Big Red in Waco, Texas, is offering 30 cents a share for Jones Soda, less than half the Seattle cola company's current stock price.
Jones Soda is considering a sale to Big Red Holdings for 30 cents a share, or about $7.9 million, the Seattle-based soda-pop company said Monday.
It has been operating with “substantial doubt about our ability to continue as a going concern,” according to a securities filing in August.
Jones’ board is evaluating Big Red’s offer, which is not final and at this point is called an “indication of interest.”
In a news release, Jones said it might negotiate with Big Red and will not disclose further developments until the board is ready.
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Based in Waco, Texas, Big Red is a privately held company and owns several soda brands, including Big Red, a cream soda-style drink popular in the South, and NuGrape.
The news was released after the stock market closed. Jones’ shares rose 4 cents to 67 cents in regular trading Monday, then fell 2 cents in after-hours trading to 65 cents.
The stock has traded as high as $1.53 in the last year.
Trading volume Thursday was 422,603 shares, when the stock lost 8 cents to close at 63 cents. Volume was back to normal Monday, just over 100,000 shares.
In February, Jones hired North Point Advisors to help it consider “strategic alternatives” and has looked at many options, it said Monday, including fundraising, strategic partnerships and distribution arrangements, and potential “combinations” with strategic and financial investors.
Jones CEO Joth Ricci said the company has focused for the past year on its core glass-bottle business and has improved its results despite lower sales.
“However, adverse economic conditions have continued to negatively impact our liquidity and financial condition and caused us to explore strategic alternatives in an effort to enhance shareholder value,” Ricci said in the news release.
Over the past 18 months, Jones Soda has laid off about 75 people to cut costs and now has about 40 employees.
Last month, it posted a loss of $1.5 million for the third quarter, a 72 percent improvement from a year earlier despite an 18 percent drop in revenue.
When Jones issued its “going-concern” statement, it said it had enough cash, $7.1 million, to operate without additional funding if sales met new projections. At the end of September, the company had $6.1 million in cash.
Many of the layoffs affected people hired in 2008 to work on the national rollout of Jones cans, a project on which the company had stumbled in 2007 after years as a successful niche player focusing on bottled soda.
The 2008 market blitz proved too costly, and Jones continued to post losses.
Last November, Key Bank terminated Jones’ $15 million line of credit.
Jones said in August it did not think more meaningful cost cuts were possible and that it had doubts about its ability to raise more debt or equity if that became necessary.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org