Royal Spring Water (fka RSPG)

[BillionStack]

http://www.wallstreetreporter.com/profile.php?id=18572:

WSR: Tell us about your basic business formula and strategy.

RSPG: From inception, our initial business goal has been to enter into the very large and successful bottled water market. We are one of the few companies that has the capacity to provide bottled water for private label buyers on a large scale. We're one of the few companies that can provide the large buyer private labeling of water. As the water business grows, there is a huge demand for water manufacturers/bottlers that have both the capacity and the water to fill the orders.

WSR: Tell us about the market potential of the company.

RSPG: Any kind of company that is in the retail business from market chains to airlines provides water. Since our company has the capability of supplying a large amount of bottled water, we can compete with the regular-label companies providing private labels to those buyers.

WSR: Tell us about some of the company’s recent moves.

RSPG: When we started, we knew that the U.S. market in the bottled water sector was a USD$10 billion business in 2005, which is estimated to increase to USD$50 billion in the next 5 to 10 years. Very quickly, however, we realized that the water shortage, drinking water problems, and water demand is bigger internationally. We started working with the U.S. Chamber of Commerce to get company names, countries, and contacts to decide who was the right company to make a deal with; in the interim, they contacted us. We are confident that on the international level, our business will be bigger. What’s good about it is that in the international markets, all of our deals so far that we have either signed letters of intent or are finalizing contracts will be with the Royal Spring Water label.

WSR: Tell us about the product itself.

RSPG: It was never a hurdle, but a major component or step, which is part of what happens when a company becomes a water bottler for the consumer. We never had any doubts about that; it was just a matter of getting to that point where everything was lined up and they came in and did it.

WSR: Tell us about the Artesian wells.

RSPG: Our President and CEO, Alex Hazan, and our Chief Engineer have been looking to get involved in the drinking bottled water arena for quite awhile. Once the team came together, we found the property in Hereford. It took 4 to 5 months’ hard negotiations with the landlord, but we signed a 50-year lease, and we have an option to purchase in four years, which is good because we don’t have to lay out cash right away. We have a capitalized lease. Part of the reason why we're going to be successful is that there are several companies that are opening other bottling plants in the country, but one, it’s going to take them several years until they're ready; and two, we're talking about an operation that’s over USD$100 million to build and spend in order to get to where we are. When we picked up the lease for the property with the water rights, all of our infrastructure was in place for the majority part, and that was a value of over USD$10 million in asset value if we had to fix it, replace it, clean it up, and so on.

WSR: Does the investment community fully understand the potential that the company has? Also, tell us why someone would want to invest in the company.

RSPG: We believe our company is growing, that an increasing amount of investors will start realizing both the potential and the strength of Royal Spring Water. In terms of what we have to offer, investors will already know about us and the ones that will come onboard will realize the potential of our company and what we have to offer to the market. The second reason is the fact that we’re located in the middle of the country, in the panhandle. But the bottom line is that many of the buyers the company has dealt with love the water – they are basically asking us for a price. That’s what we can do, both with our label and on a private label basis.