Pittsburgh Brewing: The Battle for Financial Solvency

This article was written by James Wudarczyk. It was posted on October 27, 2007.

For 145 years Lawrenceville has been home to a brewery located at 3340 Liberty Avenue. However, in the waning decades of the 20th century, the institution struggled with debt. By the early months of 2006, the brewery found itself burdened with over $2 million in unpaid sewage and water bills, an out-dated industrial facility, and an under-funded pension fund covering 530 employees. Although Pittsburgh Brewing was the 11th largest brewery in the United States, statistics compiled in 2004 illustrated that the gap between the largest and Pittsburgh Brewing was enormous. In 2004 Anheuser-Busch produced 103 million barrels of beer, while Pittsburgh Brewing produced only 372,000 barrels. To make matters worse, the Pittsburgh facility’s production was far below the 900,000 barrels it produced just ten years earlier.

In 2005 Joseph Piccirilli, co-chairman of Pittsburgh Brewing Company, expressed concerns over the need to modernize its operations if it was going to continue to employ 230 persons, of whom 200 were unionized. According to an account by Ron DaParma for the Tribune-Review, “Piccirilli’s Keystone Brewers Inc. investment group assumed about $18million in debt, including responsibility for the pension plan, when it acquired Pittsburgh Brewing from Uniontown financier Michael Carlow’s Pittsburgh Food & Beverage Co. in 1995.” The same article also noted, “Pittsburgh Brewing says it now is dealing with $5.6 million in under-funded liabilities for the plan, which, coupled with its poor financial condition, is hindering its efforts to convince lenders to extend $4million in credit needed to upgrade its facilities.” Piccirilli infused $7 million of his own money when he led an investment group to take over the financially ailing brewery in 1995. Declining sales was not the only drain on the Lawrenceville institution. Much of the loss was attributed to interest on several outstanding loans.

The DaParma article also indicated that the pension plan, “which pays out $1.6 million per year in retirement benefits and related expenses, in 2004 had enough to fund only 70 cents for every dollar in benefits owed, down from 95 cents in 2002.”

Piccirilli was also quoted, “Pittsburgh Brewing’s ability to innovate has contributed to its longevity. The company claims a number of industry ‘firsts’ – including the first snap top can; the first twist off reseable cap; the first light beer; and the first draft beer available in a can.” DaParma’s article indicated, “More recently, it attracted national attention as the first regional brewery to use aluminum bottles on a large scale Iron City beer.” The article also noted that in March 2005 Pittsburgh Brewing expanded the use of the aluminum bottle for I. C. Light, with the likeness of golfing legend Arnold Palmer appearing on a limited run of bottles. The brewery also put a picture of Dan Marino on cans and bottles in June 2005 to coincide with Marino’s induction into the Pro Football Hall of Fame.

When Piccirilli’s group purchased the financially troubled brewery, they provided $13.6 million in cash and agreed to assume more than $18 million worth of debt. Previous attempts by Piccirilli to secure $4 million in new loans to replace a 45-year-old keg system and a 65-year-old boiler proved unsuccessful. To make matters worse, the company was fined $300,000 because the boilers did not meet pollution control requirements. The government agency threatened additional fines if the boiler was not replaced within 18 months.

Over the course of the next year, the financial woes of Pittsburgh Brewing made the newspapers several times. The talented and very capable writers Len Boselovic of the Post-Gazette, and Ron DaParma, Rick Stouffer, and Joe Napsha of the Pittsburgh Tribune-Review often handled reporting on the subject.

By December 2005 the brewery executives were hoping for a white knight. The company filed for bankruptcy protection. At the same time, Vice Chairman Joseph Piccirilli was exploring options to keep from selling the company. One option was to become a virtual brewer or one that contracts the actual brewing operation, while still maintaining sales and distribution of its brands. This approach worked well for Pabst, which was once a national brewer. Piccirilli pointed to the excess brewing capacity in the business that made “virtual” brewing a feasible consideration. The aged and out-dated Lawrenceville plant continued to be a major concern, as well as pension plan deficit of $6 million, and unpaid water and sewage bills of $2.5 million.

The threat to cut off water service to Pittsburgh Brewing by the Pittsburgh Water and Sewage Authority was prompted by the fact that the Brewery reneged on several extensions to resolve the $2.5 million in unpaid water and sewer bills that dated back to 1996. In 2002 Pittsburgh Brewing averted a shut down of its water supply by obtaining a court injunction. However, the Post-Gazette of December 7, 2005 noted that the likelihood of a similar injunction was slim since the brewery did not live up to its previous obligations. On December 8, 2005 the Post-Gazette reported that the Lawrenceville Brewery filed for Chapter 11 bankruptcy status in an effort to stop the Water and Sewer Authority from terminating its services.

James Hilton of the Post-Gazette briefly traced the history of brewing in Pittsburgh in the December 8, 2005 issue of the newspaper. Hilston noted that the first commercial brewery started in 1795. However, it was not until 1861 when Edward Frauenheim opened Iron City Brewery. Frauenheim was credited with starting the first brewery in America to produce lager. By 1866 Frauenheim moved his facility from 17th Street to a building along Liberty Avenue in Lawrenceville. The facility was expanded three years later. On February 3, 1899, twenty-one firms formed a trust known as Pittsburgh Brewing Company. By 1977 it remained one of only 40 breweries left in the United States. Eleven years later, Pittsburgh Brewing Company merged with Bond Brewing Holdings, Ltd. of Perth, Australia. Then in 1992 the brewery was sold to Michael Carlow.

Len Boselovich’s column of December 8, 2005 added more details to the Bond-Carlow years. “Pittsburgh Brewing survived the imprisonment of two former owners: Australian tycoon Alan Bond and Michael Carlow, a Uniontown native who was thrown out in 1995 after he was accused of a $31.3 million check-kiting scheme against PNC Bank. Mr. Carlow’s indictment put Pittsburgh Food and Beverage, his holding company for Pittsburgh Brewing and other companies owned, into bankruptcy.” Joseph Piccirilli entered the picture in 1995 when he acquired Pittsburgh Brewing in a bankruptcy court auction, paying more than $31 million. Boselovich’s article raised questions as to the exact amount that Piccirilli invested. “Mr. Piccirilli told the Pension Benefit Guaranty Corp. he invested $7 million of the $13.6 million in cash required for the purchase, but sources who were involved in the deal said his contribution was closer to $1 million.” As part of the auction, Piccirilli was also to assume the $18 million debt that Pittsburgh Brewing had acquired over the years.

Robert O. Lampl, attorney for Pittsburgh Brewing, was quoted in the December 19, 2005 Pittsburgh Tribune-Review as saying that he expected cash flow to support day-to-day operations. Piccirilli also noted that the brewery’s debt inhibited it from borrowing the $3 to $5 million for improvements to its aging keg system and boiler house.

