-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N8Tmuj+YEoI8jTdn0UqRPlG0n9X/tU0U/ClkKX7zTu5MkFus4rXkkxkoT8GteHsF pVyOWk2mV8/RIWz3JTaPHg== 0000101063-98-000079.txt : 19980701 0000101063-98-000079.hdr.sgml : 19980701 ACCESSION NUMBER: 0000101063-98-000079 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19980630 SROS: BSE SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHIQUITA BRANDS INTERNATIONAL INC CENTRAL INDEX KEY: 0000101063 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 041923360 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: SEC FILE NUMBER: 333-51497 FILM NUMBER: 98657322 BUSINESS ADDRESS: STREET 1: 250 E FIFTH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5137848011 FORMER COMPANY: FORMER CONFORMED NAME: UNITED BRANDS CO DATE OF NAME CHANGE: 19900403 424B3 1 PROSPECTUS 873,710 Shares [LOGO] Chiquita Brands International, Inc. Common Stock This Prospectus relates to up to 873,710 shares of the Common Stock, par value $.01 per share (the "Common Stock"), of Chiquita Brands International, Inc. ("Chiquita" or the "Company"). The Common Stock is listed on the New York, Boston and Pacific Stock Exchanges. On June 26, 1998 the last sale price of the Common Stock as reported on the New York Stock Exchange was $14.3125 per share. The shares of Common Stock offered hereby (the "Shares") are being sold for the account of and by the person named under the caption "Selling Shareholder." The Shares may be sold from time to time in transactions on the open market or in negotiated transactions, in each case at prices satisfactory to the Selling Shareholder. (See "Plan of Distribution.") The Company will not receive any proceeds from any sales of the Shares. See "Risk Factors" beginning on page 4 for a discussion of certain factors which should be considered by prospective purchasers of the Common Stock. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is June 26, 1998. AVAILABLE INFORMATION Chiquita is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy and information statements and other information with the Securities and Exchange Commission (the "Commission"). Chiquita has filed with the Commission a Registration Statement under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Shares offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement and exhibits thereto, or amendments thereto, to which reference is hereby made. Such reports, proxy and information statements, Registration Statement and exhibits and other information filed by Chiquita may be inspected and, upon payment of the Commission's customary charges, copied at the public reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the Commission at Suite 1300, 7 World Trade Center, New York, New York 10048, and at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material may also be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission maintains a Website that contains reports, proxy and information statements and other information regarding companies, including Chiquita, that file electronically with the Commission at http://www.sec.gov. Chiquita's Common Stock is listed on the New York, Boston and Pacific Stock Exchanges. Reports, proxy and information statements and other information concerning Chiquita may be inspected and copied at the Library of the New York Stock Exchange at 20 Broad Street, New York, New York; at the Secretary's Office of the Boston Stock Exchange at One Boston Place, Boston, Massachusetts; and at the Listing Department of the Pacific Exchange at 301 Pine Street, San Francisco, California. No person has been authorized to give any information or to make on behalf of the Company or the Selling Shareholders any representations, other than those contained in this Prospectus, in connection with the offer made hereby, and, if given or made, such other information or representation must not be relied upon as having been authorized by the Company or the Selling Shareholders. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any security other than the securities offered hereby, or an offer to sell or solicitation of an offer to buy such securities in any jurisdiction in which such offer or solicitation is not qualified or to any person to whom such offer or solicitation would be unlawful. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained or incorporated by reference herein is correct as of any date subsequent to the date hereof. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Chiquita will furnish, without charge, to any person to whom this Prospectus is delivered, upon such person's written or oral request, a copy of any and all of the information that has been incorporated by reference in the Registration Statement of which this Prospectus is a part (not including exhibits to such information unless such exhibits are specifically incorporated by reference into such information). Any such request should be directed to the Vice President, Corporate Affairs of Chiquita, 250 East Fifth Street, Cincinnati, Ohio 45202; telephone: (513) 784-6366. The Annual Report on Form 10-K for the year ended December 31, 1997 (which incorporates by reference certain information contained in the Company's 1997 Annual Report to Shareholders) (the "1997 10-K") filed by Chiquita with the Commission (Commission file number 