-----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, M+45xMFvmPiL2GPaWuHa6wI1Lvp5irlgev0ULiKFYW9EwfLtdfqrRqgYv+7Sy5Jq sy3NEKW8Hg+echC1Dla/kQ== 0000950152-96-003379.txt : 19960710 0000950152-96-003379.hdr.sgml : 19960710 ACCESSION NUMBER: 0000950152-96-003379 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960709 SROS: NYSE 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: 424B5 SEC ACT: 1933 Act SEC FILE NUMBER: 333-00789 FILM NUMBER: 96592476 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 424B5 1 CHIQUITA 424(B)(5) 1 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION. A FINAL PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS WILL BE DELIVERED TO PURCHASERS. THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JULY 5, 1996 PROSPECTUS SUPPLEMENT (To Prospectus dated May 1, 1996) $125,000,000 CHIQUITA BRANDS INTERNATIONAL, INC. [LOGO] % SENIOR NOTES DUE 2006 --------------------------- INTEREST PAYABLE MAY 1 AND NOVEMBER 1 --------------------------- Chiquita Brands International, Inc. ("Chiquita" or the "Company") is offering (the "Offering") $125,000,000 aggregate principal amount of % Senior Notes due 2006 (the "Senior Notes"). Interest on the Senior Notes is payable semiannually on May 1 and November 1 each year commencing November 1, 1996. The Senior Notes will be redeemable at the option of the Company in whole or in part, at any time on or after November 1, 2001, at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. The Senior Notes will not be subject to any sinking fund. Each holder of Senior Notes may require the Company to repurchase such holder's Senior Notes in the event of a Change of Control Triggering Event (as defined) at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. The Senior Notes will be general unsecured obligations of the Company and will rank pari passu with the Company's existing and future senior unsecured Indebtedness (as defined). The Senior Notes are structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which Indebtedness totalled approximately $552 million at March 31, 1996. Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Preferred Stock Offering") of 2,000,000 shares of $ convertible preferred stock with a liquidation preference of $50.00 per share (the "Preferred Stock"). The Offering is not contingent upon the consummation of the Preferred Stock Offering. See "Use of Proceeds." --------------------------- SEE "RISK FACTORS" BEGINNING ON PAGE 3 IN THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SENIOR NOTES. --------------------------- 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 SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------
Underwriting Price to Discounts Proceeds to Public(1) and Commissions(2) Company(1)(3) - ------------------------------------------------------------------------------------------------ Per Senior Note.................. % % % - ------------------------------------------------------------------------------------------------ Total............................ $ $ $ - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from July , 1996. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3) Before deducting expenses of the Company estimated at $ . --------------------------- The Senior Notes offered by this Prospectus Supplement are offered by the Underwriters subject to prior sale, withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the Underwriters and to certain further conditions. It is expected that delivery of the Senior Notes will be made through the facilities of The Depository Trust Company on or about July , 1996. --------------------------- LEHMAN BROTHERS BEAR, STEARNS & CO. INC. FURMAN SELZ JULY , 1996 2 PROSPECTUS SUPPLEMENT SUMMARY The following summary is qualified in its entirety by the detailed information and the financial statements appearing elsewhere in this Prospectus Supplement or incorporated by reference in the accompanying Prospectus. 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, these products include other tropical fruit, such as mangoes, kiwi and citrus, and a wide variety of other fresh produce. The Company's operations also include fruit and vegetable juices and beverages; processed bananas and other processed fruits and vegetables; fresh cut and ready-to-eat salads; and edible oil-based consumer products. American Financial Group, Inc. ("AFG") owns, either directly or through its subsidiaries, approximately 43% of Chiquita's outstanding shares of Common Stock. Approximately 44% of the outstanding common stock of AFG is 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" or the "Company" also includes the subsidiaries of the Company. IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 3 THE OFFERING Securities Offered......... $125,000,000 aggregate principal amount of % Senior Notes due 2006 (the "Senior Notes"). Maturity................... November 1, 2006. Interest Payment Dates..... May 1 and November 1, commencing November 1, 1996. Ranking.................... The Senior Notes will be general unsecured obligations of the Company and will rank pari passu with the Company's existing and future senior unsecured Indebtedness. The Senior Notes are structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which indebtedness totalled approximately $552 million at March 31, 1996. Optional Redemption........ The Senior Notes will be redeemable, in whole or in part, at the option of the Company at any time on or after November 1, 2001 at the redemption prices set forth herein plus accrued and unpaid interest, if any, to the date of redemption. See "Description of Senior Notes -- Optional Redemption." Certain Covenants.......... The Indenture relating to the Senior Notes restricts, among other things, the ability of the Company and its subsidiaries, subject to certain exceptions, to (i) incur additional Indebtedness, (ii) create certain Liens, (iii) engage in sale and leaseback transactions, (iv) make Restricted Payments, (v) engage in transactions with Related Persons and (vi) merge or consolidate with or transfer all or substantially all of its assets to another entity. Change of Control.......... If a Change of Control Triggering Event (as defined) occurs at any time, each holder of Senior Notes will have the right to require the Company to purchase such holder's Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. See "Description of Senior Notes." Concurrent Offering........ Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Preferred Stock Offering") of 2,000,000 shares of $ convertible preferred stock with a liquidation preference of $50.00 per share. The Offering is not contingent upon the consummation of the Preferred Stock Offering. Use of Proceeds............ The net proceeds from the sale of the Senior Notes offered hereby are expected to be approximately $ . The net proceeds from the Preferred Stock Offering are expected to be approximately $ . The net proceeds from these offerings will be used primarily to repay outstanding debt of the Company and its subsidiaries, as well as for general corporate purposes. Pending application of the net proceeds from these offerings as described herein, such net proceeds may be invested in short-term investments or used for general corporate purposes. See "Use of Proceeds." S-3 4 SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data set forth below for the years ended December 31, 1991 through 1995 were derived from the Company's audited consolidated financial statements. Information presented below for interim periods was derived from the Company's unaudited consolidated financial statements and in the opinion of management includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations for the interim periods. This information should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto and "Management's Analysis of Operations and Financial Condition" included or incorporated by reference in the Company's Reports on Forms 10-K and 10-Q for such periods. Interim results are subject to significant seasonal variations and are not necessarily indicative of the results of operations for a full fiscal year.
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, ------------------------- ---------------------------------------- 1996 1995 1995 1994 1993 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME STATEMENT DATA: Net sales........................................ $ 624,806 $ 674,269 $2,565,992 $2,505,826 $2,532,925 Operating expenses Cost of sales.................................. 471,999 495,995 1,958,063 1,996,179 1,993,552 Selling, general and administrative expenses... 73,235 77,403 333,537 331,498 332,934 Depreciation................................... 21,711 24,651 98,622 106,964 102,591 Restructuring and reorganization............... -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- 566,945 598,049 2,390,222 2,434,641 2,429,077 ---------- ---------- ---------- ---------- ---------- Operating income (loss)1....................... 57,861 76,220 175,770 71,185 103,848 Interest income.................................. 7,340 6,670 28,157 22,902 20,377 Interest expense................................. (35,167) (41,417) (163,513) (167,464) (169,789) Other income (expense), net...................... 194 426 1,455 2,566 6,483 ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations before income taxes.......................... 30,228 41,899 41,869 (70,811) (39,081) Income taxes..................................... (6,000) (8,300) (13,900) (13,500) (12,000) ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations....... 24,228 33,599 27,969 (84,311) (51,081) Discontinued operations2......................... -- 4,029 (11,197) 35,611 -- ---------- ---------- ---------- ---------- ---------- Income (loss) before extraordinary item........ 24,228 37,628 16,772 (48,700) (51,081) Extraordinary loss from debt refinancing......... -- -- (7,560) (22,840) -- ---------- ---------- ---------- ---------- ---------- Net income (loss)................................ $ 24,228 $ 37,628 $ 9,212 $ (71,540) $ (51,081) ========== ========== ========== ========== ========== Fully diluted earnings (loss) per common share: Continuing operations.......................... $ .38 $ .55 $ .37 $ (1.76) $ (.99) Discontinued operations2....................... -- .07 (.21) .69 -- Extraordinary item............................. -- -- (.14) (.44) -- ---------- ---------- ---------- ---------- ---------- Net income (loss).............................. $ .38 $ .62 $ .02 $ (1.51) $ (.99) ========== ========== ========== ========== ========== Ratio of earnings to fixed charges3.............. 