FHH - Fountain House enters agreement to acquire
Isoworth
Fountain House Holdings Corp
FHH
Shares issued 13,481,249 Mar 24 close
$1.25
Tue 4 Apr 2000 News
Release
Mr. Brian Wanden reports:
Fountain House Holdings Corp. (FHH) is pleased to announce that it
has
entered into an agreement in principle dated March 26, 2000, with
Isoworth
Holdings Limited pursuant to which FHH will acquire all of the issued
and
outstanding shares of Isoworth in exchange for the issuance of
61,903,500
shares from the treasury of FHH at the deemed price of $1
each.
Approximately 97 per cent of the shares issued to the Isoworth
shareholders
will be escrowed for release over time in accordance with the policies
of
the Canadian Venture Exchange. The following is a summary of the
material
terms of the proposed transaction and background information
respecting
Isoworth.
Business of the companies
Isoworth is engaged in the business of manufacturing and marketing
beverage
dispensing systems and equipment. Isoworth has recently
completed
development of a new beverage dispensing system known as BevStar.
The
BevStar dispenses hot, cold and sparkling beverages and holds
three
different beverage flavours at any one time in addition to being able
to
provide chilled (still or sparkling) and hot water. The BevStar is
designed
to replace the water cooler, coffee machine and drink vending machine
in
small- to medium-sized offices and the home. Beverage concentrates
are
available to produce a wide range of high-quality hot and cold
beverages,
including chilled juices, carbonated and still soft drinks, hot coffee
and
tea, cold beer and other alcoholic drinks. Isoworth currently has
70
employees.
FHH is also engaged in the business of providing beverage
dispensing
systems. FHH is the holder of a licence respecting certain
proprietary
technology from Isoworth, and used that technology in the development
of
its Drinkscentre dispensing system. The Drinkscentre
is a
microchip-controlled drinks appliance for the home that produces still
and
sparkling water, soft drinks, beer and other alcoholic drinks
from
concentrate. The Drinkscentre holds three different beverage flavours
at
any one time.
Management of FHH and Isoworth have determined that it is in the
best
interest of both companies to merge their operations to
streamline
manufacturing, marketing and sales. The target market for the
BevStar
dispensing system is both offices and homes, while the target market
for
the Drinkscentre is primarily domestic.
History of Isoworth
The Isoworth business was founded in 1984 as Isoworth Ltd., a
United
Kingdom company. From 1984 to 1993, Isoworth remained primarily a
research
and development organization, focusing on the development of technology
in
the beverage dispensing industry. In 1990, its current chairman and
chief
executive officer, Sir Paul Judge, became involved with Isoworth
and
oversaw the development of the low-cost beverage dispensing system for
both
the home and office environment, now known as BevStar. Pursuant
to a
corporate reorganization undertaken in 1996, Isoworth Holdings Ltd.
was
incorporated under the International Businevs Companies Act 1989 of
the
commonwealth of the Bahamas. As a result of the reorganization,
Isoworth
Ltd. became a wholly owned subsidiary of Isoworth Holdings Limited
which
also now wholly owns its United States subsidiary, BevStar Inc.
Development
of the BevStar was substantially completed in November, 1999, and
Isoworth
is now manufacturing and marketing BevStar. Isoworth's
operational
headquarters are in Luton, Bedfordshire, England, where Isoworth
has a
manufacturing facility, a research and development department, and
sales
and administrative offices. Isoworth also has sales offices in Chicago
and
Orange county, U.S., Amsterdam, Holland, and Xiamen China.
Financial information
The following is a summary of significant financial information
respecting
Isoworth. Derived from its consolidated unaudited financial statements
for
the financial year ended Dec. 31, 1999. All figures have been
converted
from British pounds sterling to Canadian dollars at the exchange rate
of
2.4 Canadian dollars for one pound sterling.
Isoworth reported a total loss for the financial year ended Dec. 31,
1999,
of $10,697,738 on gross revenue of $1,554,713. The operating loss
after
cost of sales and administrative expenses was $8,886,370. The total
loss
for the year was attributable in part to a provision for interest
payable
on outstanding shareholder loans of $2,331,739 and a provision
for
revaluation of investment of $517,387. Isoworth also reported fixed
assets
of $9,482,798 and net current liabilities of $31,795,202 on account
of
outstanding shareholder loans (which, as noted below, are to be
converted
into equity), for total assets less current liabilities of a
negative
$22,312,404. Isoworth also reported called-up share capital of
$7,521,448
and a revenue deficit brought forward of $29,833,853, for a net deficit
of
$22,312,404. Isoworth has outstanding loans from certain
shareholders
totalling approximately $31,795,202 (Canadian), which funds were
spent
principally on research and development by Isoworth to bring its
BevStar
products to the marketing stage. As a condition of the acquisition,
these
loans including principal and accrued interest are to be capitalized,
with
the lenders accepting Isoworth shares in satisfaction of the loans.
