Quality Foods Brands buys manufacturing facility

by Eric Schroeder
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SYOSSET, N.Y. — Quality Food Brands Inc. (Q.F.B.), a subsidiary of holding company Synergy Brands, Inc., has acquired the assets of a baking mix facility in Michigan from Laurus Master Funds for $4.75 million in 9% non-recourse secured term notes. In addition, Q.F.B. gave Laurus and LVBP Holdings the right to acquire a minority stake in Q.F.B.

Q.F.B. said it will use the plant to produce baking mix products that will help supply its existing customers. In the past, the company has used the facility to supply its customers, but felt the baking business has grown to a level that requires direct manufacturing capabilities so it may gain better product control, special purpose packaging and margin enhancement.

According to Q.F.B., the facility has the capacity to produce about $15 million in baking mix products at current configurations. The company plans to add additional lines that could allow for the production levels to be increased to $25 million annually. The company currently distributes about $10 million in baking mix products annually.

Q.F.B. is wholly owned by PHS Group, Synergy’s grocery subsidiary. The company will be used as the manufacturing arm of PHS for the production of baking mix products. PHS already has established vendor relations for the raw materials needed to supply the manufacturing plant such as sugar, shortening, etc. and has developed a customer base that already has placed orders for production of private label goods.

Under terms of the transaction, neither PHS nor Q.F.B. acquired any customers from the acquired facility or any trademarks that are being used for current sales. The assets of the manufacturing facility, which include the baking mix equipment and physical facilities needed for the manufacturing process, were the sole assets expected to be used.

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