Baywood International, Inc., (the "Company") announced today that it has closed the asset sale of its wholly-owned subsidiary, Nutritional Specialties, Inc./dba LifeTime(R) or LifeTime(R) Vitamins ("LifeTime") to Nutra, Inc., a subsidiary of Nutraceutical Corporation. The purchase price of LifeTime was initially $8,250,000 in cash and then subsequently increased on the final close to $8,578,000 in cash due to working capital adjustments less payment of certain liabilities.
Simultaneous with the sale, $3.6 million of the proceeds were used to pay off the Company's senior lender, Vineyard Bank, N.A. The Company received a one-time cash benefit of $338,434, as $259,600 of interest expense was forgiven and an additional $78,834 of principal was discounted. Additionally, the Company used the remaining capital to pay off certain other debt and fund the working capital needs of the business. The Company intends to continue its restructuring plans to recapitalize its balance sheet and capital structure, while focusing on the growth of its beverage business, namely New Leaf Tea, as well as the expansion of new products within the functional beverage space. The Company has begun its restructuring plans by retiring all of its preferred equity and most of its outstanding warrants. The Company anticipates that this will leave the remaining capital structure with common shares, a smaller number of warrants, and approximately $1.7 million of debt going forward. The Company believes that this will set the stage for a solid financial foundation to enable the rapid expansion in the unmet demands of the beverage business.
Commenting on the close of the sale, President and Chief Executive Officer Eric Skae stated, "We are now officially a pure-play beverage company. The closing of this transaction gives New Leaf a fresh start with a much improved capital structure and balance sheet. We feel we have laid the groundwork to complete our restructuring over the coming weeks, which will give management the greatest opportunity to build enhanced shareholder value moving forward. Our goal is to focus all of our attention on building out our New Leaf brand as well as finalizing the development of additional new and exciting functional beverages. It is our belief that with clarity of focus on our business plan and a manageable financial structure, we are now positioned to build the type of company that investors will embrace."
The Company intends to develop a new line of ready-to-drink ("RTD") beverages based on Super Juices and other functional ingredients. The New Leaf brand is already established in the Northeast and is emerging in the Southeast, Midwest and South Florida in over 75 distributors and approximately 8,000 accounts in the independent grocery/restaurant "street" channel. The Company's goal is to build the New Leaf brand nationally and drive sales growth through expanded distribution, marketing support and new product additions.
For more detailed information regarding the sale of LifeTime, please refer to the Company's current report on Form 8-K filed on the SEC's website at www.sec.gov.
About New Leaf and Baywood International, Inc.:
Founded by Eric Skae in 2004 in Orangeburg, New York, New Leaf was created with the vision of providing healthy beverages for consumers that are great-tasting and made only with high quality ingredients. New Leaf Tea was the company's first product that was born out of that vision and now is available to consumers in 14 unique flavors and in over 8,000 outlets including restaurants, delis, pizzerias and other retail establishments. Currently, Baywood's products are sold under the New Leaf(R) Tea brand. For more information, please visit www.newleafbrands.com.
This press release may contain forward-looking statements which involve known and unknown risks, uncertainties or other factors that could cause actual results to differ materially from the results, performance, or expectations implied by these forward-looking statements. The Company's expectations, among other things, are dependent upon general economic conditions, continued demand for its products, the availability of raw materials, retention of its key management and operating personnel, its ability to operate its subsidiary company effectively, need for and availability of additional capital as well as other uncontrollable or unknown factors which are more fully disclosed in the Company's Form 10-Ks and other filings made with the United States Securities and Exchange Commission.