1-1550), the Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 (the "1998 10-Q"), the Current Reports on Form 8-K dated January 7, 1998, January 16, 1998, February 11, 1998, February 19, 1998, and April 22, 1998 (the "8-Ks"), and the description of Common Stock of Chiquita contained in Amendment No. 1 to the Registration Statement on Form 8-A filed by Chiquita on June 18, 1998, are incorporated herein by reference and made a part hereof. All documents filed by Chiquita pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering made hereunder shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. FORWARD-LOOKING STATEMENTS This Prospectus, including the information incorporated by reference herein, information included in, or incorporated by reference from, future filings by the Company with the Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company, contains, or may contain, certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, included or incorporated by reference in this Prospectus and in future filings with the Commission and written and oral statements by the Company and its representatives that address events, developments or financial results that Chiquita expects, believes or estimates will or may occur in the future are forward-looking statements that are intended to be covered by the safe harbor provisions of that Act. These statements reflect management's current views and estimates of future economic circumstances, industry conditions and company performance and are based on many assumptions and factors Chiquita believes are appropriate under the circumstances and speak as of the date made. Such statements are subject to a number of assumptions, risks and uncertainties, including product pricing, costs to purchase or grow (and availability of) fresh produce and other raw materials, currency exchange rate fluctuations, natural disasters and unusual weather conditions, operating efficiencies, labor relations, access to capital, action of governmental bodies, and other market and competitive conditions. Any changes in such assumptions or factors, many of which are beyond the control of Chiquita, could produce materially different outcomes. Some of these risks are described in more detail in "Risk Factors" below. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from the expectations expressed in the forward-looking statements. THE COMPANY Chiquita Brands International, Inc. is a leading international marketer, producer and distributor of bananas and other quality fresh and processed food products sold under the Chiquita and other brand names. In addition to bananas, Chiquita's fresh products include other tropical fruit, such as mangoes, kiwi and citrus, and a wide variety of other fresh produce. Chiquita's operations also include private label and branded canned vegetables and related products; fruit and vegetable juices and beverages; processed bananas; fresh cut and ready-to-eat salads; and edible oil-based consumer products. American Financial Group, Inc. ("AFG") owns, either directly or indirectly through its subsidiaries, approximately 37% of Chiquita's outstanding shares of Common Stock. Approximately 44% of the outstanding stock of AFG is beneficially owned by Carl H. Lindner, members of his family and trusts for their benefit. Chiquita is a New Jersey corporation. The address of its principal executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its telephone number is (513) 784-8000. Unless the context indicates otherwise, the term "Chiquita" also includes Chiquita's subsidiaries. RISK FACTORS In addition to the other information set forth in this Prospectus, prospective investors should carefully consider the following in the context of the more complete disclosure in the Company's 1997 10-K and 1998 10-Q before making an investment in the Shares. Recent Losses. From 1984 to 1991, Chiquita reported a continuous record of growth in annual earnings. In 1992, the Company reported a loss from continuing operations of $222 million that included $61 million of charges to restructure its worldwide banana operations in connection with the announcement of a new quota system for European Union ("EU") banana imports. Operating results for subsequent years are as follows: Period Income (Loss) from Continuing Operations ______ ________________________________________ 1993 ($51) million 1994 ($84) million included charges and losses totaling $67 million resulting primarily from farm closings and banana cultivation write-downs in Honduras following an unusually severe strike and the substantial reduction of Chiquita's Japanese "green" banana trading operations. 1995 $28 million included a $19 million net gain primarily resulting from divestitures of operations, sales of older ships and other actions taken as part of Chiquita's ongoing program to improve shareholder value. 