Youngevity to consider divestiture of its direct selling business unit back to its founders
Company aims to reduce complexity, de-leverage the remaining business and sharpen its focus on its field to cup and field to finish business model with focus on hemp and coffee
SAN DIEGO, March 12, 2020 /PRNewswire/ -- Youngevity® International, Inc. (NASDAQ: YGYI), a leading multi-channel lifestyle company operating in three distinct business segments including a commercial coffee enterprise and a commercial hemp enterprise, announced today that the company is exploring the divestiture of its direct selling business unit back to the original founders of the direct selling division and has entered into a non-binding term sheet regarding a potential transaction with Steve and Michelle Wallach.
The company's board of directors has formed a special committee consisting of all of its independent directors to review and consider the terms of the proposed transaction. The special committee has engaged an investment banking firm to review the fairness of the proposed transaction to stockholders.
Some of the basic considerations outlined in the non-binding term sheet include the proposed sale to the company of approximately 14 million shares of Youngevity's capital stock held by the Wallachs and termination of stock options, the forgiveness of approximately $80,000,000 of inter-company debt owed by the Company to the direct selling business unit and the post-closing working capital level of the direct selling business unit to be mutually determined. It is expected that the terms and conditions of any transaction with the Wallachs will be set forth in a definitive purchase agreement and other ancillary documents to be negotiated between the parties, and that the conditions to closing will include receipt of a fairness opinion and stockholder approval of the transaction.
"I believe that the potential of this divestiture strengthens the opportunity for all stakeholders and the focus that this will bring to the various divisions will allow both the public company and the direct selling division to thrive and better leverage their core competencies. The sales and supply agreements that will exist between the two entities, post divestiture, should allow for a seamless transition that benefits both companies," said Steve Wallach, Youngevity CEO. He continued, "The trust and respect and the strong relationship we have built with our President and CFO, Dave Briskie, provides us with a great deal of optimism that this potential transaction can provide a long-term beneficial relationship between our companies and all stakeholders."
"We are grateful that we are a stronger company today in part due to the incredible partnership that began with Dave Briskie and the Javalution Coffee Company (now CLR Roasters) over the past 9 years. When we made the decision to merge into the public company, our goal was to reach more people around the world and heighten the awareness of Dr. Wallach's message. Through this collaboration we believe we have accomplished this goal and we are certain that this relationship will continue to prosper in the event we can bring this potential transaction to close," said Michelle Wallach, COO of Youngevity. She continued, "Youngevity will always remain committed to innovating the best health and wellness products that it can develop based on the foundation of Dr. Wallach's research."
In the event the transaction is completed, it is expected that the newly formed entity that acquires the Direct Selling Division will retain the Youngevity tradename and the public company will be re-branded with a new name and new stock symbol, Steve Wallach would resign as a Director, Chairman and CEO of the public company and become CEO and President of the newly formed entity that acquires the Direct Selling Division, Michelle Wallach will resign as COO of the public company and serve as the COO of the newly formed entity that acquires the Direct Selling Division and Dave Briskie would become the CEO of the public company.
Dave Briskie, Youngevity President and CFO stated, "We believe the public markets have not appropriately valued our securities due to the multi-division model that we created including lower valuations on multiples of revenue than we would like to see coming from our Direct Selling Division on a stand alone basis. Further, we believe it will be much more efficient from a public company expense standpoint to eliminate the additional expense incurred as a result of the reporting requirements associated with the Direct Sales Division's international offices. We anticipate that focusing and investing more heavily into our hemp enterprise (Khrysos Industries) and our coffee enterprise (CLR Roasters) field to finish models is the best way to maximize growth, profits, and unlock shareholder value going forward." He continued, "If this transaction comes to a successful close, we expect there will be very little change, if any, experienced by our distributors, our customers, and our employees. For all, it should still feel like business as usual."
About Youngevity International, Inc.
Youngevity International, Inc. (NASDAQ: YGYI and YGYIP), is a multi-channel lifestyle company operating in three distinct business segments including a commercial coffee enterprise, a commercial hemp enterprise, and a multi-vertical omni direct selling enterprise. The Company features a multi country selling network and has assembled a virtual Main Street of products and services under one corporate entity, YGYI offers products from the six top selling retail categories: health/nutrition, home/family, food/beverage (including coffee), spa/beauty, apparel/jewelry, as well as innovative services.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions. These forward-looking statements are based on management's expectations and assumptions as of the date of this press release and are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements and include statements regarding the potential transaction with Steve and Michelle Wallach, the potential of the divestiture to strengthen the opportunity for all stakeholders and focus the various divisions to thrive and better leverage their core competencies, the sales and supply agreements that will exist between the two entities, post divestiture, allowing for a seamless transition that benefits both companies, the potential transaction providing a long-term beneficial relationship between our companies and all stakeholders, the expected efficiencies from a public company expense standpoint, focusing and investing more heavily into our hemp enterprise (Khrysos Industries) and our coffee enterprise (CLR Roasters) field to finish models to maximize growth, profits, and unlock shareholder value going forward, and the expected change, if any, experienced by our distributors, our customers, and our employees. Important factors that could cause actual results to differ materially from current expectations include, among others, our ability to consummate the potential transaction with Steve and Michelle Wallach, negotiate a definitive agreement and secure all required approvals and closing conditions, including receipt of a fairness opinion and shareholder approval regarding the transaction, our ability better leverage our respective core competencies, our ability to effect a seamless transition that benefits both companies, our ability to maintain a long-term beneficial relationship between our companies and all stakeholders, our ability to implement efficiencies from a public company expense standpoint, our ability to maximize growth, profits, and unlock shareholder value going forward by focusing and investing more heavily into our hemp enterprise (Khrysos Industries) and our coffee enterprise (CLR Roasters) field to finish models, our ability to minimize the expected change experienced by our distributors, our customers, and our employees, our ability to drive revenue and further growth, our ability to return to profitability, expand our liquidity, and strengthen our balance sheet, our ability to continue to maintain compliance with the NASDAQ requirements, our ability to expand our distribution, our ability to add additional products (whether developed internally or through acquisitions), and the other factors discussed in the preliminary prospectus supplement and accompanying base prospectus and our Annual Report on Form 10-K for the year ended December 31, 2018 and our subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.
Contacts
Youngevity International, Inc.
Dave Briskie
President and Chief Financial Officer
1 800 982 3189 X6500
Investor Relations
YGYI Investor Relations
800.504.8650
[email protected]
SOURCE Youngevity International, Inc.
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