Jones Soda considering $7.9 million sale to Big Red in Texas

Jones Soda is considering a sale to Big Red Holdings for 30 cents a share, or about $7.9 million in cash, the Seattle-based soda pop company said this afternoon.

It has been operating with "substantial doubt about our ability to continue as a going concern," according to securities filing in August.

Jones' board is evaluating Big Red's offer, which is not final and at this point is called an "indication of interest." In a press release, Jones said it might negotiate with the Texas-based soda company.

Based in Waco, Big Red is privately held and owns several soda brands including Big Red, a cream soda-style drink popular in the southern U.S., and NuGrape.

The news was released after the stock market closed. Jones' shares rose 4 cents to 67 cents in regular trading today, then fell 2 cents in after-hours trading to 65 cents a share.

Trading volume last Thursday was 422,603 shares, when the stock lost 8 cents to close at 63 cents. Volume was back to normal today, just over 100,000 shares.

In February, Jones hired North Point Advisors to help it consider "strategic alternatives" and has looked at many options, it said today, including fundraising opportunities, strategic partnerships and distribution arrangements, and potential "combinations" with strategic and financial investors.

Jones CEO Joth Ricci said the company has focused for the past year on its core glass-bottle business and has improved its profit despite lower sales.

"However, adverse economic conditions have continued to negatively impact our liquidity and financial condition and caused us to explore strategic alternatives in an effort to enhance shareholder value," Ricci said in the release.

Over the past 18 months, Jones has laid off about 75 people in an effort to cut costs and now has about 40 employees.

Last month, it posted a loss of $1.5 million for the third quarter, a 72 percent improvement from a year earlier despite an 18 percent drop in revenue.

When Jones issued its "going-concern" statement in August, it said it had enough cash -- $7.1 million - to operate without additional funding if sales met new projections. At the end of September, the company had $6.1 million in cash.

Many of the layoffs were of people hired in 2008 to work on the national rollout of Jones cans, a project on which the company had stumbled in 2007 after years as a successful niche player focusing on bottled soda.

The 2008 market blitz proved too costly, and Jones continued to post losses. Last November, Key Bank terminated Jones' $15 million line of credit.

Jones said in August that it did not think more meaningful cost cuts were possible and had doubts about its ability to raise more debt or equity if that became necessary.