming like a freight train and cannot be stopped,” Owoc said.

Mounting Challenges

But Bang’s challenges are mounting. Taken together, the debt to PepsiCo and the cumulative legal damages, which could still swell, likely swallows up most of the revenue Owoc’s company collected last year from sales of Bang Energy, its dominant product, according to estimates by Bloomberg News. And industry insiders point out that the energy-drink category has changed since Bang’s astronomic rise began in 2018: There are now lots of good-for-you brands, and distributors increasingly want to carry several of them, not just one.

Some current and former employees doubt that Owoc, whose fortune is valued at about $3 billion by the Bloomberg Billionaires Index, can get the company out of the mess he landed it in. Vital Pharmaceuticals Inc., Bang’s parent, listed total assets and liabilities of as much as $1 billion each in its bankruptcy petition.

Bang has been in financial disrepair since at least March, when it defaulted on hundreds of millions of dollars in debt, bankruptcy court documents show. Bang’s lenders held off on seizing their collateral — and even advanced $60 million of new money — while the company searched for a rescue deal.

But so far, no one has been willing to fully bail out Owoc’s kingdom. Bang’s advisers looked for months for either a new equity investment or fresh debt, but found no takers, according to court papers. The company owes more than $340 million to existing lenders.

Bang’s current lenders have agreed to put up $100 million of new money to fund the bankruptcy, but there’s a catch: Owoc will have to begin trying to sell the company if he can’t find a way to refinance all of its high-ranking debt in the next three-and-a-half months, court papers show.

Those in the beverage world have wondered for months how long Bang could stave off a Chapter 11 filing as bad news kept stacking up. In April, the parent company was ordered to pay $175 million to Monster and Orange Bang, the California juice maker, for breach of contract and trademark infringement. The ruling also required Owoc’s company to pay them a 5% royalty on all future US sales of Bang Energy.

Pepsi Break

In June, Owoc announced that the distribution deal with PepsiCo, which had gone from rosy to sour, was over. He didn’t disclose, though, that ending the agreement prematurely had cost his firm $115 million.

And in September, a California jury found that Bang had for years made false advertising claims about its eponymous product and ordered the company to pay $293 million to Monster. The jury also held Owoc personally guilty for that violation.

That came just weeks after reports that Vital was in talks with Keurig Dr Pepper Inc. about a potential sale — discussions that quickly fell apart. Former Bang executives said privately they were skeptical that Owoc would ever give up control of his company.

Owoc, 61, has for decades sold the image of himself as the archetype of a self-made American entrepreneur. He opened a small sports supplements store, called VitaHouse, in a Miami strip mall in 1993. He grew it into a retailer with tens of millions of dollars of revenue, targeting a narrow niche of customers focused on weightlifting and fitness.

Social Star

That shifted in 2012 with the launch of Bang Energy — an energy drink stuffed with three cups of coffee’s worth of caffeine and other supposedly health-boosting ingredients. After a few years, sales exploded thanks to a flood-the-zone social-media strategy targeting young consumers and successful efforts to build a nationwide network of distributors. And Owoc, now a billionaire, began turning himself into a social-media star.

But as the coronavirus pandemic swept over the US, the tide turned. Sales plateaued and Owoc blamed PepsiCo, which had struck a deal to be Bang’s exclusive distributor of its energy drinks. (PepsiCo has said it fulfilled its contractual obligations and that Owoc’s critique is misguided.) Then followed the steep legal judgments.

Can Owoc mount a comeback? Gerry Khermouch, the editor of Beverage Business Insights, says he’s learned over the years to never write off the man from Miami.

“Jack Owoc had his back to the wall a decade ago when he launched Bang Energy,” Khermouch wrote in an email, referring to a period of severe financial troubles Owoc has spoken about publicly. “At this point, his team has reassembled a credible third-party distribution network, so there may be plenty of life left in that brand after the Pepsi fiasco.”

But inside the company, the outlook is decidedly gloomier, according to current and former employees who spoke with Bloomberg News. They asked to remain anonymous to avoid retribution by Owoc.

Some employees have departed in recent weeks. Others still at the company described feelings of sadness and embarrassment. One former executive who remains in touch with old colleagues wrote that all hope was gone.

The bankruptcy is Vital Pharmaceuticals Inc., 22-17842, US Bankruptcy Court for the Southern District of Florida (Fort Lauderdale).

(Updates with pre-bankruptcy financing efforts beginning in eleventh paragraph.)

Most Read from Bloomberg Businessweek

The Twitter Deal Has Pierced Elon Musk’s Reality Distortion Field

Even After $100 Billion, Self-Driving Cars Are Going Nowhere

The Great Post-Covid Online Shopping Bet Was a Costly Delusion

Hackers Target Eager Homebuyers With a Dumb Scam That Keeps Working

A New Silicon Valley Emerges at the Arctic Circle

©2022 Bloomberg L.P.

