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TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN
BURNABY, BC, June 9 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund (the "Fund") today declared a monthly cash distribution of $0.030 per unit ($0.36 per annum) for the period from June 1 to June 30, 2009. The distribution will be payable to unitholders of record at the close of business on June 30, 2009, and will be paid on July 15, 2009. The Fund holds all the outstanding securities of Swiss Water Decaffeinated Coffee Company, Inc. ("SWDCC") and makes monthly cash distributions to unitholders based on SWDCC's financial performance.
The June 2009 distribution amount is a 60% reduction from the previous monthly level of $0.075 per unit ($0.90 per annum), which the Fund has maintained since March 2007. The Fund intends to continue distributions at the reduced level until its distributable cash generation improves as a result of anticipated increases in sales volumes.
"The new distribution level reflects today's very challenging economic environment. The decline in consumer spending has had a particularly negative impact on the significant portion of our customer base that targets out-of-home coffee consumption. In addition, a market-wide shortage of coffee from Colombia and other Central American countries has caused delays in receiving coffees from some of our toll customers, and reduced orders from all customers as they work to manage their costs, inventories and coffee blends in light of dramatic price increases for coffees from these regions. The net effect has been a larger than expected decrease in our sales volumes and distributable cash. These circumstances necessitated the difficult decision to reduce distributions to our unitholders to a more sustainable level," said Frank Dennis, Chief Executive Officer of SWDCC and a Trustee of the Fund.
"We continue to aggressively pursue initiatives to increase our sales volumes. In March 2009, we launched a marketing campaign in strategic geographic regions, aimed at increasing consumer awareness of the SWISS WATER(R) Process and their ability to choose chemical free decaffeinated coffee. We are optimistic that our investment in building consumer awareness will generate increased sales volumes in 2010 and beyond, which in turn will increase the Fund's distributable cash," Dennis concluded.
"We believe the reduced distribution level is sustainable for 2009, given the current economic environment and the level of capacity utilization that we can confidently expect," added Sherry Tryssenaar, Chief Financial Officer of SWDCC. "The new distribution level will enable the Fund to maintain a conservative capital structure and the financial flexibility to manage the business effectively."
Company Profile
The Fund owns Swiss Water Decaffeinated Coffee Company Inc. (SWDCC), a premium green coffee decaffeinator located in Burnaby, British Columbia, Canada. SWDCC uses the patented 100% chemical free SWISS WATER(R) Process to decaffeinate green coffee beans for premium roasters and discerning health conscious customers in the United States, Canada and other international markets. As a result, it offers a better-for-you alternative to approximately 80% of other decaffeinated coffees which have been exposed to methylene chloride or ethyl acetate during the decaffeination process. The SWISS WATER(R) Process is the world's only consumer branded decaffeination process and the company supports the brand through ongoing consumer research and focused consumer advertising.
Forward-Looking Statements
Certain statements in this news release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SWDCC and the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements may include such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. The Fund's ability to pay cash distributions is entirely dependent upon the earnings and cash flow generated from SWDCC's operations. This may fluctuate with the performance of the business, which can be susceptible to a number of risks. These risks may include, but are not limited to, our ability to renew and expand services agreements with key customers and obtain service agreements with new customers, competition from existing chemical and other natural or chemical free coffee decaffeinators, competition from new entrants with alternate processing methods or agricultural technologies, environmental and regulatory risks, energy costs, foreign exchange fluctuations, labour relations, intellectual property infringement, ability to maintain organic certification, coffee prices (notwithstanding hedging programs, as exact hedging correlation is not attainable), the availability of coffee, adequacy of insurance, dependence on key personnel, product liability, and terms of credit agreements. In addition, there are certain risks associated with a trust, including the nature of trust units, dependence on SWDCC, restrictions on potential growth, capital investment, unitholder limited liability, income tax matters and government regulations.
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