FEBRUARY 2007
Frank D'Angelo has been removed at the president of Steelback Brewery and replaced with a 25-year-old...
Ad overspending forces Steelback into bankruptcy protection
Steelback Brewery founder Frank D'Angelo's days as the pitchman for the company's beer could be numbered after Steelback was tipped into creditor protection by its billionaire backer, Bernard (Barry) Sherman, who said spending too much on poorly conceived advertising pushed the upstart brewer to the brink of financial ruin.
Both Steelback and non-alcoholic beverage maker D'Angelo Brands Ltd., have been granted court protection from their creditors by an Ontario judge after running up debts in excess of $120-million to Mr. Sherman's investment company Wasanda Enterprises Inc.
"It was overspending, primarily on advertising. Frank is a great ideas man and he developed excellent products. There is a good base of business there, but he was too optimistic in terms of the return on the commercials and he spent too much on commercials. There is a substantial loss," Mr. Sherman, the head of generic drug giant Apotex Inc., said in an interview.
Steelback and D'Angelo Brands lost a total of $14-million during the four months ended Aug. 31, and had combined sales of roughly $8.5-million, according to the court filing. With revenue of $2.5-million, Steelback spent $5.4-million on sales and marketing during the key summer period and recorded a loss of $5.9-million. D'Angelo Brands, which sells soft drinks, fruit juices and other beverages, spent $3.7-million on marketing, posted sales of $6-million and a loss of $8.1-million.
FULL STORY IS AVAILABLE FROM The Globe and Mail.
Note: Sherman's 25-year-old son, Jonathon Sherman took over Mr. D'Angelo's role as president of both companies because D'Angelo was considered to be too incompetent to be allowed to stay in control. The Sherman family also suspected D'Angelo of embezzlement and moneylaundering because of missing funds and botched records.
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