In an unusual transaction, a digital lender is merging with a publicly-traded distillery in a deal that will give the mortgage firm's shareholders a controlling interest in the company.
Portland, Oregon-based Eastside Distilling announced its deal with
"Our disruptive, cloud-based, go-to-market strategy targets Millennials and Gen Z borrowers," said Nick Liuzza, co-founder and CEO of Beeline, in a press release. "The benefits of operating in the public markets to help Beeline achieve its goals are significant."
Beeline will become a subsidiary of Eastside, according to a Securities and Exchange Commission filing. The distillery will issue to Beeline shareholders a combination of common and preferred stock equivalent to 82.5% of its total outstanding capital stock. The SEC filing said at least $2 million will be advanced to Beeline upon the completion of a private securities offering by the distillery.
The distillery said it undertook a debt-for-equity exchange with private investors, and an asset sale of a digital can printing business. Upon closing post-merger, the transactions will eliminate all debt from Eastside's balance sheet. Beeline will also appoint two individuals to Eastside's board of directors, according to the SEC filing.
Board of directors at both Beeline and Eastside have approved the merger, and the deal is expected to close later this year. Representatives for the companies didn't respond to requests for comment Friday.
Eastside was formed in 2008 and trades under the EAST symbol on the New York Stock Exchange. It reported $3.1 million in gross sales in the second quarter this year, an annual improvement, but a net loss of $1.5 million, a slight year-over-year decline.
The Providence, Rhode Island-based Beeline was founded in 2019 and offers products including debt-service coverage ratio loans, Federal Housing Administration-backed mortgages, and home loans for self-employed borrowers. The company said it's launched sales support AI which has lowered costs for direct-to-consumer platforms.
"Mortgage origination has yet to fully experience the dynamic and exciting transformation seen in other financial services sectors," said Liuzza in the press release.
Beeline is licensed in 28 states and Washington, D.C., and has 16 sponsored mortgage loan originators according to Nationwide Multistate Licensing System records. It originated $54 million in loan volume in 2023, according to Home Mortgage Disclosure Act data.
Eastside's stock rose on the Beeline news Thursday, closing at $1.44 a share after hovering under $1.00 over the last month. It traded at $1.42 per share Friday afternoon.
This is likely the first instance of a distillery entering the mortgage business, although