By December 21, 2005 local newspapers reported unsecured creditors included The Pension Benefit Guaranty Corp., Duquesne Light, Hammer Packaging of Rochester, New York, Ball Corp., and CCL Container, a Mercer, Pennsylvania firm that made aluminum bottles. The bankrupt Glenshaw Glass also filed suit for $181,050 for unpaid bills for glass beer bottles in 2003 and 2004.

On January 12, 2006 a list of major creditors showed Pittsburgh Brewing owing ALCOSAN $796,758; Pittsburgh Water and Sewage Authority $194,845; Alcohol & Tobacco Tax and Trade Bureau $700,000; U. S. Treasury Department $360,000; Glenshaw Glass $173,490; CCL $253,000; and Owens Brockway $103,307. Other creditors included the International Union of Electrical Workers pension fund, UPMC Health Plan, and High Mark Blue Cross/ Blue Shield.

By April 19, 2006 the Tribune-Review reported, “U.S. Bankruptcy Judge M. Bruce McCullough said he would sign an order setting the stage for the Pension Benefit Guaranty Corp. to take over the pension plan, whose liabilities are estimated at $11.8 million.” Further in the same account it was reported that Sherease Pratt Louis, attorney for the Pension Benefit Guaranty Corp., indicated that the government would not object to the “distressed termination” of the plan, but would determine if it would agree on an April 1, 2005 effective date as requested by the company.

Writing for the Post-Gazette on April 19, 2006 financial columnist Len Boselovic added, “Workers stopped earning additional retirement benefits when the pension plan was frozen in 1995. The $11.8 million deficit reflects benefits they had earned to that point.”

Approximately three weeks later, Boselovic reported that Pittsburgh Brewing was seeking a major wage concession from its unionized workforce. His May 12, 2006 column noted the brewery was also allegedly seeking increased employee contributions toward health care coverage and changes in vacation benefits. Boselovic reported that the company and bargaining unit (the IUE-CWA) had scheduled meetings to discuss proposed changes.

As the battle for financial solvency continued, Pittsburgh Brewing unleashed a plan to unveil Steeler Jerome Bettis’ picture on more than 1.2 million cans and bottles of Iron City. The promotion campaign was unveiled in May of 2006.

On May 24, 2006 the Pension Benefit Guaranty Corporation agreed to assume the brewery’s unfounded pension plan, which covered 532 workers. According to newspaper accounts, the pension plan had assets of $12 million and liabilities double that amount.

While the Lawrenceville facility was struggling with solvency, Piccirilli did not rule out the possibility of discussing with Johnstown Congressman John Murtha the purchase of Latrobe Brewing Company. Mr. Piccirilli insisted that Pittsburgh Brewing was his first priority and the meeting with Murtha was for discussion purposes only.

The fact that Piccirilli even contemplated discussing with Murtha the possibility of acquiring another brewery while the Lawrenceville based facility was struggling with debt did not sit very well with the business community. Len Boselovic’s “Heard off the street” column of June 4, 2006 did not pull any punches: “Is April’s Fools Day being celebrated two months late this year? Bankrupt Pittsburgh Brewing, the company that can’t pay its water and sewage bills on time, that can’t keep pension promises to its workers, that is eternally in hot water with vendors for not honoring its obligations, is making noises about being interested in Latrobe Brewing Co.’s endangered plant.” Further in the same account, Boselovic pointed out that the “Lawrenceville-based Pittsburgh Brewing had serious issues long before Mr. Piccirilli’s stewardship commenced. The two previous owners ended up in prison, which explains why Mr. Piccirilli’s investment group had to purchase the brewer at a bankruptcy auction in 1995.” Boselovic indicated that Piccirilli might have over-paid for the acquisition of Pittsburgh Brewing. He also shed additional light on the company’s financial problems: “Mead Westvaco leased some packaging equipment to the brewery. When the lease expired at the end of February, Pittsburgh Brewing failed to make a required payment of about $64,300. Moreover, it kept the equipment and has not made monthly rent payments of $4,500 since then, Mead Westvaco alleges in a May 23 filing. The situation’s the same for other equipment covered by a separate lease, the supplier stated in a motion seeking payment.”

In his analysis and commentary, Boselovic raised the question: “Does this sound like someone with sufficient financial wherewithal and the requisite business acumen to be considered a viable steward for the Latrobe Brewery? Should someone who can’t make monthly payments of $4,500 – not to mention Pittsburgh Brewing’s more glaring delinquencies – be trusted with the future of the Latrobe workers whose jobs are on the line?”

While the controversy was brewing, Cindy Abram, a spokeswoman, for Congressman Murtha tried to play down the issue by insisting that talks between Murtha and Pittsburgh Brewing over the Latrobe facility were greatly exaggerated. The Tribune-Review, June 8, 2006 reported a meeting to discuss the possible purchase of the Latrobe brewery was set for the following Friday between Piccirilli and representatives from Congressman Murtha’s staff. The following day, the same publication reported that Bev USA was contemplating a deal to sell the Westmoreland County brewery.

Pittsburgh Brewing’s financial woes continued to mount when the Rahr Malting Company of Shakopee, Minnesota asked the court to order the brewery to pay $79,311for three shipments of malt. Rahr indicated that Pittsburgh Brewing received two of the shipments prior to its December 7th bankruptcy filing.

During this period, a Pittsburgh newspaper reported, “Yesterday, the State House of Representatives adopted a list of funding requests in the latest capital budget bill, which includes $5 million for renovations and construction of a new building at a local brewery, although it did not mention Pittsburgh Brewing specifically.

On June 16, 2006 Pittsburgh Brewing was in the midst of a new fray in bankruptcy court when the International Union of Electrical Workers, Locals 22B and 144B, representing production, maintenance, and truck driver employees, petitioned Judge M. Bruce McCullough to approve the hiring of a forensic accountant to determine how much the Lawrenceville-based brewery was worth. The petition came as a result of the management-union negotiations over wage concessions. Rick Stouffer of the Tribune-Review wrote, “More than a regular accountant, a forensic accountant uses accounting, auditing and investigative skills when examining a company’s books. Such experts are trained to look beyond the numbers and deal with the reality of the situation, and they are often used in fraud cases.” In the same source, Joseph Piccirilli was quoted, “Today’s filing is not unusual and, in our view, it’s a way for the union to explore other options.” According to the Tribune-Review article, the union contended that there were three potential investors interested in acquiring Pittsburgh Brewing, but the potential buyers were not named in the source.