1996 ($28) million included write-downs and costs of $70 million resulting from wide-spread flooding in Costa Rica, Guatemala and Honduras; certain strategic undertakings designed to achieve further long-term reductions in the delivered product cost of Chiquita bananas through the modification of distribution logistics and the wind down of particular production facilities; and certain claims relating to prior EU quota restructuring actions. For 1997, the Company reported net income of $0.3 million. Net income for the quarter ended March 31, 1998 was $41 million compared to net income of $43 million for the first quarter of 1997. The Company's interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full year. At March 31, 1998 the Company's accumulated deficit was $133 million and its total shareholders' equity was $862 million. European Union Banana Regulation. On July 1, 1993, the European Union implemented a quota system effectively restricting the volume of Latin American bananas imported into the EU, which had the effect of decreasing Chiquita's overall volume and market share in Europe. The quota regime is administered through an import licensing system and grants preferred status to producers and importers within the EU and its former colonies, while imposing restrictive quotas and tariffs on bananas imported from other sources, including Latin America, Chiquita's primary source of fruit. Since imposition of the EU quota regime, prices within the EU have increased to a higher level than the levels prevailing prior to the quota. Banana prices in other worldwide markets, however, have been lower than in years prior to the EU quota, as the displaced EU volume has entered those markets. In two separate rulings, General Agreement on Tariffs and Trade ("GATT") panels found the EU banana policies to be illegal. In March 1994, four of the five countries which had initiated GATT complaints, Costa Rica, Colombia, Nicaragua and Venezuela, settled their GATT actions against the EU by entering into a "Framework Agreement" which guaranteed them preferential EU market access for bananas. The Framework Agreement was implemented in 1995 and imposed additional restrictive and discriminatory quotas and export certificate requirements on U.S. banana marketing firms, while leaving EU firms exempt. This significantly increased Chiquita's cost to export bananas. Other developments which have occurred since implementation of the quota system include: * In September 1994, Chiquita and the Hawaii Banana Industry Association made a joint filing with the Office of the U.S. Trade Representative ("USTR") under Section 301 of the U.S. Trade Act of 1974 charging that the EU quota and licensing regime and the Framework Agreement are unreasonable, discriminatory, and a burden and restriction on U.S. commerce. * In January 1995, the U.S. Government announced a preliminary finding against the EU banana import policy and, a year later, the USTR found the banana Framework Agreement export policies to be unfair. * In September 1995, the United States, Guatemala, Honduras and Mexico commenced a challenge against the EU quota regime using the procedures of the World Trade Organization ("WTO"). Ecuador, the world's largest exporter of bananas, joined these countries in filing a new WTO action in February 1996. * In May 1997, a WTO arbitration panel issued a report ruling that the licensing and quota systems under the EU quota regime and the Framework Agreement violate numerous international trade obligations to the detriment of Latin American supplying countries and U.S. marketing firms such as Chiquita. The panel recommended that the WTO request the EU to conform its import regime for bananas to these trade obligations. * In June 1997, the EU appealed the WTO panel report. In September 1997, the WTO Appellate Body upheld the panel's report and the full WTO body later adopted both the panel and Appellate Body reports. * In January 1998, a WTO arbitrator ruled that the EU must fully implement banana policies consistent with the WTO report findings not later than January 1, 1999. * In January 1998, the EU governing commission proposed a new quota and license regime for review and possible implementation by the EU. The five governments which filed the WTO complaint, joined by Panama which has recently become a WTO member and initiated its own challenge to the quota and Framework Agreement, have all indicated that they do not believe the current EU proposal complies with the WTO findings. * In March 1998, in a separate proceeding brought by Germany against the EU, the European Court of Justice ruled that the Framework Agreement's exemption of EU marketing firms from the requirement to obtain export certificates for bananas from Costa Rica, Colombia, Nicaragua and Venezuela was discriminatory and violated applicable EU law. The EU no longer requires these export certificates from any marketing firms. If the EU fails to comply with the WTO rulings by January 1, 1999, the WTO authorizes the injured governments to engage in retaliatory trade measures, such as tariffs or withdrawal of trade concessions, against the EU. However, there can be no assurance as to the results of the WTO proceedings, the nature and extent of actions that may be taken by the affected countries or the impact on the EU quota regime or the Framework Agreement. Leverage. As of March 31, 1998 Chiquita and its subsidiaries had short-term notes and loans payable of $87 million and long-term debt (including current maturities) of approximately $1.1 billion; the percentage of total debt to total capitalization for Chiquita was 57%. As of March 31, 1998, long-term debt maturities for the remainder of 1998 and the years 1999 through 2002 are $37 million, $68 million, $95 million, $166 million and $34 million, respectively. Subsidiaries. Most