Eagle I Capital Corporation
TSX VENTURE : EIC.P

April 08, 2010 18:55 ET

Eagle I Announces Agreement to Purchase the Assets of Miguel's Products, LLC

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 8, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

EAGLE I CAPITAL CORPORATION ("Eagle I" or the "Company") (TSX VENTURE:EIC.P) is pleased to announce that it and its wholly owned subsidiary, Eagle Acquisition, Inc. ("Eagle Subco") have entered into a definitive asset purchase agreement with WWS Holdings, LLC, New Jersey limited liability company (the "Vendor") and Dean Lynch ("Lynch") dated March 26, 2010 ("APA") for the arm's length purchase of certain of the assets of Miguel's Products, LLC ("Miguel's"), a limited liability company incorporated under the laws of the State of Delaware, USA (the "Proposed Transaction"). Eagle I previously entered into a merger agreement with Miguel's dated April 21, 2009, which was subsequently terminated on October 23, 2009 (the "Merger Transaction").

ASSET PURCHASE AGREEMENT & QUALIFYING TRANSACTION

Pursuant to the APA, Eagle I has agreed to acquire, through Eagle Subco all of the assets of Miguel's, excluding any and all deposits, deposit accounts and cash proceeds, (the "Miguel's Operating Assets") upon acquisition of the Miguel's Operating Assets by the Vendor from TZ Business Lenders, Inc. and Lynch (the "Secured Party"). The Secured Party holds a first priority security interest in and lien on all of the assets of Miguel's and sold all of the Miguel Operating Assets to the Vendor at a public sale conducted in accordance the terms and conditions of the United States Uniform Commercial Code on April 1, 2010. The acquisition of the Miguel's Operating Assets will be on a "where is and as is basis" without any representation or warranty from the Vendor.

The Company intends that upon the completion of the transactions contemplated by the APA, the Proposed Transaction will constitute the Company's qualifying transaction (the "Qualifying Transaction") pursuant to the policies of the TSX Venture Exchange (the "TSXV"). A full copy of the APA is available at www.sedar.com. The key terms of the APA are summarized below.

Consideration

As consideration for the acquisition of the Miguel's Operating Assets from the Vendor, Eagle I have agreed to the following:

  1. US$500,000 promissory note with an interest rate of 4% per annum payable to the Vendor over a 33 month period commencing on May 1, 2010 with monthly payments of US$10,000 for the first 12 months and payments of US$20,000 per month thereafter until the note is fully paid;
  2. US$100,000 promissory note with an interest rate of 4% per annum payable to Lynch over a 22 month period on May 1, 2010 with monthly payments of US$5,000; 
  3. 1,500,000 common shares of Eagle I, of which 1,350,000 will be issued in the name of the Vendor and 150,000 will be issued in the name of an assignee of the Vendor;
  4. 100,000 common shares of Eagle I issued to Lynch; and
  5. US$214,198.87, which represents the inventory value and amounts of outstanding accounts receivable of Miguel's and which will be paid by Eagle I from the proceeds of the sale of such inventory and the collection of such accounts receivable. 

All of the 1,600,000 common shares of Eagle I to be issued in connection with the APA will be subject to escrow provisions required by the TSXV and will be released over a three year period. The share consideration has a deemed value of C$0.25 per common share of Eagle I. 

As part of the consideration, Eagle I has agreed to convert the US$285,000, previously loaned to Miguel's in connection with the Merger Transaction, plus interest and fees, to consideration paid for the Miguel's corporate name and other assets of Miguel's. 

Pursuant to the APA, the closing of the Proposed Transaction will be on the first business day following approval of the Proposed Transaction by the TSXV, but in any event will not be later than April 26, 2010.

The Resulting Issuer may, in its sole discretion, assume certain Miguel's trade accounts payable in order to maintain critical business relationships of Miguel's.

Significant Conditions Required to Close

As a condition to closing, amongst other things, the TSXV must approve the Proposed Transaction and the issuance of the securities of the Company in connection therewith.

ARMS' LENGTH TRANSACTION

The Proposed Transaction constitutes an Arm's Length Qualifying Transaction pursuant to the policies of the TSXV. 

EAGLE ACQUISITION, INC.

Eagle Subco is a company incorporated under the laws of the State of Delaware and is a wholly owned subsidiary of the Company. Eagle Subco does not have an operating business.

WWS HOLDINGS, LLC AND DEAN LYNCH

The Vendor is a New Jersey limited liability company with a principal place of business in Mahwah, New Jersey, USA. The Vendor is controlled by Jack Birnberg and Jeff Birnberg. 

Jack Birnberg's principal place of residence is in Boca Raton, Florida, USA and

Jeff Birnberg's principal place of residence is in Franklin Lakes, New Jersey, USA.

Mr. Dean Lynch principal place of residence is in Milton, Massachusetts, USA.

