Exhibit 99
----------
ALLOU HEALTHCARE, INC.
50 EMJAY BOULEVARD
BRENTWOOD, NEW YORK 11717
(American Stock Exchange
Trading Symbol: ALU)
SUMMARY COMPANY CONTACT
Allou Healthcare, Inc. announces certain developments: Richard A. Sebastiao
Chief Restructuring Officer
o Inventory and Accounts Receivable Allou Healthcare, Inc
Substantially Overstated in Reports to (631) 273-4000
Lenders.
o The Company Terminates the Employment of
Principal Executive Officers.
o Lenders File Additional Bankruptcy Petition.
o Two directors resign from Board of Directors.
April 24, 2003. For immediate release.
INVENTORY AND ACCOUNTS RECEIVABLE SUBSTANTIALLY OVERSTATED IN REPORTS TO
LENDERS. The Company believes that the levels of assets collateralizing loans
were substantially overstated in recent reports submitted by the Company to its
senior lenders. The preliminary results of the Company's investigation indicate
that inventory was overstated by approximately $35,000,000 and that accounts
receivable may be overstated by $75,000,000 to $80,000,000, for a total
overstatement of $110,000,000 to $115,000,000. The Company has retained a
forensic accounting firm to assist with the continuing investigation of this
matter.
THE COMPANY TERMINATES THE EMPLOYMENT OF PRINCIPAL EXECUTIVE OFFICERS.
Allou Healthcare, Inc. (the "Company") has terminated its employment of Victor
Jacobs, Herman Jacobs, David Shamilzadeh and Jacob Jacobs. Victor Jacobs had
been employed by the Company as Chairman of the Board; Herman Jacobs had been
employed by the Company as Chief Executive Officer; David Shamilzadeh had been
employed by the Company as President and Chief Financial Officer; and Jacob
Jacobs had been employed by the Company as Executive Vice President. Each of the
four terminated employees has retained his seat on the Company's board of
directors, with Victor Jacobs still holding the board position of Chairman.
Most of the duties of the offices in which the above named terminated
individuals were employed will be performed by Richard A. Sebastiao. The Company
previously announced the retention of Mr. Sebastiao as its Chief Restructuring
Officer. In connection with its retention of Mr. Sebastiao, the Company entered
into an agreement with Mr. Sebastiao's company, RAS Management Advisors, Inc.
("RAS") of Providence, Rhode Island, pursuant to which RAS will evaluate the
Company's existing inventory and receivables, act as liaison with senior and
unsecured lenders, make all employment-related decisions, review and approve
purchase orders and disbursements, and directly supervise the accounting,
information technology, warehousing/distribution, sales, purchasing and security
departments. In addition, Mr. Sebastiao will seek buyers for the various
operating units of the Company in an expeditious manner.
LENDERS FILE ADDITIONAL BANKRUPTCY PETITION. On April 21, 2003, the
Company's senior lenders, led by Congress Financial Corporation, filed an
involuntary petition for bankruptcy in the Eastern District of New York under
chapter 11 of the United States Bankruptcy Code with respect to the Company and
two of its subsidiaries, Rona Beauty Supplies, Inc. and Trans World Grocers,
Inc. Chapter 11 is the reorganization provision of the Bankruptcy Code under
which it is possible for a company to continue its operations, restructure its
indebtedness and emerge from chapter 11 bankruptcy as a reorganized enterprise.
On April 9, 2003, the lenders filed an involuntary chapter 11 bankruptcy
petition with respect to M. Sobol, Inc., Allou Distributors, Inc., Direct
Fragrances, Inc., and Stanford Personal Care Manufacturers, Inc., which are
principal operating subsidiaries of the Company. The April 9, 2003 filing was
consented to by all parties involved.
TWO DIRECTORS RESIGN FROM BOARD OF DIRECTORS. Stuart Glasser and Jeffrey
Berg have resigned from the Company's Board of Directors. Mr. Glasser and Dr.
Berg were two of the Company's three outside directors. The remaining five
directors are Mr. Sol Naimark, who is not employed by the Company, and Victor
Jacobs, Herman Jacobs, David Shamilzadeh and Jacob Jacobs, each of whom was
previously employed by the Company as noted above.
ABOUT THE COMPANY. Allou Healthcare, Inc. distributes consumer personal
care products and prescription pharmaceuticals. The Company also manufactures
upscale hair and skin care products for sale under private labels. The Company's
consumer personal care products distribution business includes prestige brand
name designer fragrances, brand name health and beauty aids products and
non-perishable packaged food items. Its prescription pharmaceuticals
distribution business includes both brand name and generic pharmaceutical
products.
The Company and certain of its subsidiaries are the subjects of chapter 11
bankruptcy proceedings. The Company's class A common stock is registered with
the Securities and Exchange Commission and is listed on the American Stock
Exchange under the trading symbol ALU. Trading in the class A common stock was
halted by the American Stock Exchange on April 9, 2003.
Certain statements in this announcement are "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements, which may refer to the
expectations of the Company's management or advisors concerning the outcome of
future events, and which may include the words "believe" or "intend" or other
descriptions of such expectations, involve certain known and unknown risks,
uncertainties and other factors that may cause the statements to be materially
different from actual future results.