The Jolt Co. Inc. has moved its headquarters to New Jersey and left its founder behind.
Founded in Rochester in 1985, Jolt, which also does business as Wet Planet Beverages Inc., virtually invented the now-booming energy drink category. Jolt’s hyper-caffeinated cola initially carved out a small but impressive niche in a market whose worldwide sales now total more than $4 billion.
More recently the company’s fortunes have slumped. Last week Jolt filed for Chapter 11 court protection from creditors. Court filings describe the firm as increasingly squeezed by larger and better-funded competitors and having dealt itself a fatal blow with a 2006 marketing misstep.
If the bankruptcy plays out according to a plan the company has laid out in court filings, Jolt’s assets will be sold to the highest bidder in bankruptcy auction by the end of this year.
As of last week, Jolt founder C.J. Rapp remained with the company but had been removed as CEO. But the firm’s new CEO, Robert Clamp, said this week from Jolt’s new Garden State headquarters that Rapp is no longer with the company.
Jolt is under the control of Emigrant Capital Corp., a Manhattan-based private equity firm that first bought into Jolt in 2006. Emigrant gained voting control of the privately held company’s stock this year after a second infusion of cash.
An unidentified Emigrant Capital affiliate has tendered an initial offer of $1.7 million as a stalking horse bid on Jolt’s assets, court papers state. The filing calls for a Nov. 13 deadline for others to submit bids.
A schedule in the Chapter 11 filing states the current total worth of the cola company’s assets at $2.2 million. The total includes trademarks and other intellectual property valued at $1.5 million.
Rapp has declined to comment. The Jolt founder stated in an e-mail last week that on his attorney’s advice he would refrain from comment until Jolt’s bankruptcy case is settled.
News of Jolt’s headquarters relocation came in the form of a brief change-of-address notice filed this week with the Bankruptcy Court clerk for the Western District of New York by Jolt’s Ohio-based bankruptcy lawyer. The company-with its headquarters formerly in a suite in the Linden Oaks office park-has relocated to Monachie, N.J., the notice states.
The new address is the same as that for Boylan Bottling Co. The soft drink firm is headed by Clamp, whom Emigrant Capital installed as Jolt’s CEO earlier this year. Emigrant Capital’s Web site identifies Boylan Bottling as an Emigrant Capital company.
Val Stalowir-identified in Jolt’s court papers as an Emigrant Capital executive partner who has been a Jolt director since 2006-is Boylan Bottling’s chairman, Clamp told the Rochester Business Journal last week.
In an affidavit filed as part of the Chapter 11 case, Clamp blamed Jolt’s downfall largely on an ill-fated deal Rapp struck with Rexam Can Co. of Chicago in 2005.
Rapp chose Rexam, a U.S. unit of the British-based Rexam PLC, to manufacture so-called battery bottles, 23-ounce cans made to resemble electric batteries. Rapp apparently hoped that using resealable cans would be a marketing triumph for Jolt, but instead it turned into a nightmare, Clamp’s affidavit states.
Sales of battery bottles slumped as energy drink brands backed by the Coca-Cola Co. and Pepsico Inc., which respectively allied with Monster and Rockstar energy drinks, cut prices.
Jolt could not cut prices because it was stuck with a commitment to buy 90 million battery bottles from Rexam. The containers cost three times as much as competitors’ non-resealable cans, so Jolt could not afford to match competitors’ new prices, Clamp’s affidavit states.
Jolt’s revenues plummeted from $14.4 million in 2008 to $4.4 million through the first nine months of this year, court papers show. Clamp’s affidavit states that a consultant hired to evaluate Jolt’s prospects recommended that the company seek financing from friends and family, but it was unable to do so. As its prospects dwindled, Clamp states, Jolt’s only remaining option was a bankruptcy filing and sale of its assets.
Sale terms proposed by Jolt for its bankruptcy auction would have the firm’s assets transferred to a new owner but leave liabilities behind.
Jolt and its Canadian distributors also face a $20 million lawsuit in Canada. A class action complaint filed in the Ontario Superior Court of Justice this year accuses Jolt of violating Canadian truth-in-advertising, consumer protection, and food and drug laws by failing to reveal harmful side effects of ingesting too much caffeine, such as an increased heart rate and high blood pressure.
Sellers and distributors of other energy drinks, including Red Bull, Full Throttle, Monster, Amp and Rockstar, face similar complaints in Ontario.
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