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Clearly Canadian Beverage Corporation's U.S. subsidiary CC Beverage Corporation has sold its production facility assets located in Burlington, Washington to Advanced H2O, Inc. (AH2O) of Bellevue, Wash.
AH2O has acquired CC Beverage's production facility assets and bottling plant lease for a total of $4,348,600 U.S., which includes $2,130,000 U.S. in cash, the assumption of CC Beverage's indebtedness (industrial revenue bond note) of approximately $2,155,000 U.S., and the assumption of certain capital equipment leases of approximately $63,600 U.S.
In addition to the purchase price, AH2O has purchased CC Beverage's Cascade Clear water business for an aggregate of $2 million U.S., which will be paid to CC Beverage based on a percentage of the gross sales earned by AH2O over time, subject to a minimum payment of $100,000 U.S. per year.
Also, CC Beverage has sold its private label co-pack (bottling) business to AH2O. For this business, AH2O will pay CC Beverage a percentage of the gross profits received by AH2O from the private label business over the next five years (up to a maximum payment of $125,000 U.S. per year and a minimum payment of $62,500 U.S. per year).
In addition, AH2O has agreed to provide CC Beverage with "at cost" co-packing (bottling) services for ten years (five year initial term and five year renewal term) for up to 1,500,000 cases per year of carbonated beverages and 250,000 cases per year of non-carbonated beverages.
Clearly Canadian intends to use the proceeds from the sale for general working capital purposes, to reduce debt and to provide additional funding for the marketing and distribution of its beverages, including the continued roll-out of Reebok Fitness Water in the United States and Canada.
"Today's announcement represents months of hard work and effort, all in the interest of our improving our financial and operational position. Clearly Canadian made the strategic decision to divest of its subsidiary's production facility at this time to return to its core competencies the marketing of premium alternative beverages and to direct greater focus on the selling and marketing of the company's beverage brands in an effort to enhance overall profitability," said Douglas Mason, president of Clearly Canadian.
Based in Vancouver, B.C., Clearly Canadian is an active producer of premium alternative beverages, including Clearly Canadian® sparkling flavored water, Clearly Canadian O+2® and Tre Limone™, which are distributed in the United States, Canada and numerous countries worldwide. Clearly Canadian also holds the exclusive license to manufacture, distribute and sell certain Reebok beverage products in the United States, Canada and the Caribbean.