SALT LAKE CITY--(BW HealthWire)--March 18, 2002--USANA Health Sciences, Inc. (Nasdaq:USNA) today announced a plan to sell its business to a new corporation ( "Gull Sub") that is wholly owned by Gull Holdings, Ltd.
Gull Holdings is a private corporation that is 100% owned by USANA founder, Dr. Myron Wentz. Gull Holdings is currently the holder of approximately 49.5% of the issued and outstanding common stock of USANA. In connection with the sale, the company will change its name to Innova Ventures, Inc. ("Innova") and will transfer the USANA name to Gull Sub.
The plan is subject to shareholder approval. The company's board of directors appointed a special committee to evaluate and participate in the final approval and negotiation of the transaction. Neither Dr. Wentz nor his son, David Wentz, was a member of the special committee.
Gull Sub will pay for the business by (a) the surrender and redemption at a price of $1.60 per share of all shares of USANA common stock owned by Gull Holdings, and (b) the issuance of a promissory note of $5,000,000, and (c) the assumption of liabilities. Innova will retain ownership of all real property, cash of $3.0 million and some personal property. Gull Sub will lease from Innova the land and building currently used by the business. Lease payments will be $1.32 million annually and Gull Sub will have an exclusive option to purchase the property during the first three years of the lease. The promissory note will be payable over five years, bear interest at 14% per annum, and will be subordinated to senior debt not to exceed $8.0 million. The note will be secured by the assets sold to Gull Sub and by a pledge of the shares of the Gull Sub shares owned by Gull Holdings.
Innova will file a proxy statement with the SEC and seek shareholder approval of the transaction. The plan will be set out in detail in the proxy statement. It is anticipated that the definitive proxy statement will be mailed to shareholders on or about April 5, 2002 (subject to a review of the proxy by the Securities and Exchange Commission) and that the special meeting of shareholders will be held on or about May 10, 2002 to vote on the plan. The special committee of the Board of Directors has set March 20, 2002 as the record date for determining the shareholders who are entitled to receive notice of and to vote at the special meeting. The special committee has also determined that the transaction will require approval of the vote of more than a simple majority of all outstanding shares of USANA in number acceptable to the special committee.
The Special Committee's Decision
In addition to the specific terms of the transaction, the special committee considered numerous factors in determining that the company should proceed with the sale of the business to Gull Sub, including the following factors:
- -- The fact that the company has been unable to locate a strategic partner despite undertaking an aggressive program over the past 18 months to secure a strategic partner with whom to merge or that it might acquire.
- -- The lack of offers or opportunities that are superior to Gull Sub's offer in light of all of the terms and conditions presented by Gull Sub in this transaction, including in particular the unique relationship of Dr. Wentz as the founder of the company and as the principal visionary behind its science and the importance to the company's associates of his continued involvement with the business.
- -- The opinion of a qualified independent valuation advisor to the company's board of directors, which states that the consideration to be provided in exchange for the assets and liabilities of the business is fair, from a financial point of view, to the company and its shareholders.
- -- The fact that the board of directors will require that the transaction be approved by more than a majority of the issued and outstanding shares of the company.
- -- The fact that the transaction may facilitate a merger with or acquisition of an operating business by Innova that could generate a higher return on investment than the current business or marketing methods of the company.
Gull Sub Business Following Closing
Gull Sub will change its name following the closing to USANA Health Sciences, Inc. and will continue the business of developing and manufacturing nutritionals, personal care and weight management products, and marketing those products through the existing USANA network marketing system. Employees of USANA (excluding Gilbert A. Fuller and John B. McCandless) will become employees of Gull Sub following the closing.
Commenting on the transaction, Dr. Wentz noted, "This transaction is the result of much consideration. I believe this transaction is structured in a way that will create an opportunity for shareholders to participate in the creation of value in the public market. Personally, I am committed to preserving and growing the USANA business operations for the long-term, so that our associates, customers and employees will not experience any disruption of their incomes or product supply."
