DALLAS, Sept. 7, 2001 (PRIMEZONE) -- Fresh America Corp. (Pink Sheets:FRES), a major North American fresh produce distribution company, announced today that it closed its previously announced $5 million private equity investment and $27 million debt and equity swap. Darren Miles, Fresh America's new Chief Executive Officer, said, "We are very excited about the future of Fresh America and the opportunities this transaction affords us. We appreciate our business partners' support throughout the financing process. With an existing national network of seven distribution centers and key sales initiatives in place that will strengthen our market position, we are excited about the Company's future."
Pursuant to the terms of the transaction, North Texas Opportunity Fund LP ("NTOF") invested $5 million in cash in exchange for $5 million of preferred stock and warrants to purchase approximately 50% of Fresh America's fully diluted common stock. In addition, Fresh America's subordinated debt holders exchanged its existing $27 million of subordinated debt and preferred stock for $2.7 million of new preferred stock and warrants convertible into an additional 27% of Fresh America's fully diluted common stock. The warrants have a ten-year term and are exercisable at a nominal price. Fresh America will use the proceeds from the transaction for working capital needs and debt reduction.
On Aug. 15, 2001, the Company reported that Darren Miles became Fresh America's new Chief Executive Officer. During Miles' 20-year career, he has been Chief Financial Officer and a key executive of three different distribution companies all of which had sales in excess of $100 million. Former CEO, Colon Washburn, will remain on the Fresh America board of directors and in an advisory role to the Company. Washburn said, "I look forward to continuing my relationship with Fresh America as a director and advisor to the management team. After working with Darren Miles for the past couple of months, I feel very confident that he will be a strong leader for the Company as the new CEO."
As a result of the transaction, Fresh America's debt was reduced by approximately $21.7 million, and $4.2 million of additional cash was available for working capital needs.
Arthur Hollingsworth, co-founder and partner of NTOF, stated, "We are quite pleased by the successful completion of NTOF's investment in Fresh America. We are proud to be associated with one of the leading produce distribution companies in the United States. We are confident in the management and employees' ability to utilize Fresh America's national network to provide premier produce offerings to its customers. Fresh America's balance sheet, with approximately $22 million less debt and approximately $26 million incremental preferred stock and common equity, will provide a strong base for building this fine company."
In accordance with the terms of the transaction, NTOF has the right to appoint four directors to Fresh America's five-member board of directors. NTOF's four appointees are: Miles, Hollingsworth, Luke Sweetser and Greg Campbell. Hollingsworth will become Chairman of the Board of Fresh America. Hollingsworth is a co-founder and partner at NTOF, a Dallas-based private equity investment firm, with consolidated revenues of more than $500 million and more than 5,000 employees. Hollingsworth is Chairman of the Board of Belding Hausman Incorporated, BillMatrix Corporation, and InStaff Personnel, Inc. Additionally, he serves on the board of Hollingsworth & Vose Company and Zale Lipshy University Medical Center, Inc. He is the former Chairman of the North Dallas Chamber of Commerce, and is the former Vice-Chairman of the Dallas Area Rapid Transit Authority. Hollingsworth has a B.A. from Harvard University. Luke Sweetser, a co-founder and partner at NTOF, brings to Fresh America expertise in business development, operational analysis and improvement, and corporate strategy. He is currently a director of PrimeSource FoodService Equipment, Inc. and Trycos Incorporated, and a former director of BillMatrix Corporation. Sweetser has a B.A. from Harvard University. Campbell is a founder and partner in the NTOF. Campbell was once honored as one of Business Week's "Top 50 Corporate Executives Under 35" and was selected as Texas Male Entrepreneur of the Year by the Austin Metropolitan Resource Center. Campbell is founding director and chairman of both the National Black Business Council in Washington, D.C. and the Greater Dallas Chamber's Small Business Council. In addition, he serves on the Board of Trycos Incorporated, PrimeSource FoodService Equipment, Inc., InStaff Personnel, Inc., IBIS Communications, Harlem Steamship Company and MLN Holding Corporation. Campbell has a B.A. from Cornell University and an M.B.A. from Harvard University.
After closing, shareholder approval must be obtained for a charter amendment that will increase the authorized common stock of the company so that the warrants issued pursuant to the transaction can be exercised in full. NTOF has received proxies from the holders of 46% of Fresh America's common stock to vote in favor of the charter amendment to increase the company's authorized common stock.
Forward-looking Statements
This announcement may contain forward-looking statements that are subject to significant risks and uncertainties. Although Fresh America believes that the expectations reflected in its forward-looking statements are reasonable, Fresh America can give no assurance that such expectations or any of their forward-looking statements will prove to be correct, and future results may differ from those discussed in this press release. Important information regarding the factors that may affect Fresh America's future performance is included in the public reports that Fresh America files with the Securities Exchange Commission. Fresh America disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future event, change in expectations, conditions or circumstances, or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by Fresh America or any other person that the events or circumstances described in such statement are material.