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Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

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by Beth Ewen
September 2008

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After two PIPEs, Aethlon links Granite City with United Properties

A 22-site development agreement with United Properties will fund the next stage of development at Granite City Food and Brewery, the locally based restaurant chain that brews its own beer onsite.

It costs an average of $3 million to build one restaurant for Granite City, and United Properties will build 22 of them over the next four years and own the buildings, then Granite City will lease the properties back for an annual rate of 9.5 percent.

Sima Griffith, managing principal of Aethlon Capital in Minneapolis that arranged the financing, says the arrangement was the correct next step for Granite City, allowing it to end its ?stop-and-go? growth phase and concentrate on operating the restaurants rather than on selecting sites and building locations.

Granite City is publicly held, and Aethlon helped the company do two PIPEs, which stands for private investment in a public entity. They raised $6 million in 2003, which allowed them to get to eight restaurants, and $8.5 million in 2005, both via PIPEs.

?That?s an expensive way to fund your growth because you?re issuing shares,? Griffith says, adding, ?in Granite City?s case there was a lot of stop and go,? because they?d get money, build restaurants, get them operating, wait to get more money to build again, and so on.

Earlier, a secondary public offering wasn?t an option for Granite City, says Griffith, because investment bankers aren?t interested unless it?s for at least $25 million, ?and there?s so many costs involved. ?So a PIPE was a quicker, easier way to raise capital? for Granite City.

This time around, the debt financing raised via the United Properties arrangement was the way to go, according to Griffith.  ?The reason is, the stock is at a low point, like all restaurant stocks. Look at the entire stock market,? Griffith says. ?So it would have been very expensive to raise $66 million in an equity offering.?

Actually, that would have been impossible, ?because right now the market capitalization for Granite City is $36 million,? Griffith says.

Sima Griffith, Aethlon Capital: 612.338.6065; sgriffith@aethlon.com; www.aethlon.com