Naturade Significantly Strengthens Balance Sheet
Receives $2.5 Million in Capital from Westgate Equity Partners, L.P.
Reduces Interest from Conversion of Health Holdings & Botanicals Debt; Extends Loan Agreement with Wells Fargo Business Credit
IRVINE, Calif.--(BUSINESS WIRE)--Jan. 3, 2002-- Naturade, Inc. (OTCBB: NRDC - news), a leading marketer of soy protein products under the Naturade Total Soy(TM) brand name, today received $2.5 million of capital from Westgate Equity Partners, L.P. (Westgate) of St. Louis, in a transaction that provides working capital to build the Naturade Total Soy brand and support continued strong revenue growth.
In simultaneous transactions, Health Holdings & Botanicals, LLC (HHB) agreed to convert its $5.3 million of Naturade debt to common stock. In addition, Wells Fargo Business Credit (Wells) agreed to extend the existing Credit and Security Agreement through December 31, 2003. The recapitalization resulting from these transactions will significantly improve Naturade's balance sheet and financial ratios.
Naturade CEO Bill Stewart said, ``The financial strength of our new partnership with Westgate will allow us to intensify our focus on brand-building as the No. 1 brand of soy protein meal replacements in the mass market and to maintain our reputation as innovators of natural products that offer real consumer health benefits. Westgate recognizes our potential, which is supported by the FDA approved heart health claim for soy protein, and understands the value of our distribution base in 28,000 mass market outlets. We also are excited by their interest in creating additional strategic alliances for Naturade.''
In consideration of its investment, Westgate received shares of redeemable preferred stock convertible into 13,540,723 shares of common stock (subject to adjustment to protect against dilution) and a three-year warrant to purchase, for $3.5 million, additional shares of redeemable preferred stock convertible into 33,641,548 shares of common stock that would raise Westgate's ownership to 51%. In consideration of its conversion of Naturade's debt and cancellation of its preferred shares, HHB received 35,989,855 shares of common stock. Currently, there are 43,813,494 shares of common stock outstanding.
Naturade has agreed to elect two Westgate representatives to its board of directors. Form 8-K filed with the Securities and Exchange Commission provides a description of the rights of the preferred shares sold to Westgate and the terms of the transactions with Westgate, HHB and Wells.
Westgate is a $120 million, consumer-oriented committed equity fund whose principals offer particular expertise in natural, soy protein-based products. Its investors include the nation's largest independent pension system, numerous financial institutions and high net worth executives. William P. Stiritz, Westgate's chairman and organizer, is the former chief executive officer of Ralston Purina Company, which, until 1997, was the parent company of Protein Technologies International, Inc. (PTI).
PTI, now a division of DuPont, is the world's leading supplier of soy protein isolate raw material and a strategic partner with Naturade, supplying raw material, cooperative marketing support and research and development assistance. Jay Brown, who is responsible for operational oversight of Westgate's portfolio companies, will play a key role in supporting Naturade expansion efforts. Brown worked closely with Stiritz at Ralston Purina where he served as CEO of Van Camp Seafood Company, Continental Baking Company and PTI.
Brown said, ``We believe strongly in the long-term growth potential for soy protein products and see Naturade as a solid base from which to build brands that merit high consumer purchase interest and strong retailer support. We have high confidence in the consumer packaged goods experience of the Naturade management team and in the scientific studies that support the Company's key product claims.''
The Wells agreement is an amendment to an existing business relationship begun in January 2000 through which Naturade maintains a secured line of credit that contains certain financial and other covenants, as well as restrictions on the payment of dividends and other distributions. It includes a security interest in the equipment, inventory, receivables and other assets of Naturade. |
