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Aloha Water
ownership disputed
after payment
default

Acquirer Hawaiian Natural
Water Co. is contesting seller
Daniel Gabriel's move

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By Russ Lynch
Star-Bulletin

Daniel Gabriel, who sold his Aloha Water Co. in March to Hawaiian Natural Water Co., says he has taken the business back because Hawaiian Natural did not make payments it owed him.

Gabriel said yesterday he also intends to keep the 750,000 shares of Hawaiian Natural, 11 percent of the company, that were part of his merger agreement.

Hawaiian Natural disputes Gabriel's position and Marcus Bender, its founder, president and chief executive, said he is consulting with attorneys to see what he should do next. He declined further comment.

Gabriel said he and his partners resumed ownership of Aloha Water on Aug. 4, after Hawaiian Natural had fallen 90 days behind in interest payments worth about $4,000 a month.

Hawaiian Natural had agreed to pay 10 percent annual interest, in monthly installments, on a $500,000 note it issued to Gabriel's group as part of the purchase price. The note is 51 percent owned by Daniel Gabriel. His wife Patricia holds 20 percent and his partner, David Smith of Morgan Hill, Calif., holds the other 29 percent.

Gabriel said he is running the business as he did before, at its Puahi Street, Waipahu location, and there have been no changes because of the merger with Hawaiian Natural.

Meanwhile, Hawaiian Natural said it will report a bigger-than-expected loss for the second quarter of 2000 because of the dispute with Aloha. The company said it has adjusted its accounts to post a $903,000 reserve for "impairment of the goodwill associated with the acquisition of Aloha."

In a filing with the Securities & Exchange Commission earlier this week, Hawaiian Natural said the change will force it to report a second-quarter loss of 22 cents a share. Without the accounting change, the loss would have been 8 cents a share, the firm said. Hawaiian Natural also told the SEC that it will be late filing its second-quarter report because the dispute with Aloha forced it to make changes.