Blyth, Inc. And ViSalus Founders Execute New Agreement

GREENWICH, Conn., Dec. 18, 2012 /PRNewswire/ -- Blyth, Inc. (NYSE: BTH), a direct to consumer company and leading designer and marketer of candles, accessories for the home, and health and wellness products sold through the direct selling and direct marketing channels, today announced that it and the other members of ViSalus have reached an agreement whereby Blyth increased its ownership in ViSalus to more than 80% for a payment of $57.4 million to the other members of ViSalus.  In addition, the other members of ViSalus have agreed to exchange their membership interests for capital stock of ViSalus, Inc. which will be redeemable in December 2017 for a total redemption price of $147.5 million.  ViSalus will also redeem in January 2013 all of the outstanding interests under its Equity Incentive Plan for $25.3 million, which will be funded by Blyth.

The new agreement between Blyth and the other members of ViSalus provides for a series of transactions, detailed below, that achieve the mutually-shared objectives of providing ViSalus' Founders and its management team the opportunity to participate in ViSalus' future results through their ongoing ownership and participation in a new management incentive plan.  In addition, the new agreement should improve Blyth's long-term liquidity by providing for a redemption of the ViSalus stock it does not own in December 2017.  All of the members of ViSalus agreed to sell their interests in ViSalus ratably, allowing Blyth to achieve an ownership position in excess of 80%.

Commenting on the execution of this definitive agreement between Blyth and the other members of ViSalus, including all of the Founders, Robert B. Goergen, Chairman and Chief Executive Officer of Blyth said, "We are extremely pleased to have crafted an agreement that meets our objectives of providing the ViSalus Founders and other members of their management team with an equity participation in ViSalus' future results.  Moreover, as a group, the ViSalus Founders continue to be significant Blyth shareholders, strengthening further this alignment.  I look forward to working with Ryan and his management team to grow the ViSalus business together, making ViSalus a worldwide household brand synonymous with 'healthy lifestyle.'"

Ryan Blair, ViSalus' Chief Executive Officer, echoed Mr. Goergen's comments, adding, "Nick, Blake and I are especially pleased to have finalized an agreement that demonstrates our full commitment to the global growth of ViSalus and the opportunity for our Promoters and customers to make an impact on the worldwide obesity epidemic.  Our goal is to make ViSalus a household brand by providing a simple, social and achievable method for our customers to reach their health and fitness objectives."

Mr. Blair continued, "Today's agreement also highlights the ViSalus/Blyth partnership.  We have worked with Blyth for five years now and we plan to work with them for many more."

The new agreement between Blyth and the other members of ViSalus provides for the following transactions.  The transactions between Blyth and ViSalus involve related parties as described below.

• Blyth purchased 7.6% of the membership interests of ViSalus Holdings, LLC from the other members for $57.4 million, which increased Blyth's membership interest in ViSalus Holdings, LLC to 80.4%. 
• Blyth and the other members in ViSalus Holdings, LLC exchanged their membership interests in ViSalus Holdings, LLC for common stock of ViSalus, Inc., a Nevada corporation that was a wholly-owned subsidiary of ViSalus Holdings, LLC. 
  • Blyth exchanged its membership interests for shares of Class A and Class B Common Stock of ViSalus, Inc. that together represent 80.4% of the capital stock of ViSalus, Inc. on a fully converted basis.  Each share of Class A Common Stock entitles Blyth to one vote and each share of Class B Common Stock entitles Blyth to 10 votes on all matters submitted to ViSalus' stockholders.
  • Ryan Blair, Blake Mallen and Nick Sarnicola (ViSalus' Founders) exchanged their membership interests in ViSalus Holdings, LLC for shares of Series B Preferred Stock of ViSalus, Inc., which together represent 13.7% of the capital stock of ViSalus, Inc. on a fully converted basis.  Each share of Series B Preferred Stock entitles its holder to 10 votes on all matters submitted to ViSalus' stockholders.
  • Robert B. Goergen, Robert B. Goergen, Jr., Todd A. Goergen (all three of whom are related parties of Blyth) and the other holders of preferred membership interests in ViSalus Holdings, LLC exchanged their preferred membership interests in ViSalus Holdings, LLC for shares of Series B Preferred Stock of ViSalus, Inc., which together represent 2.9% of the capital stock of ViSalus, Inc. on a fully converted basis.
  • The remaining holders of common membership interests of ViSalus Holdings, LLC exchanged those interests for shares of Series A Preferred Stock of ViSalus, Inc., which together represent 3.0% of the capital stock of ViSalus, Inc. on a fully converted basis.  Each share of Series A Preferred Stock entitles its holder to one vote on all matters submitted to ViSalus' stockholders.
• Blyth and ViSalus have agreed to redeem all of the Series A and Series B Preferred Stock on December 31, 2017 for a total redemption price of $147.5 million, provided that the Preferred Stock shall not have converted earlier into common stock of ViSalus, Inc. as described below.
• In the event that ViSalus, Inc. completes an initial public offering that implies a valuation of at least $800 million or that has been approved by a majority of the voting power of the Preferred Stock prior to December 31, 2017, the Series A and Series B Preferred Stock will convert into Class A and Class B Common Stock, respectively, in an amount equal to their ownership percentage.  The Class A Common Stock will entitle its holders to one vote and the Class B Common Stock will entitle its holders to ten votes on all matters submitted to stockholders.  The implied valuation set forth in the first sentence is an aspirational goal and should not be considered the valuation of ViSalus at the date hereof or to predict ViSalus' valuation at any time in the future.
• ViSalus will redeem all of the outstanding interests under its Equity Incentive Plan for $25.3 million, which will terminate the EIP.  Blyth will provide the funds to ViSalus for this redemption.
• ViSalus will adopt a dividend policy pursuant to which it intends to pay regular cash dividends to its stockholders, subject to the prior approval by its and Blyth's boards of directors.  Based on the current ownership structure, Blyth will receive 80.4% of such dividends when and as declared and paid by ViSalus.

