Synergy Brands Subsidiary Acquires A Baking Mix Manufacturing Facility In Michigan

Syosset, NY - Synergy Brands Inc. Synergy Brands subsidiary, Quality Food Brands Inc. acquired the assets of a baking mix facility in Michigan from Laurus Master Funds (Laurus) for $4.75M in 9% non-recourse secured term notes. In addition QFB provided Laurus and LVBP Holdings the right to acquire a minority stake in QFB. The assets provide QFB with an operation to produce baking mix products that will supply existing customers of the Company. The Company has used this facility in the past to supply its customers and felt that at this time its baking business has grown to a level that requires direct manufacturing capabilities so that the Company can gain better product control, special purpose packaging and margin enhancement. The facility has the capacity to produce about $15M of baking mix product at current configurations. QFB plans to add additional lines that could allow for the production levels to be increased to $25M annually. The Company currently distributes about $10M in baking mix products annually.

QFB was wholly owned by PHS Group, Synergy's grocery subsidiary. QFB will be used as the manufacturing arm of PHS for the production of baking mix products. PHS had already established vendor relations for the raw materials needed to supply the manufacturing plant such as sugar, shortening etc. and has developed a roster of customers that have already placed orders for production of private label goods. PHS is developing new customer that it hopes will use the current capacity of the plant.

Since QFB acquired the facility out of a foreclosure proceeding, PHS's strong credit with vendors and customers will be needed for the transition and is expected to continue. Neither PHS nor QFB acquired any customers from the acquired facility or any trademarks that are being used for current sales. The assets of the manufacturing facility, which include the baking mix equipment and physical facilities needed for the manufacturing process, were the sole assets expected to be used.

For further details please refer to the Company's 8-K.

SOURCE: Synergy Brands Inc.