Wednesday, August 7, 2013

Trinity Springs faces foreclosure

Law firm claims $2.4 million for legal fees

Express Staff Writer

    A regional water company that began distributing bottled water in the Wood River Valley and then expanded distribution across the United States is facing mortgage foreclosure in Elmore County.
    Trinity Springs Ltd, with a bottling facility near Paradise, Idaho, 40 miles from Ketchum, was founded by Stan Acker, Jock Bell and Mark Johnson in 1990 with capital from 140 investors, many from the Sun Valley area.
    The company once had a staff of 24 and was a leading supplier of bottled water at health food stores, including Whole Foods. After distributing bottled water around the United States for several years, the company ran into financial trouble. In 2004, it was bought in a hostile takeover by AMCON, a publicly traded, Nebraska-based distributing company.
    Trinity shareholders fought the hostile takeover in Idaho 5th District Court and in 2007 won back control of the company from AMCON. The company has been out of production for about 10 years.
    Law firm Hawley Troxell Ennis and Hawley, which once represented the water company, is now pursuing foreclosure against Trinity Springs Ltd. and its major investor, Gordon Rock, in order to acquire company assets in lieu of $2.5 million the firm claims Trinity owes the firm for legal fees.
    A letter sent to company shareholders by board member Tony Ballard on Aug. 1 states that the Trinity board offered $1.7 million, by investor Kit Morrison, to the law firm to end the foreclosure proceedings, but the offer was turned down.
    “It is my understanding that if the law firm continues its present course of action, and no transaction happens, we shareholders will cease to exist,” Ballard said.
    A scheduling conference for foreclosure proceedings is planned for Aug. 19 in 4th District Court in Mountain Home, to set trial dates. According to the clerk of the court, no attorneys have been listed for the defendant, Trinity Ltd.
    The foreclosure proceedings, which began in March, came as a surprise to local shareholders in the company.
     “I would like to know what is going on with the company I own stock in,” said Ketchum resident Tom Heinrich. “I feel duped.”         According to a letter sent on Jan 16, 2012, to Trinity shareholders by (former) company President Joseph F. Roxstrom, the company has in recent years entertained numerous offers to sell the company, to Global Resource Partners, Z3 Enterprises, RSG Aqua and other potential buyers.
    “Since the recovery of the property in May 2009, your board has accepted deposits totaling $1.35 million in connection with offers to purchase Trinity Springs. However, financing did not materialize and each buyer forfeited its deposits. These funds were used to pay creditors and protect the assets,” wrote Roxstrom.
    Thomas Schumann, a self-described “activist investor” located in Santa Monica, Calif., sent the Idaho Mountain Express information he said he secured during the course of “due diligence” in attempts to raise funds to purchase Trinity during the past 14 months.
    Documents supplied by Schumann list secured creditors, Gordon Rock and Hawley Troxell Ennis and Hawley, as being owed $1.8 million, and $2.1 million respectively, as of August 2012.
    The document, which Schumann said was sent from the Hawley Troxell office two years ago, lists a total of $4.6 million in company liabilities, including $75,000 in travel expenses owed to company board member Mark Johnson.

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