Hawaiian Natural Water Co. is being acquired by Omaha, Neb.-based Amcon Distributing Co., in exchange for shares of Amcon, which has already stepped in to take care of some of the Hawaii company's debt problems.
company being sold
By Russ Lynch
Hawaiian Natural's shares rose nearly 32 percent, to 25 cents from yesterday's close of 19 cents, in late Wall Street trading today. The companies announced the deal after the markets closed yesterday. Amcon shares rose 13 cents to $4.88 in late trading today.
The deal is expected to close March 31.
Hawaiian Natural, founded in 1994, bottles and sells water from a spring deep under the Mauna Loa volcano on the Big Island and also operates a purified-water business in Kona. Founded in 1994, it went public in May 1997.
Expenses to develop and market its products have kept the company from making a profit and in August it reported a loss of nearly $2 million for the first half of this year and total losses of more than $8 million since going public.
Its stock was delisted from the Nasdaq exchange and it now trades on the over-the-counter bulletin board. In a report to the Securities & Exchange Commission three month ago, the company said it had to find additional financing or go out of business.
In a joint announcement yesterday, the companies said Amcon has lent the water company $750,000 for working capital.
The merger, which will make Hawaiian Natural a wholly owned subsidiary of Amcon, values Hawaiian Natural's shares at $2.87 million. Hawaiian Natural's shareholders will receive Amcon shares, which trade on the American Stock Exchange under the symbol DIT, in exchange for their Hawaiian Natural stock.
The exchange ratio is to be based on a formula that values DIT at between $6 and $8 a share depending on market performance over the 20 days prior to the merger.
Meanwhile, Amcon's financial assistance to Hawaiian Natural is based on promissory notes that allow Amcon to take control of Hawaiian Natural if it defaults.
Marcus Bender, founder and CEO of Hawaiian Natural, said the arrangement with Amcon will let the company increase efficiency and production to expand sales.
Amcon, a wholesaler of consumer products including beverages, candy, tobacco and groceries, owns a wholesale business called Food for Health Co., and operates 11 health-products retail stores in five mainland states.