Galaxy Foods (AMEX:GXY)
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Galaxy Nutritional Foods Redeems Preferred Shares Through Equity
Raise
Subway(R) Founder Fred DeLuca Now Company's Second-largest Shareholder
ORLANDO, Fla., Oct. 7 /PRNewswire-FirstCall/ -- Galaxy Nutritional Foods
(AMEX:GXY), the leading producer of nutritious plant-based dairy alternatives
for retail and foodservice markets, today announced the conversion and
redemption of the balance of the Company's outstanding Series A Preferred
Shares. The redemption was funded through a private placement of $2.3 million
in common stock.
In transactions that closed October 6, 2004, Mr. Fred DeLuca, the Founder and
Chairman of Subway(R), increased his previous ownership position in Galaxy via
the purchase of 2 million shares of the Company's common stock at a price of
$1.15 per share. With this additional investment, Mr. Deluca now owns
approximately 3.3 million shares of Galaxy's common stock outstanding and
becomes the second-largest shareholder in the Company. Mr. Deluca also received
a Warrant to purchase an additional 500,000 shares of the Company's common
stock at the same price of $1.15 per share.
Also on October 6, 2004, the Company's Preferred Shareholders (BH Capital
Investments, LP and Excalibur Limited Partnership) converted a portion of their
outstanding Series A Preferred Shares into approximately 600,000 shares of
common stock. Simultaneously, the balance of the Series A Preferred Shares
held by the Preferred Shareholders was redeemed for a total price of
$2,279,688. As part of the transaction, the former Preferred Shareholders also
received Warrants to purchase up to 500,000 shares of common stock at a
purchase price of $2.00 per share.
"We would like express our sincere thanks to Mr. Deluca for participating in
the private placement and appreciate the confidence that he and others have
shown in Galaxy and its management team," commented Michael E. Broll, Chief
Executive Officer of Galaxy Nutritional Foods, Inc. "The redemption of all
outstanding Preferred Shares eliminates all uncertainties regarding potential
future dilution from the conversion of preferred shares into common stock. This
development, combined with the financial restructuring in May 2003 and the
favorable settlement of the Schreiber Foods patent lawsuit in May 2004, removes
the third external impediment to the Company's future growth. With the
successful removal of these constraints, management can focus upon the
execution of a business strategy that is designed to significantly enhance
shareholder values in coming years."
The securities purchased in this private placement have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be re-offered, sold, transferred, pledged,
or assigned without an effective registration statement for the securities
under the Securities Act of 1933 and the state securities act or blue sky act
of any state having jurisdiction thereof, or an opinion of counsel that
registration is not required under said act or the securities act or blue sky
act of any state having jurisdiction with respect thereto. The Company has
undertaken the obligation to file a registration statement with the Securities
and Exchange Commission within 180 days of closing to register the shares
issued in the private placement and to include the shares underlying the
warrants described above.
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, Inc.
CONTACT: Investor Relations, Dawn M. Robert of Galaxy Nutritional Foods,
Inc., +1-407-854-0433
Web site: http://www.galaxyfoods.com/