Advertisement

Reuters

Germany girds for gas supply pain, targets $93 billion price relief plan

BERLIN (Reuters) -Germany on Monday said it plans to urgently implement a 96 billion euro ($93 billion) plan to ease pressure on consumers from surging gas prices as it was warned that the supply situation heading into winter remained tense even with full reserves. “The supply situation remains tense despite the filled storage facilities,” Michael Vassiliadis, head of trade union IG BCE and one of the commission experts, told a news briefing, adding that the panel hoped their plan would curb inflation. If adopted, the plan would be paid for by a 200 billion euro relief package Chancellor Olaf Scholz’s government announced last month to reduce the impact of energy prices on Europe’s largest economy, which experts have estimated needs to cut consumption by a fifth to get through winter and beyond without rationing.

MarketWatch

U.S. stocks open higher after 3 days of losses as investors await inflation data, Fed minutes and earnings

U.S. stocks open mostly higher on Monday, with the S&P 500 and Dow Jones Industrial Average on track to snap a three-session losing streak that culminated with a 630-point drop for the Dow on Friday following the release of jobs data for September. The S&P 500 [s: spx] gained 5 points, or 0.2%, to 3,645. The Nasdaq Composite [s: comp] fell 15 points, or 0.2%, to 10,636.

Reuters

Rivian shares skid after EV maker recalls nearly all vehicles

Rivian’s market capitalization dropped more than $2 billion to $31.1 billion in a single day, compared with automakers such as Ford Motor Co and General Motors Co, which are valued at $45.67 billion and $47.08 billion, respectively. The company started selling electric vehicles in the third quarter of last year and has so far delivered 13,198 vehicles. The addition of battery packs and motors, as well as downtime required at the plant to ramp up capacity could derail Rivian’s pace of production, according to the brokerage.

Bloomberg

Hertz False-Arrest Claimants Can Sue in State Court, Judge Rules

(Bloomberg) — More than 60 people who have accused Hertz Corp. of having them wrongly arrested won the right to join a lawsuit against the company, dealing another blow to efforts by the rental car giant to keep the allegations bottled up in bankruptcy.Most Read from BloombergHere’s How Weird Things Are Getting in the Housing MarketThis Is What 7% Mortgages Will Do to the Housing MarketScreening Procedure Fails to Prevent Colon Cancer Deaths in Large StudyCathie Wood Warns of ‘Serious Losses’ i

Reuters

Ex Credit Suisse banker in $86 million London appeal after Romanian conviction

A former Credit Suisse banker, who was convicted and sentenced to prison in Romania for a decade for alleged espionage in 2013, is hoping to revive an $86 million London claim against the Swiss bank for lost earnings. Vadim Benyatov, a former head of European emerging markets focused on energy sector privatisations, is urging the Court of Appeal to overturn a lower court decision to dismiss his case, in which he alleges the Swiss bank owes him a duty of care and that his employment contract implied a considerable indemnity. A lawyer for Benyatov told the Court of Appeal on Tuesday that his client, who was made redundant in 2015 and has been unable to find suitable work since then, had been convicted for doing his job.

Bloomberg

Russia Loses 60% of Its Seaborne Crude Market in Europe

(Bloomberg) — Russia has lost three-fifths of its seaborne crude sales in Europe since Moscow sent troops into Ukraine in February. That market is going to vanish almost completely eight weeks from now and the latest sanctions will make it very difficult to divert flows elsewhere.Most Read from BloombergHere’s How Weird Things Are Getting in the Housing MarketScreening Procedure Fails to Prevent Colon Cancer Deaths in Large StudyPutin Threatens More Missile Attacks on Ukraine as Cities Hit‘No P

Deadline

‘Smile’ Widens With Huge Overseas Increase As It Nears $100M Global – International Box Office

Paramount’s Smile is positively grinning ear-to-ear as the horror pic from director Parker Finn saw a wild 19% upswing in holdovers at the international box office in its second frame. The weekend gross was $17.5M in 61 markets for a $40M offshore cume and $89.9M global to date. The overseas increase is quite literally gobsmacking […]

American City Business Journals

Amgen-partnered neuroscience startup rakes in another $112M

A year after emerging from stealth with what would ultimately be the fifth-largest fundraise among local life sciences companies in 2021, Neumora Therapeutics has raised another $112 million to propel its neuropsychiatric drugs forward.

Reuters

BNY Mellon to offer crypto services in digital asset push

(Reuters) -Bank of New York Mellon Corp is adding cryptocurrencies to assets that it holds as a custody manager, as it looks to attract a diverse set of investors and traders by tapping into the popularity of bitcoins and ethers. Trading in cryptocurrencies has skyrocketed worldwide, drawing many traditional institutions to an asset earlier shunned by Wall Street due to its wild swings and sharp regulatory scrutiny. Nasdaq Inc and BlackRock Inc have already rolled out custody platforms for their clients, as they look to gain a foothold in a market dominated by players such as Coinbase Inc and Binance.

: Winter is coming for Europe’s auto industry, which faces an output fall of one million due to supply energy woes

Previous article

Mining Stock News – Fremont (TSXV: FRE) to Vend Coyote and Rossi Claim Blocks to Westward Gold Inc

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News