AMPAC International, Galaxy Foods sign letter of intent to participate in Sino-foreign food manufacturing joint venture.

ORLANDO, Fla.--(BUSINESS WIRE)--Sept. 24, 1996--AMPAC International Inc., formerly Captain Tony's Pizza Inc., Tuesday announced that Pacific Foods Ltd., subsidiary, has signed a letter of intent with Huzhou Zhenyuantong Foods Mfy. (HZF), and Galaxy Foods Co. to form a joint venture that will produce, sell and distribute various food products to major consumer markets within the People's Republic of China.

The partners determined that total initial investment for the joint venture will reach an estimated $15 million, while registered capital shall be $4.5 million (U.S.). The venture will be headquartered in Huzhou, People's Republic of China. Huzhou, a central transportation and manufacturing hub, is located within close proximity to several of China's major markets, including Shanghai. The parties added that the transaction will be closed subject to the completion of due diligence.

Under terms of the agreement, Pacific Foods will hold a 65% interest in the venture and contribute capital, and support services that include legal consulting, translation, accounting and auditing. HZF, owner of a 35% interest, will provide factory premises, equipment, labor and installation of equipment. In addition, HZF will facilitate the flowthrough of product through its existing distribution network. The preliminary agreement also calls for Galaxy Foods to negotiate with suppliers regarding the purchase of equipment technology, contribute the formulations for the various food products to be manufactured by the venture, conduct research and development for new products, train employees and provide technical consulting to the venture, in concert with Pacific Foods Ltd.

"The Chinese appetite for American food products is voracious," stated Thomas L. Tedrow, president of Pacific Foods Inc. "This joint venture will facilitate the movement of American brands into a ready and waiting market. We are especially pleased that another local company, Galaxy, will be contributing its expertise to the venture."

HZF manufacturers and distributes ice cream, TCBY frozen yogurt, candy, chocolate and pastries from a 47,000 square meter state of the art facility in Huzhou, China. It has existing and extensive distribution channels for the shipment of product. Foods produced through the joint venture will be easily integrated into HZF's network, which consists of a fleet of refrigerated trucks. For the reporting period January through August 1995, HZF reported net income of $1.8 million (U.S.) on revenues of more than $17 million.

Galaxy Foods Co. (NASDAQ:GALX), located in Orlando, invented healthy cheese products free from cholesterol, saturated fat and lactose in 1972. Several of Galaxy's lactose-free cheese products, to be manufactured through the joint venture, will be reformulated to accommodate the Asian palate.

Pacific Foods, based in Orlando, identifies and develops U.S. based restaurant concepts and food products for the emerging markets within the People's Republic of China. AMPAC International, its parent company, utilizes technology and a proprietary international network to achieve licensing, financing and promoting of U.S. food concepts and brand names to the vast Chinese audience.

CONTACT: Waterford Sterling Corp., Orlando

Rob Bleckman, 407/841-1350