In addition, ViSalus is entering into new five-year employment agreements with Ryan Blair, ViSalus' Chief Executive Officer, and Blake Mallen, its Chief Marketing Officer. ViSalus also intends to create a management incentive plan and to issue stock options and restricted stock units that will vest over an eight-year period to Mr. Blair, Mr. Mallen and ViSalus' third Founder, Nick Sarnicola, Global Ambassador.  ViSalus also intends to issue stock options and restricted stock units to its senior management team that will vest over a three-year period. 

As noted above, the transactions between Blyth and ViSalus involve related parties.  Robert B. Goergen (Blyth's Chairman of the Board of Directors and Chief Executive Officer), Robert B. Goergen, Jr. (Blyth's President and Chief Operating Officer) and Todd A. Goergen (Chief Strategy Officer of ViSalus) owned 2.4%, 0.1% and 0.8%, respectively, of the membership interests of ViSalus Holdings, LLC before the completion of the transactions described above and now own 1.8%, 0.1% and 0.6%, respectively, of the outstanding capital stock of ViSalus, Inc.  Of the $57.4 million that was paid by Blyth to the other members of ViSalus, Blyth paid $5.1 million to Robert B. Goergen, $1.7 million to Todd A. Goergen (and trusts affiliated with him) and $0.2 million to Robert B. Goergen, Jr.  Of the $147.5 million aggregate redemption amount of Preferred Stock that was issued by ViSalus, Inc., shares with a $13.2 million redemption amount were issued to Robert B. Goergen, shares with a $4.5 million redemption amount were issued to Todd A. Goergen (and trusts affiliated with him) and shares with a $0.5 million redemption amount were issued to Robert B. Goergen, Jr.  In addition, Robert B. Goergen will receive 1.8%, Todd A. Goergen (and trusts affiliated with him) will receive 0.6% and Robert B. Goergen, Jr. will receive 0.1% of any cash dividends declared and paid by ViSalus, Inc.  Robert B. Goergen is the father of Robert B. Goergen, Jr. and Todd A. Goergen, who are brothers.  Pamela M. Goergen, a Director of Blyth, is the wife of Robert B. Goergen and the mother of Robert B. Goergen, Jr. and Todd A. Goergen.

Blyth, Inc., headquartered in Greenwich, CT, USA, is a direct to consumer business focused on both the direct selling and direct marketing channels.  It designs and markets home fragrance products and decorative accessories, as well as weight management products, nutritional supplements and energy drink mixes.  These products are sold through Direct Selling under both the home party plan and network marketing methods. The Company also designs and markets household convenience items and personalized gifts through the catalog/Internet channel.  The Company manufactures most of its candles and sources nearly all of its other products.  Its products are sold direct to the consumer in North America under the PartyLite®, Two Sisters Gourmet® by PartyLite and ViSalus Sciences® brands, and to consumers in the catalog/Internet channel under the As We Change®, Miles Kimball®, Exposures®, Walter Drake® and Easy Comforts® brands.  In Europe, Blyth's products are also sold under the PartyLite brand.  

Blyth, Inc. may be found on the Internet at www.blyth.com.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning the payment to be made by Blyth to the other stockholders of ViSalus in December 2017, Blyth's long-term liquidity, ViSalus' intention to redeem and terminate its Equity Incentive Plan, ViSalus' intention and ability to pay cash dividends, ViSalus' intention to enter into employment agreements with Ryan Blair and Blake Mallen, ViSalus' intention to adopt a management incentive plan and to issue stock options and restricted stock units thereunder, and ViSalus' ability to conduct an initial public offering, as well as any implied value of ViSalus at the time of any initial public offering.  Forward-looking statements also include statements concerning our and ViSalus' plans, objectives, goals, strategies, future events, performance or future value and underlying assumptions and other statements that are other than statements of historical facts and may be identified by words such as "will," "expect" or "intend" and any other similar words.  Actual results could differ materially due to various factors, including Blyth's long-term liquidity and ability to make the payment to the other stockholders of ViSalus in the amount of $147.5 million in December 2017, the ability of ViSalus to conduct an initial public offering, the ability of ViSalus to enter into employment agreements with Mr. Blair and Mr. Mallen, the slowing of the United States or European economies or retail environments, the risk that we will be unable to maintain our historic growth rate, our ability to respond appropriately to changes in product demand, the risk that we will be unable to integrate the businesses that we acquire, including if we complete the acquisition of ViSalus, into our existing operations, the risks (including foreign currency fluctuations, economic and political instability, transportation delays, difficulty in maintaining quality control, trade and foreign tax laws and others) associated with international sales and foreign sourced products, risks associated with our ability to recruit new independent sales consultants, our dependence on key corporate management personnel, risks associated with the sourcing of raw materials for our products, competition in terms of price and new product introductions, risks associated with our information technology systems (including, susceptibility to outages due to fire, floods, power loss, telecommunications failures, computer viruses, break-ins and similar events) and other factors described in this press release and in the Company's most recently filed Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.  The forward-looking statements made in this press release are made only as of the date of this release, and Blyth undertakes no obligation to update them to reflect subsequent events or circumstances except as may be required by securities laws.

SOURCE Blyth, Inc.