Galaxy Nutritional Foods Agrees to Outsourcing Arrangement and Sale of Plant Assets to Schreiber Foods
July 07 2005 - 8:01AM
PR Newswire (US)
Galaxy Nutritional Foods Agrees to Outsourcing Arrangement and Sale
of Plant Assets to Schreiber Foods Schreiber to Manufacture and
Distribute Galaxy Products in Future ORLANDO, Fla., July 7
/PRNewswire-FirstCall/ -- Galaxy Nutritional Foods, Inc. (AMEX:GXY)
("Galaxy" or "the Company"), a leading producer and marketer of
health-promoting, nutritious plant-based dairy alternatives for the
retail and foodservice markets, today announced its entry into two
definitive agreements with Schreiber Foods, Inc. ("Schreiber
Foods"). Asset Purchase Agreement Under the terms of a definitive
agreement (the "Asset Purchase Agreement") signed on June 30, 2005,
Galaxy Nutritional Foods, Inc. will sell substantially all of its
plant assets to Schreiber Foods, Inc., a $2 billion- plus (sales)
global enterprise and the world's largest privately held cheese
company. The transaction, which will be subject to approval from
the Company's primary lenders and shareholders, is expected to
close on or about November 1, 2005. Supply Agreement Under the
terms of a definitive agreement (the "Supply Agreement") signed on
June 30, 2005, Schreiber Foods has agreed to manufacture and
distribute all of the Company's products for an initial period of
five (5) years beginning September 1, 2005. The Supply Agreement is
renewable at Galaxy's option for up to two additional five-year
periods. On or before November 1, 2005, Schreiber will purchase
Galaxy's remaining raw materials, ingredients and packaging at the
Company's cost. "By agreeing to sell our plant assets and contract
with Schreiber Foods for the production and distribution of our
healthy food products, we expect to retire all of our outstanding
debt with Wachovia Bank and realize significant cost savings going
forward," stated Michael E. Broll, Chief Executive Officer of
Galaxy Nutritional Foods, Inc. "Our Company will benefit from the
production and operational efficiencies of a much larger company
that has an outstanding reputation for product quality and
distribution capabilities within the dairy products industry. In
the future, we will be able to focus our activities upon new
product development and the marketing of our expanding line of
dairy alternative products into the retail and foodservice markets.
During the first twelve months following the completion of these
proposed transactions, Galaxy should realize significant production
and distribution cost savings, and such savings should increase as
our sales grow in future years." The Company also announced that it
has entered into a Loan Modification Agreement with Wachovia Bank,
N.A. (formerly South Trust Bank) that accelerates the maturity of
Galaxy's loan from June 1, 2009 to July 31, 2006. Under the
Modification Agreement, Galaxy will continue to make principal
payments of $110,000 per month until the loan matures or is paid
off. It is currently the intention of Galaxy to repay in full its
outstanding obligations to Wachovia Bank (estimated to be $7.5
million as of November 1, 2005) out of cash proceeds from the sale
of plant assets to Schreiber Foods. "We currently expect that the
proceeds from the sale of plant assets, after repayment of the loan
to Wachovia Bank, will be sufficient to cover any one-time costs
associated with the closure of plant facilities and the transition
of production and distribution activities to Schreiber Foods,"
concluded Broll. Additional information regarding the Asset
Purchase Agreement, the Supply Agreement, and the Loan Modification
Agreement is provided in a Form 8-K filed with the Securities and
Exchange Commission on July 6, 2005. Note: During the week of July
11-15, 2005, Galaxy Nutritional Foods, Inc. will release its
operating results for the fiscal year ended March 31, 2005.
Subsequent to such earnings release, management will host a
conference call to discuss FY2005 operating results and the
agreements with Schreiber Foods, Inc. that are discussed in this
news release. The date and time of such conference call will be
announced in a news release to be issued prior to the release of
FY2005 operating results. About Galaxy Nutritional Foods, Inc.
Galaxy Nutritional Foods is the leading producer of great-tasting,
health- promoting plant-based dairy and dairy-related alternatives
for the retail and foodservice markets. These
phytonutrient-enriched products, made from nature's best grains --
soy, rice and oats -- are low and no fat (no saturated fat and no
trans-fatty acids), have no cholesterol, no lactose, are growth
hormone and antibiotic free and have more calcium, vitamins and
minerals than conventional dairy products. Because they are made
with plant proteins, they are more environmentally friendly and
economically efficient than dairy products derived solely from
animal proteins. Galaxy's products are part of the nutritional or
functional foods category, the fastest growing segment of the
retail food market. Galaxy brand names include: Galaxy Nutritional
Foods(R), Veggie(R), Veggie Nature's Alternative to Milk(R), Veggie
Slices(R), Soyco(R), Soymage(R), Wholesome Valley(R), formagg(R),
and Lite Bakery(R). For more information, please visit Galaxy's
website at http://www.galaxyfoods.com/ . THIS PRESS RELEASE
CONTAINS "FORWARD-LOOKING" STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-
LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES,
OR OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE
UNDUE RELIANCE ON THOSE FORWARD-LOOKING STATEMENTS, WHICH SPEAK
ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO
RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS
TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO
REFLECT UNANTICIPATED EVENTS OR DEVELOPMENTS. DATASOURCE: Galaxy
Nutritional Foods CONTACT: Dawn M. Robert, Investor Relations,
Galaxy Nutritional Foods, Inc., +1-407-854-0433 Web site:
http://www.galaxyfoods.com/
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