July 23, 2008
Seaway Valley Capital Corporation Releases Update
Seaway Valley Capital Corporation (OTC Bulletin Board: SWVC) ("Seaway Valley") chairman and chief executive officer, Thomas W. Scozzafava, issued the following update to its shareholders today:
Dear Shareholders:Despite the recent pressure in the shares of Seaway Valley (www.seawaycapital.com), the Company has made and continues to make significant strides in the underlying value of the businesses in its portfolio. To review, Seaway Valley has accomplished the following major milestones:
-- In the fall of 2007, Seaway Valley acquired one hundred percent of WiseBuys Stores, Inc. (www.wisebuysstores.com) and then quickly acquired one hundred percent of Patrick Hackett Hardware Company (www.hackettsonline.com). As previously announced, management is in the process of converting each WiseBuys store into a "Hackett's" brand store.
-- In March 2008, Seaway Valley assisted Hackett's in securing a $5 million inventory based line of credit from Wells Fargo.
-- Including the previously announced and soon-to-be-opened Sackets Harbor store, Hackett's has ten (10) locations with expected 2008 revenues of over $20 million and pro forma (once all ten stores are open for a complete calendar year) of over $30 million. The WiseBuys store transitions are both time and capital intensive, but the process continues on. We converted the Canton store on June 14th and expect to convert the Gouverneur store by mid-August. Hamilton and Tupper Lake are expected to transition this fall, and Pulaski is targeted before year-end.
-- In June 2008, Seaway acquired North Country Hospitality, Inc., bringing to Seaway Valley four distinct-but-synergistic business lines including: (1) Sackets Harbor Brewing Company, which develops, produces, and markets craft-brewed beers such as the award winning "War of 1812 Amber Ale" and "Thousand Island Pale Ale", as well as "Railroad Red,""1812 Amber Ale Light" and "Harbor Wheat" specialty beers; (2) Seaway Restaurant Group, which includes Sackets Harbor Brew Pub, Good Fello's Brick Oven Pizza and Wine Bar, The 1812 Stationhouse, and five Jreck Subs franchises; (3) Alteri Bakery, which is the largest and one of the last traditional Italian bakeries in the region; and (4) boutique lodging assets including hotel and long-term rental assets in the heart of the village of Sackets Harbor.
Seaway Valley, in short order, acquired assets totaling approximately $30 million and has current projected pro forma annualized revenues of $36 - $40 million including the current North Country assets and revenues. While management continues the task of integrating its core holdings it will also continue to drive growth in the portfolio companies.
Hackett's - New Store Locations
While Hackett's current focus is converting the WiseBuys stores, management continues to aggressively seek opportunities for new store development. Hackett's is targeting locations with demographics that are consistent with Hackett's premium branded products and excellent customer service. To this end, management is close to executing a Term Sheet for its eleventh site and has begun negotiations with representatives for a possible twelfth location. Each store would be projected to produce revenues of $3-$4 million per store. We hope to announce soon the finalization of at least one - but possibly both - of these locations.
Hackett's - Acquisitions
The Company has executed a Term Sheet and is currently drafting definitive agreements to acquire a regional retail company with calendar 2007 revenues of over $15 million and profits of about $550,000. The transaction, which is contingent upon execution of the definitive agreements and financing, would immediately complement Hackett's business and management team with diversified merchandise offering and proven operators. We hope to finalize this transaction in the coming weeks. Additionally, the Company continues to seek out investments and acquisitions in the consumer products and retail space.
Sackets Harbor Brewing Company
Sackets Harbor Brewing Company represents a significant growth opportunity for the Company. Based on the success of the Company's flagship "1812 Amber Ale" and the brand's continued acceptance in northern New York, central New York, and central Florida markets, we have begun plans to begin aggressively promoting the beer in a much wider geographic region. We are also seeking strategic alliances that will more quickly build the brand's critical mass. To this end, we recently commenced brewing our flagship 1812 Amber Ale brand with a much larger, nationally recognized brewer and in 500 barrel batches, which is about two and one-half times larger than our previously produced batches. Additionally, management will seek to build its portfolio of beer brands through opportunistic acquisitions.
Alteri Bakery, Inc.
Alteri Bakery, Inc., which is currently projected to produce annualized revenues of approximately $2.2-$2.5 million, has physical plant capacity that would enable it to more than double its current revenues. Securing new commercial contracts to drive production while also promoting its higher margin specialty products will be the focus of management over the coming months. Management is also currently seeking financing for equipment that will immediately increase output and productivity.
Management is currently in discussions with various parties for potential development of its most popular proprietary restaurant concepts: Good Fello's Brick Oven Pizza and Wine Bar and The 1812 Brewpub. The concepts can be co-located or rolled out separately, depending on the market. Additionally, the Company is in discussions to acquire a similar established restaurant with projected 2008 revenues of around $1.8 million that would introduce Seaway Valley to an urban, high volume market.
Seaway Valley will also continue to evaluate other acquisitions and investments in industries outside the retail, hospitality, and consumer products industry. In particular, the Company is planning to establish, together with additional outside partners, production facilities based on regionally harvested agricultural products such as wheat, corn, and barley. And as many of you already are aware, I am a founder, former Chief Executive Officer, and significant shareholder of GS AgriFuels Corporation, which was formed as a platform acquisition company for the development of ethanol, biodiesel, crush plant, and biofuels feedstock production facilities from the use of proprietary technologies. The company, primarily under my direction, made investments and acquisitions including NextGen Fuel, Inc., a biodiesel equipment manufacturer; Sustainable Systems, Inc., a 600 ton per day oilseed crush plant; ZeroPoint Clean Tech, Inc., a biomass gasification and gas-to-liquids company; and acquired Corn Oil Extraction Systems ("COES"), a technology that extracts high value corn oil from low value distillers grain. I recently initiated efforts to secure the rights to the approximate 30% equity stake in GS AgriFuels, which in early 2008 merged into GreenShift Corporation. While the outcome of these efforts is yet to be determined, I will certainly pursue the maximum value owed to Seaway and its shareholders.
About Seaway Valley Capital Corporation
Seaway Valley Capital Corporation (www.seawaycapital.com) was formed in 2002 to make equity, equity-related, and debt investments in companies that require expansion capital and in companies pursuing acquisition strategies. Seaway also seeks investments in leveraged buyouts and restructurings. Seaway Valley will consider investment opportunities in a number of different industries including retail, restaurants, media, business services, and manufacturing. Seaway Valley will also consider select technology investments.
Safe Harbor Statement
This press release contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of the Company, and members of their management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully and the ability to complete before-mentioned transactions. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.