Judge M. Bruce McCullough scheduled a July 18 hearing to consider the union’s request to permit a forensic accountant to review the financial information of the bankrupt Pittsburgh Brewing Company. However, the Tribune-Review of July 11, 2006 indicated that the unsecured creditors opposed the motion. Court briefs showed that the unsecured creditors argued that the International Union of Electrical Workers Locals 22B and 144B were “in effect, seeking to begin a sale even though Pittsburgh Brewing has not filed a reorganization plan.”

The battle between the Water Authority and Pittsburgh Brewing and the subsequent decision to file for Chapter 11 status caught workers at the brewery by surprise. Ron DaParma and Mike Wereschagin highlighted the human side of the economic conflict in article that appeared in the Pittsburgh Tribune-Review, December 8, 2005. While Piccirilli was determined to avoid laying-off any of the 200 employees, Jim Sauro, an 18-year veteran of the company described the situation as simply “heart-wrenching.” Shop steward Nick Constantino was quoted as saying the brewery had given him the best job he ever had.

On July 19, 2006 both Pittsburgh newspapers reported that Pittsburgh Brewing avoided a court battle over an auditor when the company conceded it would open its books to various unions. According to Michael J. Healy, attorney for the unions, “The intent of the request remains the same - to have an outside expert review the company’s books so potential investors will have an idea of the company’s financial condition in case Pittsburgh Brewing is unable to reorganize and remain in business.” Healy proposed Chicago accountant Gene Leeb as a candidate for the job since Leeb had experience with other bankruptcy cases. He also indicated that the union would absorb the costs associated with the audit. However, Pittsburgh Brewing argued that it provided all of the financial records the union needed, as well as providing monthly updates to the court. Although no timetable was set for the review, both parties agreed to make the results public without a court order.

On July 28, 2006 Pittsburgh Brewing petitioned the court for an extension past the August 4th date set for submitting a reorganization plan. The brewery argued for the extension on the grounds that it hadn’t reached a new labor contract with the International Electronic Workers locals 144B and 22B. The petition asked the court to extend the deadline until November 1st.

Pittsburgh Brewery was in the newspapers again on August 1, 2006 when it agreed to pay Equitable Gas $20,000 for past due bills.

When the brewery asked the court to terminate its five-year contract with the union, the bargaining unit argued that Pittsburgh Brewing failed to give the union a business plan that showed how it would use any cost savings from the new pact.

By August 5, 2006 Joe Napsha reported, “The bankrupt Lawrenceville brewer of Iron City and IC Light beers said in court documents that it cannot come up with a feasible plan to emerge from Chapter 11 bankruptcy with its five-year labor pact in tact.” The article also indicated that unless the union made concessions, the brewery would most likely close. Pittsburgh Brewing also warned that an out-of-state brewer would be contracted to make its brands. Further in the Napsha article, it was noted that production workers earned between $17.44 and $19.05 per hour, and the current contract called for an annual increase of 30 cents per hour. The company also asked that the employees start contributing 12.5 per cent of the cost of health care. Under the present contract, the company paid the full cost of the health care program.

In the same account, Piccirilli argued, “It is difficult to formulate a reorganization plan when one of the significant components of the pal, which is the labor contract is unknown.”

According to the Tribune-Review of August 8, 2006 Judge M. Bruce McCullough agreed to an emergency hearing on August 17th to hear Pittsburgh Brewing’s request for the rejection of the labor agreement. The petition resulted when the unions, which represented 160 workers, refused the company’s request for a 10 per cent wage cut and an increase in worker’s health care costs.

On August 9, 2006 the Tribune-Review reported on the ownership of the company. Piccirilli owned 44 percent of Pittsburgh Brewing, followed by Jack P. Cerone, who owned 20 percent. “Two other shareholders are listed in court records: Thomas O. Gephart of San Diego, and Steven B. Sands of New York City, each with less than 5 percent. That leaves ownership of about 28 percent of the Lawrenceville brewery in the hands of others, who are not listed. In fact, there are more than 50 other shareholders, none of whom owns more than 5 percent.”

The article focused attention on Jack P. Cerone, an attorney from the Chicago suburbs of Des Plaines, Illinois. “Cerone became one of the brewery’s creditor’s in 2003 when he paid $1 million to purchase a $1.03 million loan from National City Bank, and then paid $500,000 to buy a $5.2 million loan from Provident Bank of Cincinnati, Ohio. Cerone parlayed that $1.5 million investment into a $6 million secured claim against the brewery.” Also, the same newspaper article reported, “In 2003, Cerone became more involved when he took over Pittsburgh Bewing’s bank loans.” Reportedly in the three months before the bankruptcy filing, Pittsburgh Brewing made loan payments to Cerone for $144,666. Then throughout December he was paid in excess of $44,500. These payments irked unsecured creditors, and Cerone’s weekly payments were reduced to approximately $9,100.

By August 18, 2006 Napsha reported that both the union and company agreed to resume talks in a move that postponed Pittsburgh Brewing’s plan to have the courts terminate the labor agreement. Judge McCullough gave both parties until August 28th to work out a compromised. At the same time, Pittsburgh Brewing petitioned the court for permission to hire Chatsworth Securities LLC of Greenwich, Connecticut in an advisory capacity to help attract new financing. The consulting team would be paid $10,000 a month.

A few days later, the battle between Pittsburgh Brewing and the unsecured creditors flared up when the creditors filed a document in U.S. Bankruptcy Court asking for a reorganization plan to be submitted by October 15, instead of the November 1st date requested by the brewing company. The unsecured creditors argued that there was no reason that the date could not be moved up approximately two weeks, which would allow Pittsburgh Brewing to emerge from bankruptcy by the end of the year. Also, the creditors argued that a delay would lower the value of the company since a portion of Pittsburgh Brewing’s business was seasonal. McCullough agreed to the petition. In addition, Judge McCullough honored the union’s request to postpone the September 8 hearing on the company’s bid to terminate the labor agreement. The union noted that they had a negotiation session scheduled for the following week.

The Tribune-Review of September 12, 2006 reported that Pittsburgh Brewing agreed “to postpone until at least late September a hearing in U.S. Bankruptcy Court in Pittsburgh a request to terminate its labor contract.” Apparently the move was to allow both the union and company time in order to continue negotiations on wage and benefit concessions. The company’s financial woes continued when the unionized employees voted 93-0 to reject the company’s request for concessions. Members of the International Union Electrical Workers-Communications Workers of America locals 22B and 144B blamed Piccirilli and management for the financial problems at Pittsburgh Brewing. One union member was quoted, “They are top-heavy in management. The Tribune-Review, which acquired a copy of the proposals that was distributed to workers, reported in the October 2, 2006 edition that the company was seeking a five percent reduction in wages, and the elimination of two 30-cents-an hour pay increases scheduled for May 2007 and May 2008. The proposal also called for the employees to contribute 12.5% toward health care, with deductibles of $1,250 per employee and $2,500 per family; or a 17.5% contribution if they opted for a nondeductible plan. Specific changes in vacation and holiday benefits were not listed in the article. According to the evening edition of the same newspaper, the union wanted to continue working under the five-year contract reached in May 2005. Then, the following day, October 3, 2006, the Tribune-Review reported that Pittsburgh Brewing wanted to end its participation in the pension plan, replacing the existing plan with 401(k) participation. However, that proposal had been previously rejected at early bargaining sessions.