of Chiquita's operations are conducted through its subsidiaries and Chiquita is therefore dependent on the cash flow of its subsidiaries to meet its obligations. The claims of holders of Chiquita Common Stock will be subordinate to any existing and future obligations of Chiquita and will be structurally subordinated to any existing and future obligations (whether or not for borrowed money) of its subsidiaries, many of which have direct obligations to lenders and other third-party creditors. As of March 31, 1998, the total debt of Chiquita's subsidiaries aggregated $424 million, of which $235 million represented non-recourse long-term debt of Chiquita's shipping subsidiaries secured by ships and related equipment and $37 million represented short-term notes and loans payable. Competition and Pricing. Approximately 60% of Chiquita's 1997 consolidated net sales were attributable to the sale of bananas. Banana marketing in international trade is highly competitive. While smaller companies, including growers' cooperatives, are a competitive factor, Chiquita's primary competitors are a limited number of other international banana importers and exporters. Chiquita has been able to obtain a premium price for its bananas due to its reputation for quality and its innovative ripening and marketing techniques. In order to compete successfully, Chiquita must be able to source bananas of uniformly high quality and, on a timely basis, transport and distribute them to worldwide markets. Bananas are highly perishable and must be brought to market and sold generally within 60 days after harvest. Therefore, the selling price which an importer receives for bananas depends on several factors, including: the availability of bananas and other fruit in each market; the relative quality of competing fruit; and wholesaler and retailer acceptance of bananas offered by competing importers. Excess supplies may result in increased price competition. Profit margins on sales may also be significantly affected by fluctuations in currency exchange rates. Competition in the sale of bananas also comes from other fresh fruit, which may be seasonal in nature. The resulting seasonal variations in demand cause banana pricing to be seasonal, with the first six months of the calendar year being the stronger period. Chiquita's vegetable canning business competes directly with a few major producers of both branded and private-label canned vegetables, as well as indirectly with numerous marketers of frozen and fresh vegetable products. Adverse Weather Conditions and Crop Disease. Bananas are vulnerable to adverse local weather conditions, which are quite common but difficult to predict, and to crop disease. These factors may result in lower sales volume and increased costs, but may also restrict worldwide supplies and lead to increased prices for bananas. However, competitors may be affected differently, depending upon their ability to obtain adequate supplies from sources in other geographic areas. Chiquita has a greater number and geographic diversity of major sources of bananas than any of its competitors. During 1997, approximately one-fourth of all bananas sold by Chiquita were sourced from each of Panama and Costa Rica. Bananas are sourced from numerous other countries, including Colombia, Ecuador, Guatemala and Honduras which comprised 6% to 13% (depending on the country) of bananas sold by Chiquita during 1997. The vegetable processing industry is affected by the availability of product supply, which correlates to plantings, growing conditions, crop yields and inventories, all of which may vary from year to year. Labor Relations. Chiquita employs approximately 40,000 employees. Approximately 31,000 of these employees are employed in Central and South America, including 25,000 workers covered by approximately 65 labor contracts. Approximately 40 contracts covering approximately 15,000 employees are currently being renegotiated or expire during 1998. Strikes or other labor-related actions are sometimes encountered upon expiration of labor contracts or during the term of the contracts. Other Risks of International Operations. Chiquita's operations are heavily dependent upon products grown and purchased in Central and South American countries; at the same time, Chiquita's operations are a significant factor in the economies of many of these countries. These activities are subject to risks that are inherent in operating in these countries, including government regulation, currency restrictions and other restraints, risks of expropriation and burdensome taxes. There is also a risk that legal or regulatory requirements will be changed or that administrative policies will change. Certain of these activities are substantially dependent upon leases and other agreements with the governments of these countries. Chiquita's overall risk from these factors, as well as from political changes, is reduced by the large number and geographic diversity of its sources of bananas. Chiquita's worldwide operations and products are subject to numerous governmental regulations and inspections by environmental, food safety and health authorities. Although Chiquita believes it is substantially in compliance with such regulations, actions by regulators have in the past required, and in the future may