Seaway Valley Capital Corporation (OTC Bulletin Board: SWYV) ("Seaway Valley") (www.seawayvalleycapitalcorp.com) chairman and chief executive officer, Thomas W. Scozzafava, issued the following update to its shareholders today:
Dear Shareholders:
Regardless of the recent turmoil in the broader financial markets, management of Seaway Valley simply does not feel that the current market capitalization and share price of the Company reflect either its underlying asset value or its current businesses and their respective prospects. With gross assets of approximately $35 million and shareholder equity of approximately $8 million, Seaway Valley's current market capitalization of $165,000 is not acceptable by management and, we are quite sure, by current shareholders.
To this end, management has begun intensive efforts to address this issue and has recently retained advisors to help it explore strategic alternatives to lift the Company's long term prospects. These alternatives could include seeking a long term institutional investor that could possibly provide the Company with significant fresh capital while also acquiring a large portion of the current convertible securities - some of which contain more dilution risk than others. If successful, this could provide enough capital to properly fund our core holdings for continued and strong organic growth. Additionally, such a financing could serve to "clean up" Seaway Valley's balance sheet and ultimately lessen dilution by bringing in an investor whose time horizon is perhaps measured in years.
In addition, management is working closely with many of the Company's preferred shareholders to explore ways of restructuring or, at the very least, limiting their dilutive impact. Most of the preferred shareholders are long term investors, and this is reflected by the fact that the vast majority of preferred shares remain currently outstanding. And although the dilution potential of the preferred stock actually decreases as Seaway's share price increases, the simple existence of the shares may be counterproductive to such a result.
Another and not necessarily mutually exclusive alternative may be to unlock the value of Seaway's holdings by positioning them into stand-alone public investment platforms. Management feels that Seaway's current market capitalization is certainly less than the sum of its parts. In fact, Hackett's, Sackets Harbor Brewing Company, Alteri Bakery and Seaway Restaurant Group would perhaps each individually be worth more than the entire current public market value of Seaway Valley.
Although management cannot be sure that any of the above strategies will be successfully transacted or, if done, done so at terms perceived as more favorable to the Company, we have currently begun down an exploratory path with swift and material value creation as our goal.
Safe Harbor Statement
This press release contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of the Company, and members of their management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully and the ability to complete before-mentioned transactions. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.
