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FRESH BRANDS, INC.
Proposed Merger With
December 6, 2005
Investor Conference Call Script
Before we begin the call, I need
to tell you that certain matters discussed on this call will be forward-looking
statements intended to qualify for the safe harbors from liability established by
the Private Securities Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because the context of the statement will include words
such as we believe, anticipate, expect or words of similar import. Similarly, statements
that describe our future plans, objectives, strategies of goals are also forward-looking
statements. Forward-looking statements include statements about the expected timing,
completion and effects of the proposed merger. Such forward-looking statements are subject
to certain risks and uncertainties that may materially adversely affect our anticipated
results. Fresh Brands may not be able to complete the proposed merger on the terms
described above or other acceptable terms or at all because of a number of factors,
including the failure to obtain shareholder approval or the failure to satisfy the other
closing conditions. Additional risks and uncertainties include, but are not limited to the
factors summarized in our Form 10-K for our fiscal year ended January 1, 2005. Copies of
this Form 10-K are available on the SECs web site, which is www.sec.gov and
through a link on our web site located at http://www.fresh-brands.com. You are
urged to consider these factors carefully in evaluating forward-looking statements and are
cautioned not to place undue reliance on forward-looking statements. The forward-looking
statements made on this call are only made as of the date of this call and we disclaim any
obligation to publicly update such forward-looking statements to reflect subsequent events
Good afternoon, My name is Louis
Stinebaugh, and I am President and Chief Operating Officer of Fresh Brands. With me today
is John Dahly, our Chief Financial Officer, and Jon Hoenecke, Vice President of Finance.
I am delighted to announce that we
have entered into a definitive merger agreement to be acquired by an affiliate of
Certified Grocers Midwest, Inc. for $7.05 per share in cash. Including the Companys
debt and certain other liabilities to be assumed in the transaction, the total deal value
is approximately $100 million. We have 4,931,934 shares outstanding.
Many of you know Certified Grocers,
which has been in existence since 1940. It is a profitable Chicago-based grocery
wholesaler with about $675 million in annual sales and a strong balance sheet. Certified
is a member-owned cooperative that serves approximately 200 independent retail stores,
principally in Illinois, out of a 67-acre distribution center in Hodgkins, Illinois.
Members of the Certified cooperative own Certified Holdings, Inc., the parent of the
company we are merging with.
The proposed merger is subject to
shareholder approval and other customary closing conditions. The transaction is not
subject to any financing contingency and Certified has guaranteed the obligations of its
affiliate to pay the merger price to our shareholders upon closing of the merger. No
regulatory approval is required. We expect to close the transaction sometime in the first
quarter of 2006, depending upon the SEC review process of our proxy materials, which we
plan to file on a preliminary basis with the SEC within the next several weeks.
We are very excited about the
synergies and benefits to our organization that will result from the merger. This is a
true win-win situation for our shareholders, franchisees, employees, vendors and other
our shareholders, $7.05 per share represents a fully-financed, fair price. Our
agreement with an affiliate of Certified was the result of a six-month strategic
exploration process led by industry investment banking expert, William Blair &Company.
This extensive process focused on all aspects of our current business and our future
prospects. We explored many potential strategic alternatives and different business
models. As a result of this extensive process and the advice received from Blair, other
professional advisors and management, our Board is convinced that this transaction is
fair to, and in the best interest of, our shareholders.
our franchisees, this combination with an affiliate of Certified will allow us to
improve our economies of scale and realize many business and operating synergies and
efficiencies, including lowering our product costs. Savings from no longer being a public
company will amount to about $1.7 million a year alone. Combining forces with Certified
will allow us to provide our Piggly Wiggly franchisees with an even more aggressive value
proposition operating strategy and become even more competitive within the markets they
serve. The merger will help to provide assurance to all our franchisees that we are here
for the long-haul and have partnered with a company whose mission is similar to ours at
.providing great service to our customers. This will allow us to
continue to support and actively expand our franchise base and wholesale business.
our employees, being part of an alliance with approximately $1.3 billion of combined
annual sales should provide many opportunities to our employees. Being based in the upper
Midwest for so many years, Certified and its employees share the same values and
work ethic as Fresh Brands. This is a very good fit for us and should be looked at as
strengthening our prospects for the future.
our vendors, our transaction with Certified provides us with long-term financial
security with a company that most of you know well and respect for the way they operate
their business. Certifieds new $115 million syndicated credit facility led by J.P.