1.71 1.78 1.20 --3 --3 Ratio of earnings to combined fixed charges and preferred stock dividends3..................... 1.63 1.68 1.16 --3 --3 BALANCE SHEET DATA: Cash and marketable securities4................ $ 243,679 $ 125,079 $ 271,418 $ 165,523 $ 151,226 Working capital................................ 400,071 258,095 366,893 230,434 266,793 Total assets................................... 2,594,978 2,744,564 2,623,533 2,774,239 2,722,824 Short-term debt................................ 157,246 200,073 172,333 221,051 192,207 Long-term debt4................................ 1,235,739 1,355,910 1,242,046 1,364,836 1,438,378 Shareholders' equity........................... 695,533 682,800 672,207 644,809 584,069 OTHER DATA: Operating income (loss) plus depreciation and amortization1................................ $ 81,006 $ 102,369 $ 280,351 $ 184,265 $ 213,559 Capital expenditures5.......................... 12,255 15,506 64,640 136,981 196,554 Dividends declared per common share............ .05 .05 .20 .20 .44 1992 1991 ---------- ---------- INCOME STATEMENT DATA: Net sales........................................ $2,723,250 $2,604,128 Operating expenses Cost of sales.................................. 2,309,425 2,027,669 Selling, general and administrative expenses... 368,675 324,240 Depreciation................................... 80,438 54,401 Restructuring and reorganization............... 61,300 -- ---------- ---------- 2,819,838 2,406,310 ---------- ---------- Operating income (loss)1....................... (96,588) 197,818 Interest income.................................. 43,301 47,319 Interest expense................................. (155,036) (88,406) Other income (expense), net...................... (8,385) 3,278 ---------- ---------- Income (loss) from continuing operations before income taxes.......................... (216,708) 160,009 Income taxes..................................... (5,000) (49,100) ---------- ---------- Income (loss) from continuing operations....... (221,708) 110,909 Discontinued operations2......................... (62,332) 17,586 ---------- ---------- Income (loss) before extraordinary item........ (284,040) 128,495 Extraordinary loss from debt refinancing......... -- -- ---------- ---------- Net income (loss)................................ $ (284,040) $ 128,495 ========== ========== Fully diluted earnings (loss) per common share: Continuing operations.......................... $ (4.28) $ 2.19 Discontinued operations2....................... (1.20) .33 Extraordinary item............................. -- -- ---------- ---------- Net income (loss).............................. $ (5.48) $ 2.52 ========== ========== Ratio of earnings to fixed charges3.............. --3 1.73 Ratio of earnings to combined fixed charges and preferred stock dividends3..................... --3 1.73 BALANCE SHEET DATA: Cash and marketable securities4................ $ 413,181 $ 825,447 Working capital................................ 482,338 960,093 Total assets................................... 2,873,699 2,937,344 Short-term debt................................ 229,286 187,821 Long-term debt4................................ 1,411,319 1,202,839 Shareholders' equity........................... 667,962 967,925 OTHER DATA: Operating income (loss) plus depreciation and amortization1................................ $ (9,079) $ 258,076 Capital expenditures5.......................... 472,273 395,641 Dividends declared per common share............ .66 .55
- --------------- 1 Includes the following unusual items: write-downs and costs of $12 million in the quarter ended March 31, 1996 resulting from damage to banana producing assets caused by industry-wide flooding in Costa Rica; a net gain of $19 million in fiscal 1995 resulting primarily from divestitures of operations and sales of older ships; charges and losses of $67 million in 1994 resulting primarily from farm closings and write-downs of banana cultivations following a strike in Honduras and the substantial reduction of the Company's Japanese "green" banana trading operations; and restructuring and reorganization charges of $61 million in 1992. 2 Includes net operating results (and, in 1992, provision for loss on disposal) of the Company's Meat Division operations, which were sold in December 1995. See Note 2 to the Company's Consolidated Financial Statements for the year ended December 31, 1995. 3 For purposes of calculating the ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends, earnings are calculated as the sum of the income (loss) from continuing operations before income taxes, fixed charges (other than capitalized interest) and amortization of capitalized interest, less undistributed earnings of less-than-fifty percent owned investees. Fixed charges consist of interest on indebtedness (including capitalized interest and amortization of debt discount) and a portion of rent considered to represent interest cost. Fixed charges exceeded earnings by approximately $75 million, $45 million and $239 million for the years ended December 31, 1994, 1993 and 1992, respectively. Combined fixed charges and preferred stock dividends exceeded earnings by approximately $86 million, $49 million and $239 million for the years ended December 31, 1994, 1993 and 1992, respectively. 