Editor’s note: Chip Tate and the Balcones majority owners reached a settlement December 3 in which Tate sold his 27 percent ownership stake in Balcones to the ownership group and left the company. Details are available here.
November 26, 2014 – Balcones Distilling founder Chip Tate plans to return to the Waco, Texas distillery on December 5, now that he and the distillery’s majority investors have agreed on a compromise to end the temporary restraining order that has banned Tate from any role in Balcones since August. In a telephone interview with WhiskyCast’s Mark Gillespie, Tate described the past four months at Balcones as “wasting time, wasting whiskey, and wasting money.” As part of the compromise to end the restraining order, Tate will not return until December 5, though the two sides remain far apart on an agreement over the future of Balcones. Tate’s attorney, David Clouston, told The Waco Tribune that the December 5 date was chosen to allow both sides to get through the Thanksgiving holiday and allow time for more talks next week.
“We’re still looking for a real resolution,” Tate said. “I knew they couldn’t do what they were trying to do, and that’s been proven now, so all we really need is a true solution.” Two weeks ago, 170th District Court Judge Jim Meyer ruled in Tate’s favor on his claim that the Balcones board violated the company’s bylaws by taking action at board meetings that Tate has boycotted since July. Those actions included the August decision to suspend Tate for 90 days and seek the restraining order after months of disputes between Tate and the Oklahoma City-based investor group that purchased a majority stake in Balcones last year. The bylaws give Tate control over distillery operations, and require that he be present at board meetings for any votes to be binding.
Listen to Mark Gillespie’s interview with Chip Tate:
While Tate has been sidelined by the restraining order, Jared Himstedt has been handling distilling and blending operations at the distillery. Tate said he has not been happy with the whiskey coming out of Balcones over the past four months, and even less happy with some employees who helped the majority investors engineer their attempt to oust him. Tate declined to be specific about who might be affected, but said some responsibilities will be reassigned.
“We’re definitely going to be setting things right, putting things back on a good course…so, you know, we’ll have to make some changes. It’s hard to know who was told what at the distillery…there are certain people who were very much a part of making the investors’ actions possible, and, you know, that’ll be dealt with appropriately.”
The two sides have been discussing a scenario in which one would buy the other out, but have not been able to reach a consensus. Tate has filed a claim against the investor group, known as PE Investors II LLC, accusing it of illegally trying to dilute his 27% ownership stake in Balcones through the funding plan for the company’s new $15 million distillery. Clouston also suggested that a lawsuit between PE Investors II and Tate remains a possibility. While the two sides can veto a Balcones lawsuit against either Tate or PE Investors II, they remain free to take legal action against each other on their own.
Tate said he has investors willing to back his buyout bid, but can’t bring them into the process until an agreement can be reached with the majority investors. “We’re still trying to make offers to give them a return on their investment and part ways…we’ll see if they’re willing to do that,” he said.
We have contacted Balcones for more information, and this story will be updated as needed.
Editor’s note: This story was updated on December 6 to include details on the settlement between Tate and the Balcones ownership group.
Links: Balcones Distilling