Dairy alternative producer and marketer Galaxy Nutritional Foods today announced that it is to sell substantially all its plant to cheese company Schreiber Foods, which will then manufacture and distribute its products.
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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.
Under the terms of a definitive agreement signed on 30 June 2005, Schreiber Foods has agreed to manufacture and distribute all of the company’s products for an initial period of five years beginning 1 September 1, 2005, Galaxy said. The supply agreement is renewable at Galaxy’s option for up to two additional five-year periods. On or before 1 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, CEO of Galaxy Nutritional Foods. “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.”
“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.
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