Company Business After Closing
Following the closing, the shares of Innova will continue to trade publicly. Innova will hold tangible assets with a net book value of approximately $1.70 per share with additional unrealized tangible asset values of approximately $0.24 per share, based on the underlying net value of the retained and acquired assets. These assets will include cash, a promissory note from the purchaser, and the current corporate facilities in Salt Lake City, which will be leased to Gull Sub.
The executive officers and directors of Innova following the closing will include the following current executive officers and directors of the company. Gilbert A. Fuller will be named Chief Executive Officer and director and John B. McCandless will be named President and director. In addition to Mr. Fuller and Mr. McCandless, directors Robert Anciaux, Jerry G. McClain, and Ronald S. Poelman will continue to serve as members of the company's board after closing.
Gilbert A. Fuller, 61, has been with the company since May 1996. Mr. Fuller previously held senior executive positions at Winder Dairy, Inc., a regional commercial dairy operation, Melaleuca, Inc., Norton Company, and other entities. Mr. Fuller is a Certified Public Accountant and received a B.S. in Accounting and an M.B.A. from the University of Utah.
John B. McCandless IV, 53, has been with the company since October 1995. Previously he also served in senior executive and management positions with Apogee Strategic Services, Utah Biomedical Testing Laboratory, Atlantic Richfield Company and Biodynamics, Inc. Mr. McCandless received a B.A. in Zoology from the University of California, Santa Barbara, an M.S. in Pathology from the University of Utah, and M.A. and M.B.A. degrees from The Claremont Graduate School in California.
Robert Anciaux, 56, has served as a director of the company since July 1996. Since 1990 he has been the Managing Director of S.E.I. s.a., a consulting and investment management firm in Brussels, Belgium. From 1982 to 1990, Mr. Anciaux was self-employed as a venture capitalist in Europe, investing in various commercial, industrial and real estate venture companies. Mr. Anciaux received an Ingenieur Commercial degree from Ecole de Commerce Solvay Universite Libre de Bruxelles.
Jerry G. McClain, 61, has served as a director of the company since June 2001. Mr. McClain is the Chief Financial Officer of Cerberian, Inc., in Salt Lake City, Utah. Mr. McClain served as a key financial advisor to many companies while a Senior Partner of Ernst & Young LLP, where for 35 years he served in Dallas, Rome, New York, and several other cities throughout the world. Mr. McClain is a CPA and holds a B.S. in accounting and an M.B.A.
Ronald S. Poelman, 48, has served as a director of the company since 1995. Since 1994, he has been a partner in the Salt Lake City, Utah law firm of Jones, Waldo, Holbrook & McDonough, where he is head of the Corporate Finance Group. Mr. Poelman began his legal career in the Silicon Valley in California, and has assisted in the organization and financing of numerous companies over the past 20 years. Mr. Poelman holds a B.A. in English from Brigham Young University and a J.D. from the University of California, Berkeley.
Mr. Fuller commented, "Mr. McCandless and I are committed to creating shareholder value by pursuing attractive acquisition opportunities. We plan to target companies with solid balance sheets and positive cash flow, where conservative amounts of debt can be used to facilitate acquisitions that will be accretive to earnings per share."
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Actual results could differ materially from those projected in the forward-looking statements, which involve a number of risks and uncertainties, including reliance upon the company's independent distributor network, government regulation of products, manufacturing and marketing, and risks associated with international expansion. Such statements include, but are not limited to, statements that the company would seek to use the proceeds of the sale and its retained assets to make acquisitions intended to enhance shareholder value, the transaction will create an opportunity for shareholders to participate in the creation of value in the public market, substantially all of the other employees of the company will become employees of the purchasing entity, management of the company is committed to creating shareholder value by pursuing attractive acquisition opportunities, and the company plans to target companies with solid balance sheets and positive cash flow, where conservative amounts of debt can be used to facilitate acquisitions that will be accretive to earnings per share." The contents of this release should be considered in conjunction with the warnings and cautionary statements contained in the company's most recent filings with the Securities and Exchange Commission on Forms 10-Q and 10-K, as well as the preliminary proxy statement to be filed in connection with the special meeting for approval of the transaction. A copy of the asset purchase agreement and other ancillary agreements have been filed as exhibits to the preliminary proxy statement.