The
additional shares resulting from the capitalization of the loans will
form
part of the shares to be acquired in exchange for the 61,903,500 shares
of
FHH. As a result, Isoworth will become a wholly owned subsidiary of FHH.
FHH currently has approximately 16,679,915 shares issued and outstanding
on
an undiluted basis. Following completion of the acquisition, and prior
to
taking into account shares to be issued pursuant to financings,
the
shareholders of Isoworth will as a group hold approximately 79 per cent
of
the issued and outstanding shares of FHH on a fully diluted basis.
Isoworth share position in FHH
Isoworth is currently the holder of 1,478,570 common shares in the
capital
stock of FHH. To the knowledge of FHH and Isoworth, no shareholders
of
Isoworth or FHH hold shares of the other company.
Isoworth shareholders
Isoworth is a privately owned company organized under the laws of
the
Bahamas, Isoworth currently has 66 shareholders holding a total
of
490,156,315 shares on an undiluted basis. The following are the names
and
jurisdictions of residence of the Isoworth shareholders holding more
than
1.5 per cent of its shares:
Judge Charitable Foundation -- The Judge Charitable Foundation
is a
charitable foundation established under the laws of the U.K. The
Judge
Charitable Foundation holds approximately 35 per cent of the issued
and
outstanding shares of Isoworth. The Judge Charitable Foundation
is
controlled by trustees, one of whom is Sir Paul Judge.
Stratton Investments Limited -- Stratton Investments Limited
is a
corporation organized under the laws of Jersey, Channel Islands.
Stratton
owns approximately 61 per cent of the issued and outstanding shares
of
Isoworth. Stratton is beneficially owned and controlled by the P.R.
Judge
No. 2 settlement, a trust of which Mr. Judge is a beneficiary.
Of the remaining 6.4 shareholders, no shareholder owns more than 1.5
per
cent of Isoworth.
Proposed principais of resulting issuer
The Judge Charitable Foundation and Stratton Investments Ltd. will
become
controlling shareholders of FHH following completion of the
acquisition.
Subject to shareholder approval, the parties have agreed in principle
that
the following persons will sit on the board of directors of FHH
and/or
Isoworth following completion of the acquisition:
Mr. Judge -- Mr. Judge is the chairman of Isoworth. Following an MBA at
the
Wharton Business School, Mr. Judge's career includes 13 years with
Cadbury
Schweppes Plc where he held a series of positions, including
managing
director of Cadbury Schweppes Kenya, managing director of Cadbury
Typhoo,
deputy group finance director and group planning director.
In 1986, he led the $232,800,000 (Canadian) buyout of the U.K., French
and
Irish food operations of Cadbury Schweppes to form Premier Brands
Limited,
of which he became chairman. Premier Brands prospered under new
management,
with trading profits increasing from $15,840,000 in 1985 to $76,320,000
in
1988. Premier Brands won the national 1989 Grocer/IFE Award as the
company
with the best overall performance in the U.K. food and drink
industry
during the previous two years. Premier Brands was sold to
Hillsdovvn
Holdings in June, 1989, for a total of $744-million, at which stage
Mr.
Judge stepped down as chairman.
Mr. Judge was a goverrunent-appointed member of the Milk Marketing Board
of
the U.K. from 1989 to 1992, chairman of food from Britain from 1990
to
1992, director general of the conservative party from 1992 to 1995
and
ministerial adviser to the chancellor of the Duchy of Lancaster, based
in
the cabinet office, from 1995 to 1996. He was also a director of
the
Boddington Group Plc and of Grosvenor Development Capital Plc from 1989
to
1993 and of WPP Group Plc from 1991 to 1997. In 1990, Mr. Judge
donated
$19.2-million (Canadian) to the University of Cambridge to finance
the
university's new business school which is known as the Judge Institute
of
Management Studies, where he chairs the advisory board.
In 1986, Mr. Judge was named one of the Top 40 Under 40 chosen by
Business
magazine and in 1992 was named Food Industry Personality of the Year in
the
U.K. In 1995, the University of Cambridge made him an honorary doctor
of
law and in 1996 he became a knight bachelor in recognition of his
public
and political service.