The seesaw battle between the company and union continued. Len Boselovic of the Pittsburgh Post-Gazette noted that unless the October 15 deadline for filing a reorganization plan was extended “creditors and outside investors could file their own plan for taking over the Lawrenceville brewery.” Boselovic’s October 15 article shed additional information on how proposals to modify existing contracts work in Bankruptcy Court. “One option the company has is to seek court approval to throw out the existing contracts, a bankruptcy law provision many companies have used to get back on their feet. Pittsburgh Brewing sought permission to abrogate the contract Aug. 4 but backed off and resumed negotiations only to have its proposals rejected.” According to Boselovic, neither party seemed interested in returning to the bargaining table.

Even if the plan was approved, the Brewery projected losses of $1.6 million in 2006 and $347,000 in 2007. A profit was not projected until 2008 when the company hoped to make $575,000 and almost double that amount in 2009. Considering the fact that creditors were required to approve reorganization plans, U. S. Bankruptcy Judge M. Bruce McCullough repeatedly expressed doubts that Pittsburgh Brewing would be able to successfully emerge from operating under Chapter 11 status. McCullough insisted the brewery needed $12 million dollars for modernization, not the $7 million figured projected by the company. The infuriated McCullough stated, “The plan you’ve got ain’t gonna work…That plan doesn’t fly.” In spite of his reservations, a reluctant Judge McCullough extended Pittsburgh Brewing two weeks to submit a new reorganization plan.

Since 200 jobs in the city were at stake, Dick Skrinjar, a spokesman for Mayor Luke Ravenstahl, indicated that the mayor wished to meet with Joseph Piccirilli, President of Pittsburgh Brewing, to see how the city could help keep the brewery in Pittsburgh.

Both major newspapers during this period reported that Duquesne Light and the Pittsburgh Water & Sewer Authority filed documents in court objecting to Pittsburgh Brewing’s attempt to secure a $500,000 line of credit. Opposition from the two utility companies and other creditors was based on the grounds that Craig Newbold stipulated that the loan was not to be used for payment of former debts. Both utilities also objected to the fact that Newbold’s claim would be given a repayment preference ahead of the authority or Duquesne Light’s bills. A court hearing date on the loan issue was set for November 7.

In his October 25, 2006 column Joe Napsha reported that the U. S. Alcohol and Tobacco Tax and Trade Bureau’s did not press the brewery to post a bond and submit a partial payment on the $745,000 debt that was owed the government since 2001. However, while the government was willing to be patient on the $20,000 monthly payments, it wanted Pittsburgh Brewing to repay $48,000 in checks that bounced because of insufficient funds.

By November 7, the creditors committee joined the Pittsburgh Water and Sewer Authority and Duquesne Light in opposition to allowing Pittsburgh Brewing to secure the $500,000 line of credit unless the brewery submitted a viable plan to emerge from bankruptcy. Joe Napsha, reported in the November 7, 2006 Tribune-Review that Tom Pastorius, operator of Pennsylvania Brewing Company, Frank Fuhrer III, CEO of Frank B. Fuhrer Wholesale Company, and David Fuhrer were potential buyers.

The following day, November 8, Judge McCullough agreed to the company’s request to postpone the hearing on approval of the $500,000 line of credit. Financial woes continued to mount as Assistant U. S. Attorney Paul Skirtich informed Judge McCullough that Pittsburgh Brewing was behind in sending records on beer production to the U. S. Alcohol and Tobacco Tax and Trade Bureau. The brewery was delinquent on $234,000 in taxes. Robert O. Lampl, attorney for the brewery countered that Pittsburgh Brewing was doing a better job of submitting reports, and blamed the tax bureau’s mailroom for some of the delays.

The following day, November 9, 2006 Boselovic reported, “McCullough criticized Mr. Piccirilli’s reorganization plan, questioning who was providing the money. . . The plan mentioned raising $7 million in equity and debt, but did not identify who would provide the money. The lack of detail, plus the brewery’s delinquency in paying federal excise taxes and other ongoing obligations, nearly led Judge McCullough to open the process of closing the brewery rather than reorganizing it.”

In its recap of business news during the week, the Post-Gazette on November 12, 2006 reported, “Bankrupt Pittsburgh Brewing continues to hang on by a thread – even though U. S Bankruptcy Court Chief Judge M. Bruce McCullough two weeks ago declared co-owner and President Joseph R. Piccirilli’s plan for saving the brewery dead on arrival. Meanwhile, one possible investor, David Fuhrer, was not interested in the Lawrenceville brewery because, “It was going to take way too much money fix that place up to get it efficient.”

Pittsburgh Brewing was back in court, asking Judge M. Bruce McCullough to reduce a federal agency’s claim against the company. McCullough agreed to a hearing date of November 28 to review the request. Writing in the November 14, 2006 issue of the Tribune-Review, Joe Napsha noted, “The brewery also wants the court to reject the pension insurer’s $1.29 million claim for minimum pension plan funding contributions required to service the plan, and wants to block the pension agency from having a priority claim to the brewer’s assets.” Also, in the same source, Napsha wrote, “The pension insurer opposed an agreement in March making Jack P. Cerone, a Chicago attorney who owns 40 percent of the brewery, the sole creditor of Keystone Brewers Holding Co., which owns trademark rights to the company’s brands. Because it assumed Pittsburgh Brewing’s unfunded liabilities, the pension insurer believes it has a claim on the trademark rights owned by the brewery’s sister company.”

The following day, the Pittsburgh Tribune-Review reported, “In its latest financial crisis Pittsburgh Brewing Co. said it could be forced to close unless a federal bankruptcy judge on Thursday permits it to finance payment of about $118,000 for its business insurance premiums.” Judge McCullough agreed to an emergency hearing to review the issue of a payment schedule between the Lawrenceville brewer and Bank Direct Capital Finance LLC of Lake Forest, Illinois. Pittsburgh Brewing promised to pay $13,510 a month for nine months. In lieu of a lump sum payment, the brewing company would ultimately pay $121,592, which would compensate Bank Direct for fees and interest. Judge McCullough agreed to the request.

