Coffee Holding says committed to merger with Delta Corp

Andrew Gordon, CEO, provided the following update: “I would like to provide a business update and an update regarding the proposed transaction with Delta Corp Holdings Limited to employees, shareholders and interested persons of Coffee Holding Co. First, let me begin by thanking our long-term loyal shareholders, supporters and interested persons for their patience and understanding over the past thirteen months. I, along with my board of directors, firmly believe this patience will be rewarded in the near future. Secondly, let me assure everyone that our management team and the management team of Delta are committed to this merger. Our management team believes the combination between our respective companies in terms of future revenue growth and subsequent earnings is projected by us to translate into a stronger stock price and value creation for our shareholders. The past two years have been difficult for our business. Following COVID-19 and the costly disposal of our under-performing Generations/Steep division, we encountered both a business slowdown and increasing costs, including the expensive relocation of manufacturing equipment to our current operating facilities in Colorado and Massachusetts. In addition, domestic freight costs remain elevated, and our borrowing costs have increased as short-term interest rates have risen significantly over the last 18 months. As a result of these factors, we have seen a significant drag on our earnings. With some of these challenges behind us, we believe we are looking at an improved outlook heading into 2024. We recently started shipping our products to two new large national supermarket chains along with a third larger regional chain which we believe dominates the Northeast market. These, along with new but smaller customer wins and improved sales of our flagship brand, Cafe Caribe, in the East Coast and Southwest, are expected to help grow our revenues by 18-25% in 2024 and drive a return to profitability. Coffee prices also remain at elevated levels on an historic basis, with smaller crops last year and remaining supply chain issues combining to keep nearby supplies tight. We have always recorded better results when similar conditions persisted in the past and it is our belief that will also be the scenario heading into our next fiscal year. Finally, I want to address our rationale behind the proposed merger with Delta and why we view this as the best course for the future of the Company and return for our shareholders. Although we believe that our business is on a more stable footing, several challenges persist. Financing costs are high, a situation that appears poised to continue for several years to come and capital market access has been restrictive for small companies such as ours even before the recent rise in interest rates. In addition, most other publicly traded coffee companies, other than retail coffee companies, have both underperformed and have gone relatively unnoticed in the public markets over the last several years and our company is no exception. To execute our growth initiatives, improve margins, and reduce our overhead and capital costs, it is the view of myself and the Company’s board of directors that an increase in scale will be in our interests and that our Company and its shareholders would benefit from combining with a much larger enterprise such Delta. Delta is a global logistics company with a broad interest across commodities, industrials, and agricultural industries. It has experienced significant growth since its founding with revenues of over $620 million last year and today has over 400 employees in 17 countries. Delta’s business lines are headed by experienced management teams and combining with Delta we believe will give us the scale and efficiency to execute our strategy. It is our belief that this will be the catalyst for setting the possibility of improved stock performance once we consummate the proposed merger. We are in the process of remaining stages in the review of our proxy statement with the Securities and Exchange Commission and expect to mail our proxy statement to our stockholders by year end and to hold our special meeting in the first quarter of 2024. Again, I want to thank our stockholders for your patience and your continued support.”