ML Macadamia Orchards, L.P. Files Antitrust Lawsuit Against Mauna Loa and MacFarms

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ML Macadamia Orchards, L.P. Files Antitrust Lawsuit Against Mauna Loa and MacFarms

HILO, HAWAII, Aug. 19 -/E-Wire/-- ML Macadamia Orchards, L.P. (NYSE:NUT) announced today that it and three other macadamia nut growers had filed an antitrust lawsuit on Friday, August 13th, to enjoin the sale of the assets of MacFarms of Hawaii, LLC to Mauna Loa Macadamia Nut Corporation. The suit alleges that if the acquisition occurs, Mauna Loa would gain a monopoly over the processing of wet-in-shell macadamia nuts on the Island of Hawaii, as well as the supply of nuts to other processors. This monopoly would adversely impact the nut growers and other processors on the Island of Hawaii, and macadamia nut consumers both in Hawaii and on the mainland United States. This, the suit claims, would violate the State's antitrust laws. Named as defendants in the suit are Mauna Loa Macadamia Nut Corporation, its parent Mauna Loa Macadamia Nut Holdings, Inc., MacFH Inc., MacFarms of Hawaii, LLC, and Kapua Orchards Estates, LLC. Kapua Orchards Estates currently owns the 3,800-acre macadamia nut orchards that supply nuts to MacFarms and that Mauna Loa would control as part of the acquisition.

Joining ML Macadamia Orchards as plaintiffs in the suit filed in the State circuit court in Hilo are nut growers Whitney Koffman, Darrell Crisp and Troy Keolanui, who are smaller growers and sell nuts on the open market.

On July 9, 2004, Mauna Loa Macadamia Nut Corporation, which is ML Macadamia Orchard's exclusive customer, announced that it had entered into an agreement to acquire its largest competitor, MacFarms of Hawaii. The purchase, for an undisclosed sum, includes the industry's second largest macadamia nut processing plant (Mauna Loa has the largest), the brand name "MacFarms", customer lists, and employees related to MacFarms' farming, nut processing and marketing operations. The announcement also stated that Mauna Loa would lease Kapua Orchards' macadamia orchards.

ML Macadamia Orchards had earlier announced that it and other nut growers had expressed their strong concerns to Mauna Loa, the Department of Agriculture of the State of Hawaii, the Attorney General of the State of Hawaii, State legislators from the Island of Hawaii, and members of the County Council of the Island of Hawaii.

ML Macadamia Orchards has asked the Attorney General to take action to prevent the acquisition, but felt compelled to file the suit because it was not sure what action the Attorney General might take or whether it would be taken in time to prevent the acquisition.

The complaint alleges that Mauna Loa, which does not grow macadamia nuts, already controls 53% of the total supply of nuts through long-term purchase agreements. If it acquires MacFarms' 13.3% of the supply, Mauna Loa would control 66% of the total nut supply on the Island of Hawaii.

It also alleges that Mauna Loa buys and processes 56% of the total nut supply and MacFarms processes 20%, and that after the acquisition Mauna Loa would control 76% of all nuts processing on the Island of Hawaii. It alleges that if the acquisition is completed, Mauna Loa would be the largest buyer and processor of nuts and would be able to lower the prices that it would pay to nut growers.

The complaint further alleges that Mauna Loa, as the already dominant producer of pristine macadamia nuts and other nut products sold to retailers and customers in Hawaii, would have monopoly power in the retail market in the State of Hawaii. Mauna Loa's only competitors would be the much smaller Island Princess, Hamakua Mac Nut and Hawaiian Host, and the complaint alleges, Mauna Loa would be able to undercut their prices in the retail markets.

All macadamia nuts grown by ML Macadamia Orchards are sold to Mauna Loa subject to five different contracts. About 70% of this supply (15 million pounds) is sold under four contracts ending December 2006. The remaining 30% (about 6 million pounds) is sold under a contract ending in 2019.

The suit alleges that the acquisition, if it proceeds, would result in lower prices for ML Macadamia Orchard's nuts because Mauna Loa would have close to 80% of the processing capacity on the Island of Hawaii. The next larger processor would have only 10% of that capacity. ML Macadamia Orchards believes that Mauna Loa would be able to dictate the prices of nuts at which it will buy from the growers if the acquisition closes. ML Macadamia Orchards is concerned that Hamakua Macadamia Nut Company, which is the third largest processor and processes 10% of the nuts, could be driven out of business, thus forcing ML Macadamia Orchards and all other 640 or so Hawaii growers to deal exclusively with Mauna Loa after 2006.

Dennis Simonis, President of ML Macadamia Orchards, commented that if the acquisition is not enjoined, "Mauna Loa would have the power to destroy MacFarms in less than one month." This would be done, he explained, by discontinuing MacFarms' retail distribution, closing the processing facility, terminating or relocating key personnel, destroying the "MacFarms" brand, and taking over MacFarms' lease and nut purchase contracts.

The plaintiffs are asking the court to enjoin the acquisition, declare the acquisition agreement as void, and grant other just and proper relief to the plaintiffs.

This press release contains forward-looking statements regarding future events and future performance of the Partnership that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These include statements, among others, regarding the Partnership's future nut prices and the outcome of legal action, which are based on certain assumptions and forecasts. The Partnership files documents with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K reports, which contain a description of these and other risks and uncertainties that could cause actual results to differ from current expectations and the forward-looking statements contained in this press release.

ML Macadamia Orchards, L.P.

Dennis J. Simonis, [REDACTED-PHONE]

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