He is currently a director of Schroder Income Growth Fund Plc and
of
Cambridge Technology Management Ltd., and chairman of the council of
the
Association of MBAs and of Understanding Industry. He is also a freeman
of
the city of London and a fellow of the Royal Society of Arts, of
the
Institute of Directors, and of the Marketing Society, a companion of
the
Institute of Management and a liveryman of the Worshipful Company
of
Marketers.
Jack McGinley -- Mr. McGinley is managing director of Isoworth U.K.
Ltd.
and is responsible for all technical, research and development
and
manufacturing matters in Isoworth. Mr. McGinley has a first-class
degree
from Glasgow University, a DPhil in physics from Oxford University, and
an
MSc in digital electronics from Herriott Watt University. In 1982,
he
joined Rodime Plc where he invented (as shown on the two key patents)
the
world's first 3.5-inch Winchester hard disk drive which is now the
standard
configuration in personal computers round the world. From 1984 to 1994,
he
was with Hewlett-Packard where he became engineering director
of a
$200-million (U.S.) division with 500 staff, introducing a total
quality
culture to the organization and improving product reliability
sixfold.
Since then he set up his own consultancy business specializing in
product
development, but has also spent a year with Psion Plc, the palmtop
computer
specialist, as the interim managing director of a $192-million
(Canadian)
division with 450 staff. Mr. McGinley joined Isoworth in October, 1998.
Robert Solly -- Mr. Solly joined Isoworth in March, 1993. As
managing
director of Isoworth International Ltd., he is responsible for
European
sales and for financial matters. He is a fully qualified accountant
with
substantial experience in controlling all aspects of finance
and
administration with Systems Reliability Plc (a major high-tech
U.K.
computer manufacturing and maintenance services company) and he
was
instrumental in assisting the company to go public. His prior role
at
Actmedia Limited afforded him extensive experience of U.S.
accounting
practices.
Peter Hewitt -- Mr. Hewitt is a non-executive director of Isoworth.
He
joined Isoworth in 1986, following his retirement from Britvic Soft
Drinks
Limited (part of the Bass Group), where he held the position
of
vice-chairman. He played a leading role in bringing together Canada
Dry
Rawlings (where he held the position of managing director for nine
years)
and later Britvic Soft Drinks Limited as part of the Bass Group. For
three
years he was the chairman of the soft drink industry
draught/dispense
committee. During this time, ready-to-drink, postmix and bag-in-box
soft
drinks were developing rapidly. He was also the president of the
National
Association of Soft Drinks Manufacturers and chairman of the British
Soft
Drinks Council. Later, he was instrumental in bringing together all
U.K.
soft drink trade interests into the British Soft Drinks Association.
He
became the association's first president.
John Scott -- Mr. Scott is a non-executive director of Isoworth. Mr.
Scott
was awarded a first-class honours degree in engineering science at
Oxford
University in 1974 where he was sponsored by the CEGB with whom he
then
remained for a further two years. He subsequently worked for
Perkins
Engines Limited and then Moore and Wright Limited before joining
Cambridge
Consultants Limited in 1981 as a senior engineer, where he worked
until
joining Isoworth in February, 1984. He has been primarily responsible
for
the development of Isoworth's patented technology and continues actively
to
develop new products.
Honourable Barbara Thomas - Ms. Thomas is a non-executive director
of
Isoworth. She qualified as a lawyer in New York and became a partner of
her
law firm in 1978. She was appointed by President Jimmy Carter
as a
commissioner of the U.S. Securities and Exchange Commission in 1980,
the
first woman and the second youngest person ever to be appointed. In
1983,
she moved to Hong Kong as regional director for Samuel Montagu and in
1986
went back to New York as managing director of the international
private
banking business of Bankers Trust. She moved to London in 1993 as the
main
board director of News International Plc responsible for legal
and
corporate affairs. She has since led the purchase of the Whitworths
Food
Company, of which she became chairman, and is currently the chairman
of
Axon Group Plc, a computer consultancy company, deputy chairman of
Friends
Provident, and a director of Capital Radio Plc and a number of
other
companies.
Brian Wanden -- Mr. Wanden is currently the president and a director
of
FHH. Mr. Wanden received a bachelor of commerce, administration
and
marketing degree in 1981. He has had over 16 years of marketing and
direct
marketing experience. Mr. Wanden also has extensive experience
in
successful business startups and strategic business development.
