Hawaiian Natural Hawaiian Natural Water Co., whose oft-delayed acquisition by Amcon Distributing Co. stretched on for 13 months, sealed the deal today when its shareholders overwhelmingly approved the $2.87 million merger.
Water OKs sale
Shareholders approve Amcon's takeover
By Dave Segal
dsegal@starbulletin.comThe Pearl City-based company, which bottles, markets and distributes natural water from the Big Island under the Hawaiian Springs brand, will become a wholly owned subsidiary of Amcon and its name will be changed to Hawaiian Natural Water Company Inc. once the merger is finalized.
Nearly 70 percent of the 9,185,982 outstanding shares were cast in favor of the merger. There were 6,424,600 affirmative votes, 17,850 opposed and 100 abstaining. Votes representing the remaining shares were not cast.
The outcome of the morning meeting at the Honolulu Club had been a foregone conclusion since a majority of votes already existed to approve the merger. Hawaiian Natural's officers and directors, who owned 35.2 percent of the company, unanimously had agreed to vote for the deal while Amcon, by virtue of an earlier $300,000 investment in Hawaiian Natural stock and a $500,000 loan that it converted to stock, owned 21.8 percent of the company.
Marcus Bender, president and chief executive of Hawaiian Natural, said today he was happy with the merger.
"The company is going to be able to continue its growth into the future with a brand new bottling facility and the capacity to be able to meet demand," said Bender, who founded the company in 1995. "Plus, there's the synergy between Amcon being a distribution company and giving us mainland distribution opportunities, and just continued growth and support from the management side. It provides us with all the things we need, primarily financing and the ability to continue to grow."
Amcon Chairman and Chief Executive Bill Wright, who is in Honolulu to oversee the closing, said he expects the merger to be finalized later today and that Hawaiian Natural will cease trading as a separate publicly traded company at the end of today.
Hawaiian Natural shareholders will receive .052 of Amcon stock for each share they own of Hawaiian Natural. In other words, just over 19 shares of Hawaiian Natural stock will fetch a shareholder one share of Amcon stock. Fractional shares will be paid in cash.
Bender, who said he has an "employment arrangement" with Amcon to maintain his current status and titles, said the company had examined other offers.
"We had other opportunities, people we were talking to along with Amcon who showed a great deal of interest in the company," he said. "I don't believe we would have gone under."
Wright said the makeup of Hawaiian Natural's board, which currently consists of Bender, Brian Barbata, Michael Chagami and Bill Kuhlmann, will be determined later today.
Amcon, which distributes beverage, food, tobacco and health and beauty care products and operates 13 retail health food stores, will now be able to enter the high-end water market with its own product.
"It's a wonderful all-natural product whose story needs to be told," Wright said. "It needs to have marketing and sales support behind it to get its story told."
Hawaiian Natural shareholders, who previously didn't receive a dividend, also will be eligible to receive Amcon's quarterly distribution, which currently yields 3.1 percent annually. Its last dividend, payable Sept. 21, was 3 cents a share.
Amcon's stock, which trades under the ticker symbol "DIT" on the American Stock Exchange, closed up 8 cents today at $3.94 and is up 10.6 percent for the year. Hawaiian Natural's shares, which closed today unchanged at 15 cents under the ticker symbol "HNWC" on the Over The Counter Bulletin Board, have lost 4 percent this year.
Hawaiian Natural, which has never made a profit, has been largely dependent on Amcon for financial assistance over the past year.
In anticipation of acquiring the company, Amcon loaned Hawaiian Natural more than $1.9 million in the form of secured promissory notes to be used for working capital and equipment expenditures. Amcon, which delayed the deal's closing several times due to other acquisition activity, also invested $300,000 in Hawaiian Natural at the purchase price of 40 cents per share last February.
Hawaiian Natural, which three months ago discontinued its XEN product line of herbal beverages, had a net loss of $626,381, or 8 cents per share, in the third quarter of this year compared with a loss of $364,014, or 5 cents per share, in the same quarter of 2000. Sales decreased 19 percent to $765,000 in the third quarter compared with $945,000 in the year-ago period.
Amcon, meanwhile, said in a recent Securities and Exchange Commission filing that it expects to report a fiscal fourth-quarter loss from continuing operations of between $1.2 million and $1.5 million in the period ended Sept. 30, 2001. For its full fiscal year, Amcon said that its expected loss for continuing operations would be between $1 million and $1.3 million. The company said the fourth-quarter loss was primarily due to an after-tax loss of approximately $900,000 -- brought on by competitive pressures and integration costs -- after acquiring a wholesale distribution business in June 2001.