4 Long-term debt includes approximately $66 million of 10 1/2% subordinated debentures due 2004 (approximately $60 million net book value at March 31, 1996) which were called for redemption (at par) and defeased during the quarter ended June 30, 1996. This reduced cash and marketable securities by approximately $66 million. 5 Includes capital expenditures in connection with the acquisition of ships and containers of approximately $70 million in 1994, $120 million in 1993, $280 million in 1992 and $180 million in 1991. S-4 5 RECENT DEVELOPMENTS EUROPEAN UNION BANANA REGULATION In connection with the international trade action pending in the World Trade Organization ("WTO") filed by the United States, Ecuador, Guatemala, Honduras and Mexico challenging the European Union ("EU") banana quota and licensing regime and Framework Agreement (see "Risk Factors -- European Union Banana Regulation" in the accompanying prospectus), the WTO panel that will hear the case has now been selected and a timetable established, which calls on the panel to issue its ruling by January 28, 1997. Following any ruling by the WTO panel, certain appeal procedures are available that could extend by a few months the time before the ruling is final. Thereafter, the parties have a limited period of time to implement the ruling. There can be no assurance as to the results of the WTO proceeding. FIRST QUARTER RESULTS OF OPERATIONS Net sales for the first quarter of 1996 of $625 million decreased 7% from the comparable prior year amount of $674 million primarily as a result of the sale of the Costa Rican operations of the Company's Numar edible oils group and other non-core operations in 1995. Income from continuing operations before income taxes was $30 million in the first quarter of 1996 compared to $42 million in 1995. The 1996 amount includes write-downs and costs of $12 million resulting from damage to the Company's banana producing assets caused by industry-wide flooding in Costa Rica during the quarter. The elimination of earnings from Numar and other divested operations was offset by reduced net interest expense resulting from sales of non-core assets as well as the Company's refinancing and deleveraging program. Banana operating results for the first quarter, excluding flood-related charges, were comparable to the prior year. The effect of lower banana prices in the EU and higher costs caused by the banana Framework Agreement, which was not fully implemented until the second quarter of 1995, was offset by benefits from the Company's overall cost reduction program. The lower EU pricing resulted primarily from the carryover into early 1996 of the overissuance of special import licenses to European-based banana companies under the pretext of relief from hurricane damage sustained in the Caribbean in 1995. Net income for the first quarter of 1996 was $24.2 million, or $.38 per share. In 1995, first quarter net income was $37.6 million, or $.62 per share, which included $4.0 million, or $.07 per share, of income from the Company's discontinued meat business. OTHER In June 1996, the Company called for redemption (at par) and defeased its 10 1/2% subordinated debentures due 2004 having an aggregate outstanding principal amount of approximately $66 million (approximately $60 million after deducting unamortized discount). In 1993, Great White Fleet Ltd., the Company's shipping subsidiary ("GWF"), redelivered three cargo ships to RSG Reefer Services GmbH ("RSG"), in reliance on the force majeure provisions of the applicable contract of affreightment with RSG, due to the imposition of the EU banana quota and licensing regime referred to above. In 1994, RSG commenced an arbitration proceeding in London, England disputing the occurrence of a force majeure event and seeking damages from GWF. A hearing on the merits was held in May and June of 1996 during which RSG claimed it suffered damages in the range of $16 million to $20 million. The parties are awaiting the arbitrators' decision. Although the outcome of this proceeding cannot be predicted, the Company's management believes, based on advice of counsel, that GWF was contractually entitled to redeliver the ships and that RSG's damage claim is exaggerated. S-5 6 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Senior Notes offered hereby will be approximately $ . The net proceeds to be received by the Company from the Preferred Stock Offering (if such offering is consummated) will be approximately $ . The net proceeds from these offerings will be used primarily to repay outstanding debt of the Company and its subsidiaries, as well as for general corporate purposes. The Company will determine which debt to repay with the net proceeds from the Offering and the Preferred Stock Offering based on factors including, without limitation, prevailing market interest rates, redemption prices, maturities and other terms of the debt. Pending application of the net proceeds from such offerings as described herein, such net proceeds may be invested in short-term investments or used for general corporate purposes. S-6 7 CAPITALIZATION The following table sets forth the unaudited consolidated capitalization of