Most
recently, Mr. Wanden established a successful chain of retail stores
in
Australia known as Half-Price Warehouse.
Thomas Crosby -- Mr. Crosby is currently secretary and a director of
FHH.
He is the founder and a former president of FHH. His involvement with
FHH
spans over nine years commencing when FHH was a private entity through
its
initial public offering and its listing as a public company through to
the
present day.
Edward G. Bradley -- Mr. Bradley is currently a director of FHH. He was
the
former senior vice-president for John Labatt Ltd. (worldwide) and
is
currently the president of Flagship Games Ltd.
Kelly Willett -- Mr. Willett is currently a director of FHH. He is also
the
president of Granite Ridge Food and Beverage and was formerly the head
of
production services for Cannell Films of Canada Ltd. Mr. Willett
has
extensive experience as an on-air talent figure, which includes
hosting
live television spots for the home shopping network in the U.S.
Gary Schroeder -- Mr. Schroeder majored in finance at the University
of
British Columbia, Vancouver, B.C. Between 1985 and 1990, he was
the
president of corporate Focus Financial Inc., a consulting company
that
prepared business plans and technical reports for public companies.
He
worked as a stockbroker for a national brokerage firm and was also
involved
in fundraising for venture capital programs. Between 1993 and 1999,
Mr.
Schroeder was president of stox.com Inc., an Internet-based provider
of
real-time financial information to the investment community.
It is also proposed that the following individuals will hold
senior
management positions in the combined entity:
James Love -- Mr. Love is quality director of Isoworth. He is a
fully
qualified engineer with a background in the management of
substantial
projects and the commissioning of new production plants in the
plastics
industry. He was also involved in a company manufacturing specialized
home
drink dispensers, being instrumental in the invention of a
carbonation
process using disposable cylinders. He is responsible for ensuring
the
company maintains a rigorous approach to quality issues and for
achieving
the necessary regulatory approvals and other certification.
David Madden -- Mr. Madden is president of BevStar Inc. He has spent
most
of his career in the beverage industry in the U.S. After graduation
he
first joined E & J Gallo, the country's largest wine company, where
he
worked in a number of states as a sales and distribution manager. He
joined
Pepsi Cola in Chicago and St. Louis, becoming a regional sales manager
with
special responsibility for dispensing operations. He then gained
experience
with Citrus Springs, a high- quality juice company, and most recently
as a
general manager with a company involved in plastic technology.
Erik Jorgensen -- Mr. Jorgensen is European sales manager of Isoworth.
He
was born in Denmark and has extensive experience in selling within
Europe,
speaking a number of the major European languages. He runs a sales
force
with particular managers responsible for the U.K., France and Benelux,
and
is currently developing contacts in Germany and Scandinavia.
Proposed equity financing
FHH has agreed to use its reasonable best-efforts to complete an
equity
financing prior to closing of $16-million (Canadian). Isoworth and
its
principals will use their reasonable best-efforts to assist FHH
in
completing the financing. The proceeds are to be used primarily to
market
the products of FHH and Isoworth, with a reasonable allowance for
general
working capital.
Conditions
The obligation of the parties to complete the transactions is
conditional
upon the parties entering into a more comprehensive agreement
and
completing a satisfactory due diligence review of one another's affairs.
FHH has not yet retained a sponsor in connection with the
proposed
transaction. FHH is currently in negotiations with a
Vancouver-based
brokerage firm to act as its sponsor.
Continuance into Yukon
FHH has agreed to seek shareholder approval to continue its
jurisdiction
into Yukon in order to permit the appointment of Isoworth's current
slate
of directors to the board of directors of FHH. The Company Act
(British
Columbia), under which FHH is incorporated, requires that a majority
of
directors be ordinarily resident in Canada with one director
ordinarily
resident in British Columbia. The corporate legislation of Yukon
contains
no such requirements.
General
Completion of these transactions is subject to a number of
conditions,
including but not limited to Canadian Venture Exchange acceptance
and
disinterested shareholder approval. The transactions cannot close until
the
required shareholder approval is obtained. There can be no assurance
that
the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
information
circular to be prepared in connection with the transaction, any
information
released or received with respect to the reverse takeover may not
be
accurate or complete and should not be relied upon. Trading in
the
securities of FHH should be considered highly speculative.
The Canadian Venture Exchange has in no way passed upon the merits of
the
proposed transaction and has neither approved nor disapproved the
contents
of this press release.
(c) Copyright 2000 Canjex Publishing Ltd.
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