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

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

"Our marketing strategy was you have to make this product so premium that you don't have to compete on price only," said Brooks Rice, CEO of Mountain Valley from 1987 to 1991. "We were the only Perrier-equivalent in the United States, and we were working to maintain that position as the premium water."

Brooks helped restore the luster of Mountain Valley Water, which retains a historic cachet and cash potential its current owners are striving to unlock.

The financial statement filed with the SEC represents a company less than half the size it was nearly eight years ago, both in terms of revenue and staff.

Revenue topped $55 million after the April 2004 merger of Mountain Valley Water and Little Rock's Clear Mountain Spring Water. The combined operations employed 285 after Clear Mountain bought Mountain Valley from Sammons Enterprises Inc. of Dallas and adopted the older, better known Mountain Valley moniker.

Mountain Valley reported revenue of $24.2 million for 2010 and appeared to be on track to top that last year with sales of $19.9 million through Sept. 30. The company listed 107 full-time employees in its Dec. 2 filing with the SEC.

Behind those drops in sales and staffing were some self-paring moves. In June 2008, Mountain Valley sold the last of its company-owned distributorships to focus resources on bottling and brand building.

"Now we have over 150 distributors that are independently operated, and we no longer own any of that distribution directly ourselves," Speed said at the time.

The redirecting of corporate resources followed what was supposed to be a breakthrough deal that fell apart in September 2007. Months of negotiations to market Mountain Valley via Anheuser-Busch's nationwide wholesale distributors fizzled.

The corporate courtship marked something of a second go-around for the St. Louis beer-brewing giant. Anheuser-Busch made a run at buying Mountain Valley Water along with other bidders in 1987 but was beat out by Sammons.

In the wake of the unsuccessful Anheuser-Busch talks in 2007, Mountain Valley got into a legal dispute with Southern Wine & Spirits, which allegedly built its spring water sales from practically nothing to $1.7 million in Nevada.

Since exiting the distribution side of the business, Mountain Valley has re-evaluated its Veriplas division, which manufactures water bottles and represents 40 percent of company sales. According to SEC filings, the company intends to consolidate production in Hot Springs of its preformed and finished bottles made from Polyethylene Terephthalate (PET) resin and get shed of its leased Little Rock facility.

Funds from the proposed stock offering also would be used to upgrade bottling equipment.



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