Then on November 22, 2006 the brewery received another reprieve when McCullough agreed to allow the facility to continue paying its excise tax on a daily basis. On the same day, Pittsburgh Brewing vowed to have a rescue plan in place by November 30, and indicated that it was working on a deal for up to $10 million in financing. The U.S. Alcohol Tax and Trade Bureau agreed to hold off forcing the brewery to post a bond until the November 30 hearing.

By November 30 the Tribune-Review anticipated the U.S. Alcohol and Tobacco Tax and Trade Bureau would repeat its demand that Pittsburgh Brewing post a bond to cover the excise tax on beer produced and shipped by the facility.

The following day, December 1, 2006 Len Boselovic, writing in the Post- Gazette noted, “Pittsburgh Brewing’s next white knight may be identified as early as today when the Lawrenceville brewer files court papers outlining plans for emerging from its year-old bankruptcy.” Although the mystery knight was not named, legal representation for Pittsburgh Brewing indicated that the potential investor had clout and ample finances, but the review of the Lawrenceville company’s finances and operations was not completed. Boselovic was cautious to add that some creditors were upset about Pittsburgh Brewing’s inability to pay bills on time even with bankruptcy court protection. According to the account, Lampl, the company’s legal representation, indicated Pittsburgh Brewing would file papers outlining short-term financing until an amended reorganization plan could be filed later in the month.

The same day, the Tribune-Review’s Joe Napsha wrote, “Pittsburgh Brewing Company President Joseph R. Piccirilli said yesterday after a U. S. Bankruptcy Court hearing that the company was finalizing a deal with investors willing to put sufficient funds into the 145-year-old brewery so that it could modernize and markets its brands.” At that interview, Napsha reported Piccirilli anticipated remaining in charge of the facility. Piccirilli was further quoted, “We’re raising more money than we need. This will let me do what I need to do to make the company a success.” However, neither Lampl nor Piccirilli identified the investors.

Approximately one year after the brewery filed for bankruptcy protection, Pittsburgh Brewing was before Judge McCullogh on December 1, 2006 filing a revised financing plan. As of December 2, the bankrupt brewer still did not reveal the name of the investor “with deep pockets,” who was willing to finance Pittsburgh Brewing’s financial recovery. Three days later the Post-Gazette reported the company was back in court seeking permission to borrow up to $500,000 in short term financing, but did not identify the source of the nine per cent loan. Again, the brewery reiterated its position that it would file an amended reorganization plan by the end of the month. The company argued that without the financing, it would not have enough money to operate the brewery through the holiday season. It further insisted that no financing institution would lend the money unless it was placed at the top of the list of secured creditors.

As expected, other creditors were lined up to oppose the financing. Duquesne Light was the first to oppose the plan. In court filed documents, the public utility company argued that Pittsburgh Brewing was consistently late in paying its bills and as of December 6, 2006 had yet to pay a $9,800 security deposit required by a February 14 court order. Duquesne Light also objected on the grounds that the lender would be given preference ahead of the utility.

The following day, December 13, 2006 the Tribune-Review reported the Pittsburgh Water and Sewage Authority wanted immediate repayment of $147,336 for various charges accrued since Pittsburgh Brewing filed for bankruptcy in December 2005. “The authority said the brewery still owes $55,000 on its $110,000 security deposit; $39,415 in past bills on its seven accounts; and $52,920 for a monthly bill due Monday.” The Post-Gazette on the same day noted the brewery owed more than $2 million in unpaid bills to the authority.

Pittsburgh Brewing sought a delay until February 15 for filing of its revised reorganization plan. Joe Napsha’s December 14, 2006 column, in the Pittsburgh Tribune-Review, reported that the unsecured creditors agreed to a one-week extension. In the same account, Piccirilli still refused to reveal the source of financing but indicated that the investor offered more than the $7 million initially sought. According to Napsha, “Public records show Pittsburgh Brewing Acquisition was incorporated Nov. 29 in Delaware, but that state does not require corporation officers to be publicly identified.”

Len Boselovic’s December 17, 2006 “Heard off the street” column was an excellent combination of journalistic reporting and editorial analysis. He wrote, “Lawyers say potential investors are skittish about stepping into the spotlight too soon and that doing so could delay or complicate the rescue effort. . . . Given the brewery’s track record of keeping promises under President Joseph R. Piccirilli - whether not paying its bills on time or not making contributions to pension plans – it is only natural that some believe there are other, darker, reasons for the secrecy. One possible explanation: some influential group – creditors, the brewery’s workers or government officials, for example – may not like the terms of the proposed reorganization plan.”

Elsewhere in the same column, Boselovic reported, “The secret investor, a Delaware-incorporated entity named Pittsburgh Brewing Acquisition LLC, had hired a prominent Dallas attorney to represent it in the proceedings. Robert D. Albergotti has represented companies, private equity investors and hedge funds in the bankruptcies that include Enron, World-Com, El Paso Electric and Schlotzsky’s.” Boselovic identified Joel M. Walker and Jeffrey W. Spear as local counsel for the brewer’s rescuer. In the same source, Boselovic was quick to observe that the twists and turns taken by Pittsburgh Brewing made the outcome of the proceedings almost impossible to predict.

Two days later the Tribune-Review reported that creditors opposed to the brewery’s plan for interim financing continued to line up. The newspaper indicated the U.S. Alcohol and Tobacco Tax and Trade Bureau and Mead Westvaco Packaging expressed dissatisfaction. Pittsburgh Brewing was reported to owe almost $815,000 in excise taxes, as well as a considerable sum for leasing Mead Westvaco’s packaging machines.

The December 20th announcement that Jack R. Cerone, who owns 20 per cent interest, opposed the plan came as another twist in the brewery’s battle for survival. According to Joe Napsha’s column in the Tribune-Review, Cerone “denied Pittsburgh Brewing’s claims that he agreed on how his stake in the brewery would be handled once the new investor joins the organization.” Napsha also noted that Cerone “holds the only court-approved claim on Keystone Brewers Holding Co., which owns the trademark rights to the Iron City and IC Light brands.” However, the article indicated that Cerone said “he may agree to the interim financing after he reviews Pittsburgh Brewing’s financial reorganization plan.”

According to the Tribune-Review, December 20, article, Robert Sable, who represents the creditor’s committee, said the creditors knew the identity of the investor. In court documents filed by Sable, the creditors did not object to interim financing. Apparently all parties were waiting for the December 20 meeting with Judge McCullough before determining the viability of the revised plan.