the Company at March 31, 1996 and as adjusted to give effect to (i) the application of the aggregate proceeds from the sale of the Senior Notes offered hereby and the issuance of the Preferred Stock (assuming no exercise of the over-allotment option provided for therein), and (ii) the repayment of the Company's 10 1/2% subordinated debentures due 2004, which were called for redemption and defeased in June 1996. The table assumes that all of the net proceeds of the offerings of the Senior Notes and Preferred Stock are used to repay subordinated debt of the Company and outstanding debt of its subsidiaries. See "Use of Proceeds." The table excludes (a) the effect of any loss which might result from early retirement of any of the Company's existing debt (other than the write-off of approximately $5 million of unamortized discount on the 10 1/2% subordinated debentures due 2004) and (b) fees and expenses associated with the offerings of the Senior Notes and the Preferred Stock. Such loss, fees and expenses would not be material to the Company's total shareholders' equity. The table should be read in conjunction with "Selected Consolidated Financial Data" appearing elsewhere in this Prospectus Supplement and the Company's Consolidated Financial Statements and notes thereto.
MARCH 31, 1996 -------------------------- ACTUAL AS ADJUSTED ---------- ----------- (DOLLARS IN THOUSANDS) Short-term debt: Notes and loans payable....................................... $ 107,370 $ 107,370 Long-term debt due within one year............................ 49,876 49,876 ---------- -------- Total short-term debt................................. $ 157,246 $ 157,246 ========== ======== Long-term debt: Long-term debt of parent company 9 1/8% senior notes due 2004(a)............................ $ 175,000 $ 175,000 9 5/8% senior notes due 2004, less unamortized discount of $2,389 (imputed interest rate of 9.8%)(a)................ 247,611 247,611 % Senior Notes due 2006 offered hereby................... -- 125,000 7% subordinated debentures, due 2001, convertible into capital stock at $43 per share(a)........................ 138,000 (b) 10 1/2% subordinated debentures, due 2004, less unamortized discount of $5,363 (imputed interest rate of 12.1%)...... 60,456 -- 11 1/2% subordinated notes, due 2001(a).................... 220,000 (b) Long-term debt of subsidiaries(c)............................. 394,672 (b) ---------- -------- Total long-term debt.................................. 1,235,739 1,075,283 ---------- -------- Shareholders' equity: Series A Preferred Stock (2,875,000 shares outstanding)....... 138,369 138,369 Series B Preferred Stock offered in the Preferred Stock Offering (2,000,000 shares)......................................... -- 100,000 Capital stock, $.33 par value per share (55,234,823 shares outstanding)(d)........................ 18,412 18,412 Capital surplus............................................... 584,786 584,786 Accumulated deficit........................................... (46,034) (51,397) ---------- -------- Total shareholders' equity............................ 695,533 790,170 ---------- -------- Total long-term capitalization........................ $1,931,272 $ 1,865,453 ========== ======== - --------------- (a) The 9 1/8% senior notes and the 9 5/8% senior notes are not redeemable. The 11 1/2% subordinated notes are currently redeemable at 105.7% of par and the 7% subordinated convertible debentures are currently redeemable at par. (b) The proceeds from the sale of the Senior Notes and the issuance of the Preferred Stock will be used primarily to repay debt of the Company and its subsidiaries. To the extent that such proceeds are not used for such repayments they will be used for general corporate purposes and, in any event, until such application, will increase the Company's cash and marketable securities. See "Use of Proceeds." As of March 31, 1996, the Company had $243.7 million of cash and marketable securities ($177.9 million after giving effect to the redemption at par of the 10 1/2% subordinated debentures). (c) See Note 6 to the Company's Consolidated Financial Statements for the year ended December 31, 1995 for discussion of operating lease commitments for ships and other facilities. (d) Excludes approximately 12.3 million shares of Common Stock reserved at March 31, 1996 for issuance in connection with options (consisting of approximately 2.6 million shares issuable under currently exercisable options, approximately 4.7 million shares that may be issued under options not currently exercisable, and approximately 5.0 million shares available for future grant) and approximately 2.4 million shares reserved at March 31, 1996 for purchase or Company contributions under other employee benefit plans. See Notes 10 and 11 to the Company's Consolidated Financial Statements for the year ended December 31, 1995. Also excludes approximately 3.2 million shares reserved for issuance upon conversion of the Company's 7% Convertible Subordinated Debentures due 2001, approximately 28.7 million shares reserved for issuance upon conversion of the Series A Preferred Stock and 20 million shares to be reserved for issuance upon conversion of the Series B Preferred Stock (assuming no exercise of the over-allotment option).