DESCRIPTION OF THE MIGUEL'S OPERATING ASSETS

History and Business Overview

Miguel's is a Delaware limited liability company which is in the business of producing salty snack foods. MSA Enterprises, LLC ("MSA") was founded in the late 1980s by a restaurateur who owned a restaurant in Stowe, Vermont. At the time, MSA's product line was limited to white corn tortilla chips, blue corn tortilla chips and several salsa varieties, and its distribution network was largely confined to New England. In 2005, Miguel's purchased the assets of MSA. Since then, Miguel's has broadened the products lines and distribution network formerly established by MSA, and expanded its private label business.

Currently, Miguel's products include white corn tortilla chips, blue corn tortilla chips, three types of flavored tortilla dippers, and five varieties of gourmet salsa. These products are made with all natural or organic ingredients. Miguel's also offers both salted and honey plantain strips. In addition to the foregoing, Miguel's is also developing two additional products, "inca chips", a flavored, ridged chip, and "clouds", a flavored corn and rice puff.

Manufacturing of Miguel's products is outsourced by contract to four facilities in the United States. Manufacturers in Connecticut and California produce Miguel's tortilla chips. All of Miguel's products are currently sold and distributed in retail markets in 35 states of the United States. Miguel's customers include local and specialty distributors, who deliver products to supermarket chains, and companies for which it makes private label products including Trader Joe's. As a result, Miguel's products are sold in such stores as Stop & Shop and similar supermarkets, Whole Foods and other natural food stores and fast food chains, such as the New England based burrito chain Boloco.

TZ Business Lenders, Inc. and Lynch chose to foreclose on the assets of Miguel's that secured their loan to Miguel's. The Miguel's assets were then sold to the Vendor in a public auction. Eagle I negotiated the APA to purchase the Miguel's Operating Assets from the Vendor.

The Miguel's Operating Assets consist of proprietary intellectual property and business relationships necessary to manufacture and sell all natural and organic tortilla chips, salsa and other snack products under the Miguel's Stowe AwayÒ brand name. Miguel's product sales have increased from US$1 million in annual sales in 2004, to US$5.3 million in 2009 and increased distribution to more than 35 states.

Below is a summary of the financial information of Miguel's (in US$).

  Year Ended December 31, 2009(unaudited)(US $) Year Ended December 31, 2008 (audited)(US $) Year Ended December 31, 2007 (unaudited)(US $) Year Ended December 31, 2006 (unaudited)(US $)
Total Revenues: 5,390,000 4,510,859 2,692,151 1,960,473

In addition, according to the unaudited financial statements prepared by Miguel's management for the 12 months ended December 31, 2009, the assets being acquired by Eagle I generated gross revenues of US$5,390,000. 

THE RESULTING ISSUER

Business

Upon completion of the Proposed Transaction, Eagle I, through Eagle Subco, (the "Resulting Issuer"), will hold all of the Miguel's Operating Assets and will be engaged in the business of manufacturing Miguel's products. The Resulting Issuer will be principally focused on the development of the existing business of Miguel's in the United States and will be considered as an industrial issuer for the purposes of the TSXV.

Directors, Officers and Insiders of the Resulting Issuer

Upon completion of the Proposed Transaction it is expected that the board of directors of the Resulting Issuer will consist of four persons: Barry Atkins, David Horton, Donald Padgett and Anthony Cusano.

Upon completion of the Proposed Transaction it is expected that the executive officers of the Resulting Issuer will be Barry Atkins (President and Chief Executive Officer), Tony Cusano (Executive Vice President) and Robert Rosko (Chief Financial Officer and Corporate Secretary) and the officers of Eagle Subco will be Anthony Cusano (President), Bruce Duley (Senior Vice President, Sales and Marketing), and Robert Rosko (Chief Operating Officer). It is anticipated that the Resulting Issuer will negotiate employment contracts and/or consulting agreements with the management team and that there will be grants of common stock to the management team that vest based upon performance criteria to be agreed upon with approval of the TSXV.

Upon Closing, the Vendor will hold 1,350,000 common shares of Eagle I, representing 20.45 % of the common shares of Eagle I and will thus become an Insider of the Resulting Issuer pursuant to the TSXV policies. The Vendor is a New Jersey limited liability company with a principal place of business in Mahwah, New Jersey, USA.

The background of the directors and officers of the Resulting Issuer and the management of Eagle Subco is as follows.

Barry Atkins – currently President, Chief Executive Officer and Director of the Company, proposed President, Chief Executive Officer and Director of the Resulting Issuer
Carefree, Arizona

Mr. Atkins was the founder and president of several start-up companies over the past 25 years that were involved in the telecommunications industry. He has also worked with companies to automate operations, restructure management and obtain additional financing for expansion. 

David J. Horton – currently Director of the Company, proposed Director of the Resulting Issuer
West Vancouver, British Columbia

Mr. Horton joined Canaccord Capital Corporation in 1990 and is currently a Senior Vice President and Director of Canaccord Capital Corporation. He holds a Bachelor of Commerce degree from the University of British Columbia and an MBA from the University of Western Ontario.

