Mountain Valley Spring Co. Positions to Convert Cachet Into Ready Cash Through IPO

by George Waldon  on Monday, Jan. 16, 2012 12:00 am  

Mountain Valley Spring Co. of Hot Springs has never had a problem producing clear, cold water for thirsty consumers. But the 140-year-old company has never generated a revenue stream to match the reliable output of its bubbling spring.

After more than seven years of ownership, private investors have turned to Wall Street in hopes of raising capital through an initial public stock offering to remedy that.

The company is still weeks away from finalizing the IPO, and details such as the exact size and value of the issue remain blank spaces in its preliminary prospectus.

The filing with the Securities & Exchange Commission bears a proposed maximum aggregate offering price of $23 million. Mountain Valley reported operating losses of $4.1 million for 2009 and $3 million for 2010.

"We have incurred operating losses in the past and expect to incur operating losses in the future," the company's securities filing stated.

"We have not been profitable in recent years, and we may not become profitable in the future."

Effective Jan. 1, 2011, Mountain Valley underwent a recapitalization that included converting nearly $30.3 million in subordinated debt and accrued interest into equity, a move that transformed creditors into stockholders and bolstered the company's balance sheet.

The conversion of debt to stock made MV Holdings LLC of Rogers 85 percent owner of the company.

MV Holdings is controlled by Johnelle Hunt, co-founder of J.B. Hunt Transport Services Inc. of Lowell and beneficial owner of about 17.4 percent of the truckload carrier's outstanding common stock.

The recapitalization left the company with outstanding debt of $5.65 million on a term loan and $600,000 on a revolving line of credit as of Sept. 30. JPMorgan Chase Bank is the lender in both deals.

Breck Speed, company CEO and chairman of the board, and others associated with Mountain Valley declined comment, saying the company is in a quiet period until its registration statement is finalized with the SEC.

Revisiting a Vision

A portion of the proposed stock offering would pay to expand the sales and support staff from 10 to 30 and transform the venerable company into a money-making premium Perrier peer. It's not a new vision for the company.

 

 

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