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Hawaiian Natural
Water defaults
on payments as
deal dries up

Aloha Water's former
owner is suing to get
back his business

---

By Russ Lynch
Star-Bulletin

Hawaiian Natural Water Co. said today it has not made payments it owes in connection with its purchase of a Honolulu purified water business, Aloha Water Co., and as a result the former owners of Aloha are suing to take back the business.

In the deal it closed on March 20, Hawaiian Natural signed a promissory note agreeing to pay Aloha Water founder Daniel Gabriel and his partners a total of $500,000. The note, due to be paid in full by April 1, 2001, was secured by the stock of Aloha Water.

Hawaiian Natural agreed to pay interest equal to 10 percent a year, in monthly installments, to the holders of the note.

In today's short statement, Hawaiian Natural did not name the holders but company filings at the Securities & Exchange Commission show that 51 percent of the note was held by Gabriel, 20 percent by his wife Patricia and 29 percent by a mainland investor, David Smith of White Tiger Development in Morgan Hill, Calif.

The Gabriels also received 750,000 shares of Hawaiian Natural stock and Hawaiian agreed to make Daniel Gabriel a director and to hire him for at least one year at $125,000.

Gabriel kept the title of president of Aloha Water, which operates under its own name as a wholly owned subsidiary of Hawaiian Natural.

Natural said that the holders of the promissory note have taken action to foreclose because Hawaiian Natural has not made interest payments. "The company is conferring with legal counsel regarding its options," the statement said.

Neither company officials nor Gabriel could be reached for comment this morning.

Hawaiian Natural's over-the-counter stock closed today at 38 cents, down 2 cents from yesterday's close.

The company, which lost $2 million last year and $516,000 in the first quarter of this year, said it is late filing its second-quarter financial report but will do so within the next five days. Hawaiian Natural had sales of just over $3 million last year.

Honolulu-based Hawaiian Natural gathers water from a spring under the slopes of Mauna Loa on the Big Island, and bottles and sells it under the Hawaiian Springs brand in Hawaii, mainland and foreign markets. The company was founded in 1995 by Marcus Bender, who is the company's president and chief executive.

In 1999, the company bought a Kona bottler and retailer of purified water, Alii Bottling Co. Like Aloha Water, Alii gets water from the local public supply and runs it through a filtration system before bottling and selling it.