The long awaited revelation of the potential white knight was made public on December 22 when both the Post-Gazette and the Tribune-Review identified Connecticut businessman John N. Milne, head of a private equity firm called United Growth Partners. Both Milne and his attorney, Robert D. Albergotti, assured Judge M. Bruce McCullough they were prepared to pour more than $7 million into the 145-year-old brewery. In order to make the struggling brewery successful, United Growth indicated they would also seek concessions from the unions at Pittsburgh Brewing. They pledged to maintain operations at the Lawrenceville facility, as well as revive the Iron City and IC Light brands. According to the Pittsburgh Post-Gazette account of December 22, 2006 written by Boselovic, “A second investor group, Bay Harbour Management, was interested in the brewer if the Milne group’s plan falls short.”

Attorney Robert O. Lampl, representing Pittsburgh Brewing Company, said a reorganization plan would be in place by the January 16, 2007 date set by Judge McCullough. Although initially a number of creditors opposed interim financing, they dropped their objections prior to the December 21 hearing. Since the objections were dropped, McCullough approved short-term financing in the amount of $500,000 via a loan. Milne’s Pittsburgh Brewing Acquisition LLC agreed to provide an immediate infusion of $250,000 and another $250,000 loan effective January 1, 2007. According to Joe Napsha, Milne envisioned a brewery with a strong portfolio of brands. Milne indicated he hoped to revive some brands, while developing craft beers that offered double digit growth. However, in order to achieve financial stability for the brewery, John Milne indicated, “It’s critical that we get a cost-savings labor agreement.” He suggested, “Right-sizing the labor force might include job losses and a reduction in benefits and wages.

Napsha interestingly noted in his December 22 column, “Investor Jack Cerone, a Chicago-area attorney who owns 20 percent of the brewery, agreed to the deal because he is allowing only $500,000 of his more than $2 million claim on the brewery to have a lower priority than the new investors.”

In his December 23, 2006 column which addressed the niche beer market, Ron DaParma incorporated statistics from the Brewer’s Association, which identified brewery types operating in the United States. According to this report there are 47 Regional craft breweries, 403 microbreweries, 928 brewpubs, 17 large breweries, and 24 regional breweries.

Ed Martin, director of sales and marketing for CCI Container Corporation of Hermitage, Mercer County, which sold Pittsburgh Brewing its aluminum containers, expressed his belief that Pittsburgh Brewing could find a market niche between the high-volume competitors like Anheuser-Busch and Coors and the producers of specialty brands of beer.

A round of labor negotiations between Milne and the Union of Electrical Workers-Communication Workers of America locals 22B and 144B was scheduled for Wednesday, January 3, 2007. According to the Tribune-Review, December 29, 2006 Joe Piccirilli, who owned the brewery since 1995, was expected to participate in the negotiations. The account noted that George Sharkey was not sure “what, if any, role Jack P. Cerone, who owns 20 per cent of the brewery would play in the negotiations.”

On January 10, 2007 talks between Milne and the union were underway. Milne reiterated his position that although the contract was not set to expire until May 2010 he needed lower labor costs. The following day in the Post-Gazette, Boselovic reported that a number of unionized employees were concerned that ratifying a contract would not guarantee them a job or union representation. Boselovic also noted that both negotiators for the union and Milne remained silent on contract proposals.

The brewing company was back in the news on January 12, 2007 when the U.S. Alcohol and Tobacco Tax and Trade Bureau filed papers in court reiterating its demand that Pittsburgh Brewing post the $150,000 bonds that brewers are required to guarantee tax payments. This action was prompted by Pittsburgh Brewing’s failure to meet at January 1st deadline for covering $49,000 in bounced checks. The government agency demanded that the brewery cease operations unless the bond was posted. However, the agency agreed to postpone a hearing until the following Tuesday since there was a draft between the parties to resolve the issue.

Joe Napsha reported on January 13, 2007 that the brewery dodged closure after it paid $25,000 and agreed to deliver the balance of $24,130 to the government agency. So while the payment bought time for the struggling brewery, Napsha reported the previous day that the November financial statement showed the company was more than three months behind in paying $1.3 million in various debts.

In order to bring costs in line, Milne insisted that the labor agreement had to be renegotiated. According to newspaper accounts of January 14, 2007, in order to preserve jobs at Pittsburgh Brewing, the ten-member negotiating committee agreed unanimously to recommend acceptance of a new tentative contract. A meeting with the union’s general membership for ratification or rejection was scheduled for the following week.

While Pittsburgh Brewing was struggling with survival, Anheuser-Busch Company announced that its volume of shipments to wholesalers increased 1.2 per cent to 102.3 million barrels. August Busch IV, president and chief executive officer of Anheuser-Busch, attributed the increased sales to the growth in core brands like Budweiser and Bud Light, as well as to the acquisition of the Rolling Rock brands.

Although the general membership of the union had not been presented with the terms of the new contract, Len Boselovic’s January 17th column revealed that Milne’s negotiators submitted a proposed 15 per cent pay cut to $14.83 an hour, eliminating the pension fund, and reduction in the vacation benefits from a maximum of six weeks to three weeks. According to Boselovic, “Last week, attorneys for the IUE-CWA pension plan filed documents indicating the brewery had failed to make nearly $321,900 in pension fund contributions since it filed for bankruptcy in December 2005. The pension plan is seeking payment of $450,900 to cover the required contributions as well as penalties and interest.” Boselovic also noted, “The pension fund’s actuaries have told union officials the brewery would be required to pay an estimated $5.3 million if the plan were terminated this year. That claim, as well as a $1.8 million claim by the Pension Benefit Guaranty Corp. over a previous pension plan that was frozen in 1995, are among the creditor issues that have to be resolved before Mr. Milne’s group can acquire the brewery’s assets.”

One of the casualties in the reorganization battle was Pittsburgh Brewing Company President Joseph R. Piccirilli, who was expected to leave the position whenever the brewery emerged from bankruptcy. Piccirilli was the white knight, responsible for pulling Pittsburgh Brewing from bankruptcy in 1995. An article in the Pittsburgh Tribune-Review on January 17, 2007 indicated that Cerone’s future with the company was unsure.

On January 22, 2007 both the Pittsburgh Post-Gazette and the Pittsburgh Tribune-Review reported that the union approved the concessions by a vote of 66 –52. In addition to the 15 per cent wage cut, the new contract provisions required the union employees to contribute toward their health care plan, and the current pension plan was replaced with a 401(k) program. The concession package was a bitter pill for most employees. As David Templeton’s column noted, “Many employees leaving the meeting refused to comment. Several who did comment refused to identify themselves. No one seemed happy, but several were incensed by the givebacks, with fears their jobs were gone forever.” The same source noted that one bone of contention revolved around a provision in the agreement, which called for the termination any employee off for more than eighteen months. Employees would continue to be paid at their former rate until Milne formally took over Pittsburgh Brewing Company.