Donald Padgett — currently Director of the Company, proposed Director of the Resulting Issuer
North Vancouver, British Columbia

Mr. Padgett brings business, capital market and technical experience to the Company as he has been a director of several TSXV listed companies including Green Park Capital Corp., War Eagle Mining Company Inc. and IBC Advanced Alloys Corp. Mr. Padgett has also enjoyed an investment banking career in senior management positions, including: Managing Director of the investment banking group at Canaccord Capital Corporation's Western Canadian office (1995 to 1997) and more than 10 years as a senior member of the Investment Banking Group at Burns Fry, now Nesbitt Burns (1981 to 1994). He holds a law degree (Dalhousie University), an MBA (McMaster University) and a BSc (University of Toronto).

Robert Rosko – Proposed Chief Financial Officer and Corporate Secretary of the Resulting Issuer and Chief Operating Officer of Eagle Subco
Edison, New Jersey

In addition to acting as Chief Operating Officer of Miguel's until February 2010, Mr. Rosko has also been the President and Chief Executive Officer of Edison Technologies, LLC since 1996. He is also the founder of Edison Technologies, LLC and has been working in operations with Edison Technologies, LLC for the past 13 years. Mr. Rosko earned his Associate of Applied Science (AAS) from Raritan Valley College, Bridgewater, New Jersey in 1981. Prior to starting Edison Technologies, LLC, Mr. Rosko was owner and president of Golden Distributors located in New Jersey (USA). Golden Distributors was a full service snack distributor to types of retailers in New Jersey. In 1983, he started on a route truck delivering snacks for Anheuser-Busch. During his tenure at Anheuser-Busch he worked his way up thru the ranks and was responsible for the New York metro region. Mr. Rosko brings extensive knowledge of the snacks food industry on the accounting, operations and distribution side.

Anthony Cusano – Proposed Executive Vice President, Director of the Resulting Issuer and President of Eagle Subco
North Haven, Connecticut

In addition to acting as President of Miguel's until February 2010, Mr. Cusano is the owner of ShelfSpace Marketing and was the past Chief Executive Officer of Cape Cod Potato Chips. Mr. Cusano earned his degree in journalism from the University of New Haven in 1973.

Bruce Duley– Proposed Senior Vice President, Sales and Marketing of Eagle Subco
Hamden, Connecticut

In addition to working as the Senior Vice President, Sales and Marketing of Miguel's until February 2010, Mr. Duley's past experience in sales and marketing include acting as the Regional Director of Sales of Richelieu Foods, Inc. and as the Executive Director of Sales of Cape Cod Potato Chip.

CONCURRENT FINANCING

In order to raise operating capital for the Resulting Issuer, Eagle I may undertake a financing (the "Concurrent Financing") for gross proceeds up to C$500,000; these proceeds combined with Eagle I's working capital will meet listing requirements of the TSXV and be used for business operations, expansion of outlets and general working capital requirements. Completion of the Concurrent Financing will be subject to all necessary regulatory and TSXV approvals.

The securities contemplated to be issued in the Concurrent Financing have not been and will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and the securities may not be offered or sold in the United States absent registration or an applicable exemption from such registration. This press release does not constitute an offer of securities. 

In connection with the Proposed Transaction, and if required by the TSXV, Eagle I has agreed to engage Canaccord Capital Corporation to act as its sponsor for the purposes of the Qualifying Transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Proposed Transaction or the likelihood of completion.

DEPOSITS AND ADVANCES

With the exception of the US$285,000 previously loaned to Miguel's by Eagle I, there have been no loans or advances to Eagle Subco by Eagle I. 

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV policies, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Eagle I should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Trading of the common shares of Eagle I has been halted in connection with the dissemination of this press release, and will recommence at such time as the TSXV may determine, having regard to the completion of certain requirements pursuant to TSXV Policy 2.4.

On behalf of EAGLE I CAPITAL CORPORATION

Barry Atkins, President & CEO

This press release was prepared by management of EIC.P which takes full responsibility for its contents.

This press release contains forward-looking statements about Eagle I and its future plans, including the Proposed Transaction, Concurrent Financing and proposed business. Forward-looking statements are statements that are not historical facts and include the nature of the Proposed Transaction, deemed value of securities anticipated to be issued to the Vendor and Dean Lynch, listing on the TSXV, amount of the proposed Concurrent Financing and plans for the business of Eagle I upon completion of the Proposed Transaction. The forward-looking statements in this press release are subject to various risks, uncertainties and other factors that could cause Eagle I's actual results or achievements to differ materially from those expressed in or implied by forward-looking statements. These risks, uncertainties and other factors include, without limitation, uncertainty as to Eagle I's ability to achieve the goals and satisfy the assumptions of management; uncertainties as to the availability and cost of financing; the risk that development projects will not be completed successfully or in a timely manner; uncertainty as to the demand for the Eagle I's products and the Eagle I's ability to meet such demand; the effect of fluctuating energy prices on the Eagle I; general economic factors and other factors that may be beyond the control of Eagle I. Forward-looking statements are based on the beliefs, opinions and expectations of the management of Eagle I, at the time they are made, and Eagle I does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances, should change.

Additional information about the Company is available at www.sedar.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Eagle I Capital Corporation
    Barry Atkins
    President & CEO
    604 689 1515
    604 687 8678 (FAX)