Naturally Splendid Enterprises announced that it has signed a letter of intent with Eat Real Snack Food Canada (ERSF) to enter into a definitive agreement whereby Naturally Splendid will acquire certain packaging equipment owned by ERSF.
It has also entered into a three year service agreement whereas Naturally Splendid will process and package for ERSF.
The acquisition of this comprehensive packaging system continues the Company's strategy of becoming more vertically integrated.
Naturally Splendid VP of Operations Bryan Carson states, "The acquisition of this packaging line has many potential benefits for the Company. We are able to control inventory and costing much more efficiently, which can translate into increased margins. Delivery schedules become more manageable allowing the Company to aggressively pursue additional retail clients.
“ As importantly, when in control of our own packaging, we are able to launch additional product lines far more efficiently and can test new products more easily. There is also ample opportunity to provide packaging services not only to ERSF, but also to a wide variety of companies opening up a potential additional revenue stream for the Company".
ERSF original purchase price for the packaging equipment that Naturally Splendid is purchasing was in excess of $2,000,000 CDN. The packaging equipment includes the following:
Fully Automated Standalone Zipper Bag Manufacturing and Packaging System
Fully Automated Jar Manufacturing System
Fully Automated Jar Packaging Line
Fully Automated Dry Food Packaging System
Automated Seasoning Packaging System
Automated Powder Packaging System
Box Making Line
Overwrapping System
The parties have also agreed to enter into service agreement whereby Naturally Splendid will provide packaging and storage services to ERSF for a period of three years and ERSF will commit to a minimum monthly amount of $14,500 per month over that period.
The full value of this service agreement is a minimum of $174,000 annually for a total of $522,000 for the initial three year term of this service agreement.
Eat Real Snack Foods is a Canadian company that markets a healthy line of snacks. Their fruit and nut bars are based on three very simple concepts that are; Taste; Nutrition; and Real Ingredients.The desire of ERSF is to create a product that is an enjoyable healthy alternative to standard snack and confectionery items and to distinguish themselves from other brands that offer less nutritious products.
The products are made from real, natural ingredients with no added artificial flavourings, colourings or preservatives.
ERSF President Mr. Ammar Jeet Singh states, "We are so pleased with the opportunity to work with Naturally Splendid. This transaction allows ERSF to focus on expanding our international presence. By focusing on international sales, we believe there is an opportunity to drive additional ERSF packaging business to Naturally Splendid".
The parties have agreed that the deemed value of the lease payments will be $600,000. In the event that the total lease payments are less than $600,000, Naturally Splendid has agreed to pay to ERSF, in cash or shares, the difference between $600,000 and the remaining lease payments.
The transaction is subject to the acceptance of the TSX Venture Exchange.
