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A Scoop Of The Action

A company in Vermont offers ice cream equity.
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Iscream, you scream, we all scream for ice cream," as the saying goes, and lately a lot of people have been screaming for the "all-natural" gourmet ice cream made by Ben & Jerry's Homemade Inc. of South Burlington, Vt. Indeed, so many people have been screaming for it that the company has had trouble keeping up with the demand. "We can't make enough," laments 33-year-old president Ben Cohen, who saw sales zoom to $1.8 million in 1983, double those of the year before. "We've had to turn down some orders from distributors in New York and Washington, D.C."

Finally this spring, Cohen and co-founder, Jerry Greenfield, faced up to the fact that they had outgrown the 600,000-gallon-per-year capacity of their tiny plant. They needed a bigger facility, no question about it. But where would they get the money to pay for it?

As it happened, they didn't feel comfortable raising the money just anywhere. They felt a certain loyalty to the state in which they had launched Ben & Jerry's back in 1977 with $8,000 of hard-earned savings. "Our product is very much identified with Vermont," says Cohen. "So I wanted to find a way for Vermoneters to benefit from our growth. They're the ones who are most responsible for our success."

By "Vermonters," moreover, Cohen did not mean a few well-heeled vacationers from New York and Boston. Quite the contrary. "We're very community-oriented," he says, "and I wanted to give typical Vermonters a chance to participate." So Cohen and his attorney approached the local offices of several regional and national underwriters to discuss the prospect of a $600,000 public equity offering for Vermont residents only. While some of the underwriters seemed intrigued, "nobody wanted to do an intrastate offering," reports Cohen. "Nor were they willing to do anything that small."

But Cohen didn't give up. Rather, he went ahead and registered the offering -- 17.5% of the company's common stock -- with Vermont's Division of Banking and Insurance. (As an intrastate offering, it does not fall within the purview of the Securities and Exchange Commission.) The underwriter was none other than Ben & Jerry's Homemade Inc.

"Get a Scoop of the Action," read the announcements that ran in Vermont newspapers in early May. The ads invited "bona fide" state residents to participate in Ben & Jerry's growth by purchasing the 73,500 shares being offered. Interested residents could request a copy of the prospectus by calling a toll-free number. After reviewing it, they were asked to mail their checks to a Burlington bank that serves as the transfer agent. The minimum investment was $126 for 12 shares.

Cohen hoped to raise the $600,000 by early June (after this issue of INC. went to press). "If we don't raise at least $500,000 by the end of June," he said in May, "we'll send back all the checks." Assuming that the offering is sold, it remains to be seen how shareholders will trade the shares, since there is no Vermont stock exchange. But Thomson McKinnon Securities Inc., a New York City-based brokerage firm, has indicated that its Vermont offices might be interested in making a market in the issue for the first nine months. After that, says Cliff Sellery, a Thomson McKinnon vice-president, the issue can be legally purchased by nonresidents on the nation's over-the-counter markets.

If all goes well, Cohen hopes to have a new, 25,000-square-foot plant up and running by the spring of 1985, using the proceeds from the offering and an industrial development bond. And by 1990, Ben & Jerry's plans to be producing three million gallons a year of "homemade" ice cream. "We obviously see lots of opportunity for growth," says Cohen. "So we said to ourselves, Why not find a way to share to wealth?"

Last updated: Jul 1, 1984




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