Galaxy Foods (AMEX:GXY)
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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/