Morgan Chase will be used by Certified to complete this transaction and fund both of our
operations. It will provide substantial liquidity for all of our anticipated working
capital needs. In the near term, we have plenty of liquidity, with $17.9 million of
availability under our current bank line of credit as of the end of the third quarter.
Moreover, with our combined volume after the merger, we believe that we will become an
even better and more efficient partner with our vendors. By working together and taking
unnecessary costs out of the system, we will ultimately sell more product for our vendors
at even more competitive pricing for our customers.
our entire organization and all of our constituencies, this merger succeeds in
eliminating the significant public company costs and distractions that had unnecessarily
burdened our organization. As I said, these costs exceeded about $1.7 million last year.
longer being public will allow us to build our business and more easily make strategic
and operating decisions for the long term good of our company, outside of the public
focus of achieving quarterly earnings expectations or mandated and costly public
disclosure requirements. We should be a much more nimble and competitive organization as
a result of not being publicly traded.
merger also provides us with more financial capabilities and flexibility to invest in and
grow our Company.
feel very good about our future with Certified and the value-added synergies which will
for Certified, we believe this is an important transaction for them too. It will help
Certified grow its core wholesale business in a contiguous market and enhance the cost
savings opportunities and other synergies which it can then pass on to its own
cooperative members. This high relative level of importance to Certified enhances both
the prospects of closing our deal successfully and the likelihood that our integration
will go smoothly, with minimal disruption to our employees, franchisees and other
constituencies. With the ongoing consolidation that is occurring in our industry, this
merger is a very good strategic move for Certified.
In summary, this transaction makes a
lot of sense for both of our organizations and constituencies. We are excited about our
I am looking forward to working with
Certifieds management team to begin integrating our two great, long-standing
organizations so that we may begin to realize the many value-added synergies we are
expecting from this merger.
If anyone has questions that we may
address for you today, we will now open the call for those questions.
Thank you for participating in
todays call and for your continuing support of our company.
Where You Can Find
In connection with the proposed
merger, Fresh Brands will file with the Securities and Exchange Commission (the
SEC), and will furnish to its shareholders a proxy statement. SHAREHOLDERS ARE
ADVISED TO READ THE PROXY STATEMENT WHEN IT IS FINALIZED AND DISTRIBUTED TO SHAREHOLDERS
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Shareholders will
be able to obtain a free-of-charge copy of the proxy statement (when available) and other
relevant documents filed with the SEC from the SECs website at www.sec.gov.
Shareholders will also be able to obtain a free-of-charge copy of the proxy statement and
other relevant documents (when available) by directing a request by mail or telephone to
Fresh Brands, Inc. 2215 Union Avenue, Sheboygan, WI 53081, Attention: Corporate Secretary,
Telephone 920-457-4433, or from Fresh Brands website, www.fresh-brands.com.
This announcement is neither a solicitation of proxy, an offer to purchase nor a
solicitation of an offer to sell shares of Fresh Brands.
Fresh Brands and certain of its
directors, executive officers and other members of management and employees may, under the
rules of the SEC, be deemed to be participants in the solicitation of proxies
from shareholders of Fresh Brands in favor of the proposed merger. Information regarding
the persons who may be considered participants in the solicitation of proxies
will be set forth in Fresh Brands proxy statement when it is filed with the SEC.
Information regarding certain of these persons and their beneficial ownership of Fresh
Brands common stock as of March 30, 2005 is also set forth in the Schedule 14A filed by
Fresh Brands on April 12, 2005 with the SEC.