Napsha’s column of January 23, 2007 reported that Pittsburgh Brewing owed more than $13 million to various creditors. The following day, the Pittsburgh Tribune-Review indicated that an agreement was reached between the brewery and Reliant Energy over the $43,298 for electric service since December 2005. Provisions of the agreement required the bill to be paid in two installments by February 28th or the utility company would have a right to terminate service after giving five days notice. However, before January was over, the battle between the U.S. Alcohol and Tobacco Tax and Trade Bureau and Pittsburgh Brewing surfaced when the government reiterated its position on the brewery’s posting of a $150,000 bond to cover federal excise taxes. Pittsburgh Brewing petitioned the court for a denial of the demand, and a hearing date was set for February 6.

At the hearing, Pittsburgh Brewing’s attorney argued that the bond was not necessary since the company was making tax payments and the company was not in a financial position to post the bond. At that point, Judge McCullough asked, “You just got $500,000 in financing. Why can’t you have a bond?” At the hearing, the government backed off its demand, allowing the company more time to formulate its reorganization plan.

Early in February 2007, Judge M. Bruce McCullough agreed to give Pittsburgh Brewing an extension of three weeks to file its revised reorganization plan. Permission was granted on the grounds that the potential new owner of the brewing company needed the additional time to reach agreement with its creditors. The new date for the hearing was set for February 27, 2007. Although the labor union agreed to terminate its contract with the company, the creditors were still awaiting an offer on settlement on debts owed by Pittsburgh Brewing. In what amounted to good news for the brewery, the United States government agreed to wait three weeks before forcing Pittsburgh Brewing to comply with the posting of a bond to insure payment of excise taxes. Assistant U.S. Attorney Paul E. Skirtich indicated that the government previously seized more than $600,000 from two brewery bonds to cover past taxes.

By February 21, 2007 the brewery was still expected to file its reorganization plan by the expected deadline. However, Pittsburgh Brewing Acquisition was still in the process of negotiating with creditors, including the Pittsburgh Water & Sewage Authority and Jack Cerone. Company attorney Robert Lampl contended the company paid its back bills in the amount of $43,298 to Reliant Engergy. Two days later the Pittsburgh Tribune-Review indicated that the new buyer offered to fund the union pension fund with $250,000 once the reorganization plan takes effect, and an additional $250,000 would be paid over the course of the next five years.

Although Pittsburgh Brewing filed its reorganization plan on time, the battle to get the creditors to accept the proposals was long from finished. John Milne had the dubious task of getting sixteen of the breweries largest creditors, whose claims against the bankrupt institution amounted to $16.6 million, to settle for $3.98 million. The court gave Milne until April 27 to settle with the creditors.

The proposals, as reported by Joe Napsha, called for the paying of Jack P. Cerone, the Chicago attorney who owned 20 percent of Pittsburgh Brewing, $588,000 for seven years of consultations, $40,000 for legal fees, and $53,000 for an advance he made to the brewery in 2005. Napsha quoted Milne, “In return, Cerone would release his rights to mortgage interest on the Lawrenceville plant.” The source went on to note that Cerone would also receive $9,105 a week while the brewery remained in bankruptcy. Also, as part of the settlement, Cerone would get a seat on the new firm’s board of managers, and 50,000 shares of “common membership interests” in the privately held business.

In addition, the proposal called for paying the U. S. Alcohol and Tobacco Tax and Trade Bureau a maximum of $230,054, and paying the Pittsburgh Water and Sewer Authority $250,000. There was no mention of repaying Joe Piccirilli any of his claim for the remaining $336,000 he said was owed from the $528,000 he loaned the company. Furthermore, Timothy Hickman of Liverpool, Ohio, would serve as the company’s new president at an annual salary of $200,000.

Len Boselovic’s March 1 column noted, “The plan does not identify how much cash or debt the proposed buyers, led by John N. Milne of Unified Growth Partners, would invest in the brewery. It mentions spending $4 million for capital improvements and $500,000 for marketing, as well as lawyer fees and other administrative expenses up to $2.7 million. Nor does the plan identify the source of the funding.” Further in the same article, Boselovic indicated, “Unsecured creditors, who would have received 33 cents on the dollar under the first proposed plan, are in limbo. Mr. Milne’s lawyers are continuing negotiations with them, but if no agreement is reached, they would get nothing.”

The Pittsburgh Business Times raised some very serious questions about the feasibility of producing beer profitably at the Lawrenceville plant. Regarding the facility, John Whitehill, president of Pittsburgh Investment Bank, remarked, “It’s quaint. It’s beautiful. But it’s no way to make beer.” Cris Hoel, an attorney and close observer of the local beer industry, went so far as to say, “The Lawrenceville facility is dead.” Among the factors working against the brewery was a two-level floor plan, coal-heated boiler, antiquated line equipment, obsolete keg system, and its location in the city, which inflates distribution costs in an “era of interstate shipping.” However, the prospective owner believed that the Lawrenceville facility could be saved by capital investment and reorganizing the aged facility into a one-floor operation.

In an interesting side note, Boston Beer Company, the manufacturer of Samuel Adams Beer, announced it was returning to southwestern Pennsylvania. Boston Beer once purchased excess vat capacity from Pittsburgh Brewing for the purpose of manufacturing Samuel Adams Beer. However, this time around, Boston Beer awarded its business to the Latrobe Brewing facility.

While the viability of the Lawrenceville plant was being debated in the business journals, the Pittsburgh Water and Sewage Authority voiced strong objections to the plan, arguing that it would receive less than ten cents on the dollar that it was owed by the brewery. The authority argued that it was not fair to the taxpayers to settle for $250,000 when Pittsburgh Brewing was delinquent on $2.6 million worth of bills. Judge M. Bruce McCullough agreed to a one-week continuance in order to afford both Pittsburgh Brewing and the Water Authority time to resolve their differences.

The plan the U.S. Alcohol and Tobacco Tax and Trade Bureau also objected to the plan. The bureau argued that repayment of the interim financing debt would have precedent over the money owed the government in back taxes. Also hanging in limbo were some 200 unsecured creditors, who stood to lose everything unless a settlement could be reached with the secured creditors. Although the Pittsburgh Water and Sewage Authority objected to the reorganization plan, the International Union of Electrical Workers–Communication Workers of America Pension Fund agreed to a settlement of $250,000 in cash, and another $250,000 to be paid over five years.

Napsha reported on Aril 6th that Duquesne Light was the first unsecured creditor to object to the settlement plan since the utility was owed over $45,000 from bills that were four months old. However, by April 27, 2007, Napsha reported that the brewery and the Pittsburgh Water and Sewage Authority reached an agreement, whereby the authority would forgive one million dollars in past due bills immediately and another one million dollars in increments over three years. According to Boselovic, the authority agreed to settle for $575,000 or 22 cents on the dollar.

