SACKETS HARBOR, N.Y., Feb. 3, 2010 (GLOBE NEWSWIRE) -- Thomas Scozzafava, President and Chief Executive Officer of Seaway Valley Capital Corporation, (Pink Sheets:SEVA), which is the majority shareholder of Hackett’s Stores, Inc. (Pink Sheets:HCKI), Harbor Brewing Company, Inc. (Pink Sheets:HBWO), Alteri Bakery, Inc., and Seaway Realty Holdings, LLC issued the following update to its shareholders today:
Dear Shareholders:
Seaway Valley Capital Corporation (“Seaway Valley”) and its subsidiaries have seen significant realignment, debt reduction, and in most cases, operating stability over the past several months. The first factor that has impacted Seaway Valley and its subsidiaries has been the general stabilization and now improvement of the economy. While we have not seen and may not see for quite some time the robust consumer spending that was common from 2003 through 2007, there are many positive signs that the consumer is coming back out to shop, dine and generally enjoy life as the fear of economic “doom and gloom” portrayed by the media as imminent has subsided. Additionally, this relatively calm and stable operating environment has allowed management to focus internally on expense and debt reduction, and as the economy continues to recover our businesses will be better positioned to profit from increased revenues.
Growth in 2010 and beyond will be pursued selectively and with great discretion. In late 2009, Seaway Valley and certain of its subsidiaries received equity financing commitments of over $25 million. We are continuing to evaluate and negotiate these investment offers, which would include up-listings to the American Stock Exchange or the Over-The-Counter Bulletin Board for Seaway Valley and each of its publicly-traded subsidiaries. Proceeds from any such equity raises would be used for convertible debt reduction at Seaway Valley and bank debt reduction and growth capital at its subsidiaries.
An overview of recent accomplishments and areas of focus at Seaway Valley’s subsidiaries follows.
Harbor Brewing Company, Inc. (HBWO.PK), which operates the Sackets Harbor Brew Pub and develops, produces, and markets craft beers such as the award-winning "War of 1812 Amber Ale" and "Thousand Islands Pale Ale" as well as "Railroad Red Ale", and "Harbor Wheat, regained control of the Brew Pub operations in October 2009 due to non-payment of rent by our tenant. This has served the company well, however, as Brew Pub management has been re-focused on the production of its award-winning micro beers served on premise and our innovative fine dining menu. Additionally, the company has eliminated over $200,000 in Watertown Savings Bank mortgages on the Brew Pub. The Brew Pub is now current on all commercial loans and operations have stabilized. The Brew Pub is well-positioned for the upcoming spring and summer seasons.
Additionally, Sackets Harbor Brewing Company re-initiated production at Rochester-based High Falls Brewing Company of our award-winning War of 1812 Amber Ale and will soon do so with our Thousand Islands Pale Ale. Sales of 1812 Amber Ale have been strong, and the company is gearing up production for normally stronger seasonal sales in the spring and summer seasons. The company is also looking to introduce its third craft beer in bottles this spring. Finally, early stage plans for Sackets Harbor Brewing Company to build its own micro brewery in Sackets Harbor have begun.
Hackett’s Stores, Inc. (HCKI.PK) is the parent company of Patrick Hackett Hardware Company (“PHHC”) and HIIO, Inc. PHHC has survived a turbulent year during which it successfully defended itself from Wells Fargo’s unexpected and devastating forced repayment of $5.5 million in debt. However, we were ultimately forced to seek protection under Chapter 11 in November 2009 as a result of one vendor’s aggressive pursuit of PHHC’s operating cash. Chapter 11 prevented this from happening. Although initially avoided, the potential benefits of Chapter 11 could result in a reduction of PHHC debt by $7-$8 million and a chance for the company’s largest subsidiary to emerge leaner, stronger and well-positioned for profitable growth. Although PHHC is now a much smaller company, having closed stores in Gouverneur, Hamilton, Potsdam, Pulaski, and Tupper Lake, we feel the remaining stores in Ogdensburg, Canton, Massena and Sackets Harbor can and will become profitable. In a sign of progress, Hackett’s Ogdensburg store generated revenues in January 2010 of $363,199, which represents a revenue increase of almost $30,000 over December 2009. To have January sales exceed the preceding December (i.e. Christmas) sales is an extremely positive sign for the recovery of PHHC.
PHHC management expects to present a plan in 30 - 45 days that we hope is accepted by the creditors and the court. Regardless of the ultimate outcome of PHHC, which we hope is a positive one, shareholders of Hackett’s Stores, Inc. are not subject to bankruptcy directly, as Hackett’s Stores, Inc. (HCKI.PK) is not in bankruptcy.
Hackett’s Stores, Inc. also recently formed a new venture, HIIO, Inc., which currently is in concept stage with a more narrow focus of clothing, outerwear, footwear and selected gifts for our Northeastern customer base. Management is currently in negotiations with one landlord for a potential HIIO store.
Alteri Bakery, Inc. has seen significant stabilization over the past twelve months. When Seaway Valley acquired Alteri Bakery it was generating operating losses due primarily to unprofitable fixed price contracts. These contracts have expired and now the bakery, which has annual revenues of approximately $2 million, produces healthy profit margins across all its product lines. Alteri Bakery, Inc. now independently services the majority of its debt load, which it could not do when Seaway Valley acquired it.
Going forward, the primary focus of Alteri Bakery is plant expansion to include certain machinery that would allow it to more than double output at its current employment levels. Furthermore, this equipment, which could range from $400,000 to $500,000 in cost, would allow Alteri Bakery to enter the frozen food markets, the sales of which would not be limited to a particular geographic region.
Seaway Valley Capital Corporation and its subsidiaries own real estate valued at approximately $4-$5 million, and Seaway Realty Holdings, LLC recently repaid over $80,000 in back taxes owing from 2005-2008 (accruing on two properties prior to Seaway’s acquisition). In one case, these back taxes led to a foreclosure proceeding, which has now ceased. Additionally, in October 2009, Seaway sold its Route 37 property, which had served as the headquarters for JRECK Subs, Inc. and other former North Country Hospitality companies. A decision was made to sell the property for approximately $565,000, thus reducing Seaway’s debt by that amount and ending the ordeal of attempting to collect rent from JRECK Subs, Inc., which owed approximately $36,000 in back rent at the time of the sale. And as mentioned above, over $200,000 of mortgages have been repaid on the Brew Pub. In total, Seaway Valley and its subsidiaries have reduced real estate loans and back taxes by approximately $900,000 over the past twelve months.
I look forward to updating you further as additional developments unfold.
Safe Harbor Statement
Certain statements in this release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "project," "intend," "expect" "should," "would," and similar expressions and all statements, which are not historical facts, are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (finance or operating) or achievements to differ from future results, performance (financing and operating) or achievements expressed or implied by such forward-looking statements.