Galaxy Foods, AMPAC International sign letter of intent for food manufacturing joint venture in People's Republic of China.

ORLANDO, Fla.--(BUSINESS WIRE)--Sept. 24, 1996--Galaxy Foods Co. (Nasdaq:GALX) Tuesday announced it has signed a letter of intent with Pacific Foods Ltd., a subsidiary of AMPAC International Inc. (OTC:CTPI) and Huzhou Zhenyuantong Foods Mfy (HZF) 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 venture will be headquartered in Huzhou City, in the province of Zhejiang. Huzhou, a central transportation and manufacturing hub, is located close to several of PRC's major markets including Shanghai. The parties added that the final agreement is subject to completion of due diligence.

Under the terms of the agreement, Galaxy will provide equipment technology and product formulations, conduct research and development for new products, train employees and provide technical consulting. Galaxy and Pacific Foods will hold 65% interest in the venture. Pacific Foods will contribute capital and support services including legal consulting, translation, accounting and auditing. HZF will hold 35% interest and will provide factory premises, equipment, labor and installation of equipment. The initial investment is estimated at $15 million.

HZF presently manufactures and distributes TCBY brand yogurt and is the third largest producer of ice cream in the Republic. The company operates a 47,000 square meter state of the art facility in Huzhou and has extensive distribution channels for shipment of refrigerated product. The company also manufactures and distributes children's dairy related food products under a licensing agreement with The Walt Disney Co.

"There is a huge opportunity for American food products and technology in this region of the world," said Angelo S. Morini, Galaxy's president. "I am confident that joining forces with Pacific Foods and HZF will ultimately result in the wide-spread distribution of Galaxy's products. Being associated with a strong company having marketing ties to Disney(r) characters will place Galaxy's market entry products in a very strong position. Although cheese consumption in China is relatively non-existent, as in other Pacific Rim countries, the desire and market potential grows as they try new products, as evidenced by Japan's present 3 lb. per capita consumption. Conversely, Western consumption is about 35 lbs. per person. With a population of 1.2 billion people, the market potential is exceptional." According to PRC government officials, "Health is our number one concern since most Asians are lactose intolerant and Galaxy's products are perfect for our market."

Galaxy Foods Co. produces a complete line of healthy cheese and cheese related products for the retail, food service and industrial markets. Galaxy Foods is the inventor and originator of formagg(r), perfectly balanced nutritional products which are low in fat, have no cholesterol and no lactose and contain more calcium, vitamins and minerals than conventional cheese. The company's trademarked brands include formagg(r), Soyco(r), Soymage(r), Lite Bakery(r).

CONTACT: Galaxy Foods Co., Orlando

Rebecca Barksdale, Investor Relations 

407/855-5500, ext. 105