Chiquita agrees debt restructuring with bondholders, to file Chapter 11

New York, Nov. 12 - Chiquita Brands International, Inc. said it has reached agreement with bondholder committees on a restructuring plan that the company said will reduce its debt and accrued interest by more than $700 million and its annual interest expense by $60 million in future years. The restructuring will be achieved through a prepackaged Chapter 11 bankruptcy filing.

The Cincinnati, Ohio banana giant said the restructuring will only involve the publicly held debt and equity of Chiquita Brands International, Inc., which is a holding company without any business operations of its own.

Other creditors, assets and ongoing operations will be unaffected by the Chapter 11 filing, Chiquita said.

The company's subsidiaries, which generate their own cash flow and have access to their own credit facilities, will continue to operate normally and without interruption.

Under the plan, Chiquita will issue 40 million shares of new common stock. Security holders will receive the equity and new securities as follows:

* The $775 million of senior notes plus accrued interest will be exchanged for $250 million of new senior notes and 35.1 million shares, or 87.75% of the equity (the existing senior notes include $250 million of 9 5/8% notes due 2004, $175 million of 9 1/8% notes due 2004, $150 million of 10¼% notes due 2006, and $200 million of 10% notes due 2009);

* The $86 million of the 7% convertible subordinated debentures due 2001 plus accrued interest will be exchanged for 3.1 million shares or 7.75% of the equity. Holders may also choose to receive payment in the new senior notes instead of stock, with a limit of $10 million in total of notes to be issued to this group;

* The existing preferred stock will be exchanged for 250,000 shares or 0.62% of the equity plus seven-year warrants to purchase 4.2 million shares of new common stock, 7.79% of the equity on a fully diluted basis;

* The existing common stock will be exchanged for 550,000 million shares or 1.38% of the equity plus seven-year warrants to purchase 9.2 million shares of the new common stock, 17.21% of the equity on a fully diluted basis.

Existing management will receive 1 million shares or 2.5% of the equity as part of a management incentive program that will include a new stock option plan.

Interest on the new senior notes will be set at the yield of the seven-year Treasury plus the spread on the Bear Stearns BB index plus 100 basis points.

The agreement gives Chiquita and enterprise value of $1.28 billion, according to the report that Chiquita will file with the Securities and Exchange Commission. Of that figure, $250 million is the new senior notes and $413 million subsidiary debt, leaving $617 million of equity value for the reorganized company. Based on that calculation, the new stock is value at $14.38 per share and the warrants at $3.11 each.

The Chapter 11 filing will be with the U.S. bankruptcy court for the southern district of Ohio, according to the report that Chiquita will file with the Securities and Exchange Commission.

On completion of the Chapter 11, a new board of directors will be elected, made up of current directors Carl H. Lindner and Steve Warshaw plus five members nominated by the bondholder committees.

Completion of the plan is subject to acceptance by the affected classes of public debt and equity, Chiquita said. With approval of the ad hoc bondholder committees, the company said it believes it has the votes required for approval.

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