S-7 8 DESCRIPTION OF SENIOR NOTES The following description of the particular terms of the Senior Notes offered hereby (referred to in the Prospectus as "Senior Debt Securities") supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of Senior Debt Securities set forth in the Prospectus, to which description reference is hereby made. GENERAL The % Senior Notes due 2006 (the "Senior Notes") are to be issued as a series of Senior Debt Securities under the Indenture, dated as of February 15, 1994, as supplemented to date, between the Company and The Fifth Third Bank, as Trustee (the "Trustee"), which is also described in the accompanying Prospectus. The following statements are summaries of certain provisions that will be contained in the second supplemental indenture to be dated as of July , 1996 to the Indenture and the certificate of terms of the Senior Notes to be adopted pursuant to the provisions of, and incorporated into, the Indenture. These statements do not purport to be complete and are qualified in their entirety by reference to the second supplemental indenture and the certificate of terms, copies of the forms of which will be filed as exhibits to the Company's Current Report on Form 8-K dated July , 1996, which will be incorporated by reference in the accompanying Prospectus. The Senior Notes will be general unsecured obligations of the Company and will rank pari passu with the Company's existing and future senior unsecured Indebtedness. The Senior Notes are structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which Indebtedness totalled approximately $552 million at March 31, 1996. The Senior Notes will be limited to $125,000,000 aggregate principal amount and will mature on November 1, 2006. The Senior Notes will bear interest at the rate per annum shown on the cover of this Prospectus Supplement from July , 1996 or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semi-annually on May 1 and November 1 of each year, commencing November 1, 1996, to the person in whose name a Senior Note (or any predecessor Senior Note) is registered at the close of business on the April 15 or October 15, as the case may be, next preceding such Interest Payment Date. The Senior Notes will be issued only in fully registered form in denominations of $1,000 and integral multiples thereof. OPTIONAL REDEMPTION The Senior Notes will not be redeemable at the Company's option prior to November 1, 2001. Thereafter, the Senior Notes will be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon to but not including the applicable redemption date, if redeemed during the twelve-month period beginning on November 1 of the years indicated below:
YEAR PERCENTAGE ------------------------------------------------------------------ ---------- 2001.............................................................. % 2002.............................................................. % 2003.............................................................. % 2004 and thereafter............................................... 100.000%
The Senior Notes will not be subject to any sinking fund payment obligations. S-8 9 CERTAIN DEFINITIONS Set forth below is a summary of certain defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms and for the definitions of other defined terms used in this Prospectus Supplement and not defined below. "Acquired Indebtedness" means Indebtedness of a Person (i) existing at the time such Person becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets of such Person. "Adjusted Consolidated Assets" on any date means the amount of (i) all assets of the Company and the Subsidiaries on a consolidated basis less (ii) all Indebtedness of Subsidiaries on a consolidated basis, in each case as determined as of the last day of the immediately preceding fiscal quarter in accordance with GAAP. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Change of Control" means an event or series of events by which (i) any "person" (as such term is used in Sections 13 (d) and 14 (d) of the Exchange Act) other than Permitted Lindner Holders is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 40% of the total voting power of all classes of capital stock then outstanding of the Company normally entitled to vote in elections of directors ("Voting Shares"), provided that the Permitted Lindner Holders "beneficially own" (as so defined) a lesser percentage of the Voting Shares than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company; (ii) the Company consolidates with or merges into another corporation or conveys, transfers or leases all or substantially all of its assets to any person, or any corporation consolidates with or merges into the Company, in either event pursuant to a transaction in which the outstanding Voting Shares of the Company are changed into or exchanged for cash, securities or other property, other than any such transaction between the Company and a wholly-owned Subsidiary; (iii) the Company or any Subsidiary purchases or otherwise acquires, directly or indirectly, beneficial ownership of 30% or more of the Company's capital stock within any 12-month period; (iv) on