In addition, the city, county, and state agreed to provide $750,000 in grants and low interest loans to the potential new buyer. Of the $750,000, two-thirds of the amount was in the form of a three percent loan.

Joe Napsha’s column of May 1, 2007, indicated that Jack Cerone, one of the brewery’s secured creditors, could actually emerge with $1,892, 716 on a $1.5 million investment. According to the Napsha account, Cerone received $500,000 prior to the December 2005 bankruptcy; $627,216 for payments made during bankruptcy; $53,500 bankruptcy settlement with proposed buyer; $336,000 proposed four-year $7,000-a-month consulting deal with proposed buyer; $336,000 for an extra four-year consulting deal; and $40,000 maximum payment of legal fees.

Two days later, the Pittsburgh newspapers reported that the agreement with the Water and Sewer Authority paved the way for the eventual reopening of the brewery. However, the publications reported that the 200 plus creditors had until May 29 to vote on the reorganization plan, and Judge McCullough scheduled a confirmation hearing for June 5.

While the status of the brewery was in legal limbo, on May 22 the operations at the Pittsburgh Brewing Company made the news again when a dozen employees picketed the Lawrenceville facility. Although the demonstration was not authorized by Local 144b of the International Union of Electronics Workers/Communications Workers of America, one of the protestors indicated the wildcat strike was over the fact some of the workers were given one day of work a week, while others were not. They indicated that this was in violation of the union contract. Pittsburgh Brewing spokesperson declined to comment, but the union indicated they would file a grievance over the work rule issue. The union also claimed that a meeting was set with the company to discuss health care matters.

By June 3, 2007 the Pittsburgh Tribune-Review reported that a number of creditors approved the reorganization plan as the June 5th hearing date approached. The creditors were offered a settlement of $5.03 million against debts of $26 million. This was an essential element in order to have the court approve restructuring.

The long awaited hearing took only fifteen minutes for Judge M. Bruce McCullough to approve the reorganization plan. McCullough was both stunned and cautionary as he remarked, “I did not think we would be here today.” After thanking all of the participants for their hard work, Judge McCullough further indicated, “I don’t know how long it will last.” Apparently he said this because he was aware of the problems that the brewing company still faced, including major capital investments in the facility and increasing sales from $27.4 million a year to $37.4 million over a three year period. During the period of reorganization, the company lost $3 million.

As of July 7th the new owners would operate the company under the name Iron City Brewing Company, which was the original name of the company when the Lawrenceville facility was founded in 1861. In spite of the obstacles, the company’s new president, Timothy Hickman, remained optimistic that he could reverse the weak balance sheet and excessive cost structure. Hickman recognized that the new company would have to work hard to regain the loyalty of lapsed customers, while at the same time developing markets for craft beers.

By the beginning of June 2007 the long battle for reorganization was finally over, but the battle for financial stability was not. Although the 146-year-old Lawrenceville brewery was spared closing, it would take another three months before the new owners could take possession of the assets. Milne’s group proposed investing about $4.1 million in modernizing the facility and paying about $3.9 million to settle with creditors. Among the other issues facing the new investment group were obtaining a license from the Pennsylvania Liquor Control Board, inspection of the facility by the state Department of Agriculture, and acquisition of a bond to cover the federal excise taxes as required by the U.S. Alcohol Tobacco Tax and Trade Bureau. To add to the mixture of problems, Duquesne Light wanted Pittsburgh Brewing to pay its $20,750 overdue bill for electrical services; Health America PA Inc. also sought $219,315 for health insurance payments that the brewery had failed to pay; and a suit from the International Union of Electrical Workers-Communication Workers of America Local Union numbers 22B and 144B for $214,498 for vacation pay, medical expenses, and back pay. To further complicate matters, many of the creditors expressed dissatisfaction with Pittsburgh Brewing’s inability to meet its financial obligations while under court-ordered reorganization.

The purchase of the troubled brewery was not completed until Tuesday, September 18, 2007. Pittsburgh Brewing Company as an entity ended and a new Iron City Brewing Company came into being. However, the new company would still have to prove itself in the marketplace. In a Tribp.m. analysis of September 17, 2007, the newspaper suggested Iron City’s image needed a make over: “The new owner of Iron City beer should focus on nostalgia, build a grass-roots marketing effort and make new beers with a different style and flavor to survive against industry giants.” Julie Bradford, editor of All About Beer magazine of Durham, N.C., noted, “Rather than trying to battle the ‘800-pound gorillas’ of the beer industry such as Anheuser-Busch, Miller or Coors, Iron City should brew a beer that ‘has a distinct flavor and unusual style’ to separate itself.”

According to the Tribune-Review, September 19, 2007, Timothy Hickman, president of Iron City Brewing, issued a statement whereby he indicated that the company’s goal was “totally focused on providing a quality product to our loyal customers.”

The same article also quoted Harry Schuhmacher, editor of Beer Business Daily in San Antonio, Texas, who expressed confidence that a beer with a long history like Iron City Brewing could successfully appeal to beer drinkers by reminding them of nostalgia. However, Schuhmacher warned that Iron City’s success would be contingent upon using a genuine grass-roots strategy of putting sales people in the bar, rather than sponsoring expensive television advertisements.

Timothy Hickman seemed confident that he could make the brewery a financially viable operation with the infusion of new capital and by reviving dormant brands such as J. J. Wainwright, Fort Pitt and Olde Frothingslosh. According to the Tribp.m. “Money” section, of September 20, 2007, the company would have a variety of funding sources to operate the historic brewery. These included a $1.3 million loan, $2.5 million working capital line of credit, and a $3 million capital improvement loan from CIT Group/Business Credit Inc. of New York; a $3 million investment from United Growth Partners of Greenwich, Connecticut; and low interest loans up to $500,000 for machinery and equipment, $200,000 low interest loan from Opportunities Grant Program, and $50,000 Customized Job Training from the Pennsylvania Department of Economic and Community Development.

Hickman contended that the lack of cash had previously hampered operations. He claimed his first order of business was to put 70-75 bottlers and brewers and 27 sales and administration employees back to work. The new president expressed confidence that within 90 days, the brewery could meet demand for the backlog of beer orders. He also optimistically predicted 2008 production levels to be at 327,000 barrels or a 30 per cent increase over 2006 production levels. Hickman further expressed confidence in aggressively marketing craft beers since it had 36 labels – in addition to Iron City, IC Light, and Augustiner – to appeal to a variety of tastes.

Thus, one chapter – Pittsburgh Brewing: The Battle for Financial Solvency – closed. A new chapter in the history of the Lawrenceville institution will be written over the course of time.