require, operational modifications or capital improvements at various locations or the payment of fines and penalties, or both. Shares Available for Future Sale. No prediction can be made as to the effect, if any, that future sales of shares of Common Stock, or the availability of such shares for future sales, will have on the market price prevailing from time to time of Common Stock. Sales of substantial amounts of Common Stock, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Stock. At June 26, 1998, there were outstanding 65,337,341 shares of Common Stock, including 23,996,295 shares held, directly or indirectly, by AFG. The outstanding shares include approximately 1.3 million shares privately issued in September 1997 in connection with the acquisition of the Owatonna Canning group of companies. These shares may be sold pursuant to Rule 144 under the Securities Act after September 23, 1998. USE OF PROCEEDS The Company will not receive any proceeds from the sale of the Shares by the Selling Shareholder. However, under certain circumstances, the Company may repurchase some or all of the Shares, in which case, the Company expects to retire them. SELLING SHAREHOLDER The following information regarding the Shares offered hereby has been provided to the Company by Campbell Investment Company, a Delaware corporation (the "Selling Shareholder"), and reflects information concerning beneficial ownership of Common Stock as of the date of this Prospectus. The Selling Shareholder is a wholly-owned subsidiary of Campbell Soup Company and an affiliate of the former shareholder of Campbell Mushrooms Pty Limited and Campbell Mushrooms Centre Pty Limited (collectively the "Australian Mushroom Companies"). The Selling Shareholder received the Shares in connection with the acquisition by Chiquita's Australian subsidiary of all of the outstanding capital stock of the Australian Mushroom Companies on June 26, 1998. The Selling Shareholder owns 873,710 shares of Common Stock, which constitute the Shares. The Selling Shareholder is offering up to 873,710 shares pursuant to this Registration Statement and, assuming the sale of all of such Shares, will hold no shares of Common Stock following such sales. PLAN OF DISTRIBUTION The Shares may be sold from time to time by or for the account of the Selling Shareholder directly to purchasers, to or through broker-dealers or through a combination of these methods. Sales by means of this Prospectus may be made privately at prices to be individually negotiated with the purchasers or publicly through transactions on the New York Stock Exchange, other exchanges or in the over-the-counter market, including block trades, at prices reasonably related to market prices at the time of sale or at negotiated prices. Broker-dealers participating in such transactions may act as agent or as principal and may receive commissions from the purchasers as well as from the Selling Shareholder. The Selling Shareholder may elect to engage an underwriter to sell the Shares being offered by them. There can be no assurance that the Selling Shareholder will sell all or any of the Shares offered by it. All expenses relating to the registration of the Shares, other than fees and expenses of counsel, accountants or other consultants to the Selling Shareholder, will be paid, directly or indirectly, by the Company. The Selling Shareholder and any brokers or dealers acting in connection with the sale of the Shares hereunder may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by them and any profit realized by them on the resale of Shares as principals may be deemed underwriting compensation under the Securities Act. The Company has agreed with the Selling Shareholder, subject to certain exceptions, to keep the Registration Statement covering the Shares effective until the earlier of (i) four months after the date of initial issuance of the Shares or (ii) the date on which all Shares have been sold by the Selling Shareholder pursuant to the Registration Statement. LEGAL MATTERS The validity of the Shares offered hereby has been passed upon by Robert W. Olson. Mr. Olson, Senior Vice President, General Counsel and Secretary of Chiquita, presently holds shares of Common Stock in the Company's Savings and Investment (401(k)) Plan as well as employee stock options to purchase additional shares of Common Stock and restricted stock awards. EXPERTS The consolidated financial statements of Chiquita Brands International, Inc. appearing (or incorporated by reference) in its Annual Report (Form 10-K) for the year ended December 31, 1997 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included (or incorporated by reference) therein and incorporated herein by reference. The financial statements of Stokely USA, Inc. for the years ended March 31, 1997, 1996 and 1995, incorporated by reference into Chiquita's Current Report on Form 8-K dated January 16, 1998, have been audited by Deloitte & Touche LLP, independent auditors, as set forth in their report thereon incorporated therein and herein by reference. Such Chiquita consolidated financial statements and Stokely USA, Inc. consolidated financial statements are incorporated herein by reference in reliance upon such reports given upon the authority of such firms as experts in accounting and auditing. -----END PRIVACY-ENHANCED MESSAGE-----