any date, the individuals who at the beginning of the two-year period immediately preceding such date constituted the Company's Board of Directors (together with any new directors whose election by the Company's Board of Directors, or whose nomination for election by the Company's shareholders, was approved by a vote of at least 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; or (v) on any day (a "Calculation Date") the Company makes any distribution or distributions of cash, property or securities (other than regular quarterly dividends, Common Stock, preferred stock which is substantially equivalent to Common Stock or rights to acquire such stock) to holders of capital stock of the Company or purchases or otherwise acquires capital stock (other than upon the conversion of a security convertible into capital stock) of the Company and the sum of the Fair Market Value of such distribution or purchase, plus the Fair Market Value of all other such distributions and purchases which have occurred during the preceding 12-month period, exceeds 30% of the Fair Market Value of the Company's outstanding capital stock. This percentage is calculated on each Calculation Date by determining the percentage of the Fair Market Value of the Company's outstanding Common Stock as of such Calculation Date which is represented by the Fair Market Value of the distributions and purchases which have occurred on such date and adding to that percentage all of the percentages which have been similarly calculated on the dates of all such distributions and purchases during the preceding 12-month period. "Change of Control Triggering Event" means the occurrence of both a Change of Control and a Rating Decline. S-9 10 "Consolidated Interest Expense" means for any period the sum of (i) the aggregate of the interest expense on Indebtedness of the Company and its Subsidiaries for such period, on a consolidated basis, plus (ii) without duplication, that portion of capital lease rentals of the Company and its Subsidiaries representative of the interest factor for such period, in each case as determined in accordance with GAAP. "Consolidated Net Income" means for any period the net income or loss of the Company and its Subsidiaries for such period on a consolidated basis as determined in accordance with GAAP adjusted by excluding the after-tax effect of (i) net gains or losses in respect of dispositions of assets other than in the ordinary course of business, (ii) any gains or losses from currency exchange transactions not in the ordinary course of business consistent with past practice, (iii) the net income of any Subsidiary to the extent that dividends or distributions by such Subsidiary in the amount of such net income are restricted or prohibited and (iv) any gains or losses attributable to write-ups or write-downs of assets or liabilities other than in the ordinary course of business. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person and its Subsidiaries, as determined in accordance with GAAP. "Consolidated Tax Expense" of the Company means for any period the aggregate of the federal, state, local and foreign income tax expense of the Company and its consolidated Subsidiaries for such period, determined in accordance with GAAP. "Fixed Charge Coverage Ratio" means for any period the ratio of (i) the sum of Consolidated Net Income, Consolidated Interest Expense and Consolidated Tax Expense, plus all depreciation and, without duplication, all amortization, in each case, for such period, of the Company and its Subsidiaries on a consolidated basis, all as determined in accordance with GAAP, to (ii) Consolidated Interest Expense for such period; PROVIDED, HOWEVER, that in making such computation, the Consolidated Interest Expense attributable to interest on any Indebtedness computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period. "Food-Related Businesses" means businesses or operations involving food or food products, including, without limitation, sourcing, processing, transportation, shipping and distribution, and related assets and infrastructure. "GAAP" means generally accepted accounting principles as in effect and as implemented by the Company on the date of the Indenture. "Indebtedness" means (i) any liability of any Person (A) for borrowed money, or under any reimbursement obligation relating to a letter of credit (other than letters of credit obtained in the ordinary course of business), or (B) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any businesses, properties or assets of any kind or with services incurred in connection with capital expenditures (other than accounts payable or other Indebtedness to trade creditors arising in the ordinary course of business), or (C) for the payment of money relating to a Capitalized Lease Obligation; (ii) any liability of others described in the preceding clause (i) that the Person has guaranteed or that is otherwise its legal liability; and (iii) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (i) and (ii) above. "Intercompany Debt Obligations" means any Indebtedness of the Company or any Subsidiary which, in the case of the Company, is