Business

Kent-based Baristas Coffee makes offer to purchase Tully's

Kent-based Baristas Coffee Company wants to purchase Tully
Kent-based Baristas Coffee Company wants to purchase Tully's of Seattle.
— image credit: COURTESY PHOTO

Kent-based Baristas Coffee Company, Inc. (BCCI) announced Tuesday that it has filed an offer to purchase Tully's of Seattle.

A new company Baristas Acquisition Partners, Inc. (BAPI), has been formed to complete an offer which, if accepted by the court, will become a wholly owned subsidiary of BCCI and is backed by current Tully's shareholders and other investors, according to a Baristas media release.

The U.S. Bankruptcy Court has set Jan. 11, 2013 as the hearing date for approval of the sale of Tully's assets. The BAPI proposal would continue to maintain and operate the Tully's locations with the existing employees under the Tully Coffee brand.

The Kent flagship store of Baristas is at 411 Washington Ave. N. The company features a theme of attractive female baristas in entertaining costumes who serve coffee at a drive-up window.

Baristas has two stores in Tacoma as well as a store in Auburn, Seattle and Shoreline. The company also has a store in Texas, Florida and Arizona as well as two locations in Montana.

On Oct. 10, TC Global, Inc., (Tully's) filed for protection under Chapter 11 of the federal Bankruptcy Code in order to address issues that were preventing it from being profitable. Since filing the company has closed unprofitable locations, reduced overhead, secured additional working capital, and through the bankruptcy it will be able to eliminate debt, certain liabilities and unprofitable legacy leases.

Barry Henthorn , CEO of Baristas, released the following statement.

"We are overwhelmed with the support we have received both emotionally and financially from existing shareholders of Tully's and many other members of the community," Henthorn said. "Our offer is the only one that allows any ongoing benefit to the approximately 6,000 shareholders and does so while maximizing the returns to the other creditors.

"By combining management and supply chain resources it is expected that the combined entities of Baristas and Tully's will be profitable and that operations from just current locations alone will generate in excess of $25 million in revenue and approximately $2 million in profits during 2013. This acquisition will also allow further distribution of other Baristas products, such as our new ice cream line and other products under development."

Tully's was founded in 1992 and currently operates 47 company-owned stores in Washington and California as well as five franchised locations and 58 licensed locations throughout the Western U.S.

Tully's also has nine franchised locations in Asia; four stores in Singapore, three locations in South Korea and two in the Philippines, with the ability to franchise and/or license additional locations throughout Asia, Europe, the Middle East and other regions around the world. The company also operates or franchises smaller footprint stores in special venues such as on the premises of manufacturing facilities (Boeing), as well as, kiosks and cafes located in grocery stores, hotels, hospitals, airports, and on university campuses.

Baristas Acquisition Partners, Inc., consists of several current Tully's shareholders, a top financial analyst, executives from the coffee industry, Baristas (BCCI) shareholders, investment bankers, lawyers, professional athletes and general investors who have combined their resources in order to complete this acquisition. BAPI will continue to consider additional participants up until the time of the sale.

Baristas made the news last summer because of violations of the federal Fair Labor Standards Act.

The U.S. Department of Labor in July obtained a consent judgment and order under which Baristas Coffee Co. and company officers Henthorn and T. Scott Steciw will pay 45 current and former employees a total of $50,000 in back wages and $25,000 in liquidated damages.

The judgment and order resolve a lawsuit filed by the department in the U.S. District Court for the Western District of Washington in September 2011 against the company, doing business as Baristas Coffee Co. Inc. and Pangea Networks Inc., according to a U.S. Department of Labor media release.

The suit was filed after an investigation by the Seattle District Office of the department’s Wage and Hour Division found violations of the minimum wage, overtime and record-keeping requirements of the federal Fair Labor Standards Act.

The division found that employees at espresso stands in Auburn, Kent, SeaTac, Shoreline and Tacoma sometimes were paid with checks which were not signed or had insufficient funds, resulting in employees being paid less than the federal minimum wage for all hours worked. In addition, employees were not paid proper overtime wages when they worked more than 40 hours in a week. The employer also failed to keep accurate records of hours worked and wages paid.

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