owing to any Subsidiary and which, in the case of any Subsidiary, is owing to the Company or any other Subsidiary. "Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's or any other Rating Agency permitted to be used. "Lien" means any mortgage, lien, pledge, security interest, conditional sale or other title retention agreement, charge or other security interest or encumbrance of any kind. S-10 11 "Moody's" means Moody's Investors Services, Inc. "Permitted Indebtedness" means (i) Indebtedness of the Company or any Subsidiary outstanding on the date of the Indenture; (ii) the Senior Notes; (iii) Indebtedness of the Company not in excess of $250 million in principal amount outstanding at any time under revolving credit or similar bank facilities and any refinancings, replacements, renewals, extensions, substitutions, refundings, deferrals, restructurings, amendments, supplements or modifications of such Indebtedness; provided, however, that the proceeds of such Indebtedness referred to in this clause (iii) shall be invested in, or used in connection with, Food-Related Businesses; (iv) Indebtedness of a Subsidiary (including Acquired Indebtedness), which is non-recourse to the Company, the proceeds of which are or have been used for working capital purposes or for capital expenditures in Food-Related Businesses; (v) Acquired Indebtedness of a Subsidiary incurred in the acquisition of a Food-Related Business, PROVIDED, HOWEVER, that (A) such Acquired Indebtedness is non-recourse to the Company and not incurred in contemplation of such acquisition and (B) the Company's Fixed Charge Coverage Ratio for the prior four full fiscal quarters, on a pro forma basis after giving effect to such acquisition, exceeds the Company's Fixed Charge Coverage Ratio for the prior four full fiscal quarters immediately preceding such acquisition; (vi) Indebtedness of (A) the Company or any Subsidiary denominated in or measured by the currency of any country other than the United States, which Indebtedness is incurred for hedging purposes in the ordinary course of business consistent with past practice or (B) the Company or any other Subsidiary (in either case, other than for borrowed money) incurred in connection with Indebtedness of a Subsidiary referred to in clause (A) above which is (y) a guarantee of such Subsidiary Indebtedness, or (z) a reimbursement obligation relating to a letter of credit supporting such Subsidiary Indebtedness; (vii) Intercompany Debt Obligations; PROVIDED,HOWEVER, that the obligations of the Company with respect to such Indebtedness shall be evidenced by an intercompany note and shall be subordinated in right of payment from and after such time as all Senior Notes issued and outstanding shall become due and payable (whether at Stated Maturity, by acceleration or otherwise) to the payment and performance of the Company's obligations under the Senior Notes; (viii) guarantees by a Subsidiary, which are non-recourse to the Company, of Indebtedness of a Person that is not the Company, another Subsidiary nor a Related Person; PROVIDED, HOWEVER, that the aggregate amount of Indebtedness so guaranteed at any time shall not exceed $15 million principal amount outstanding; and PROVIDED, FURTHER, that the proceeds of such Indebtedness are or have been used by such Person in Food-Related Businesses; and (ix) additional Indebtedness of the Company (including Acquired Indebtedness) the aggregate principal amount of which outstanding at any time does not exceed 5% of Adjusted Consolidated Assets. "Permitted Liens" means (i) Liens existing on the date of the Indenture on assets of the Company or any Subsidiary; (ii) Liens on assets acquired after the date of the Indenture or Liens to secure the purchase price of assets to be acquired; (iii) Liens on properties of any Subsidiary securing Indebtedness the proceeds of which are or have been used for working capital or capital expenditures relating to Food-Related Businesses; (iv) Liens securing Indebtedness of (A) the Company or any Subsidiary denominated in or measured by the currency of any country other than the United States which Indebtedness is incurred for hedging purposes in the ordinary course of business consistent with past practice and (B) the Company or any other Subsidiary, to the extent permitted under clause (vi)(B) of Permitted Indebtedness; (v) Liens of a Person existing at the time such Person becomes a Subsidiary or assumed in connection with the acquisition of assets of such Person; (vi) Liens on working capital assets; (vii) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of the foregoing; (viii) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business and with respect to amounts not overdue for a period of more than 90 days or being contested in good faith by appropriate proceedings; (ix) judgment Liens and other similar Liens arising in the ordinary course of business; PROVIDED, HOWEVER, that the execution or other enforcement thereof is being effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; (x) Liens securing Intercompany Debt Obligations; (xi) Liens for taxes not yet due or payable under law or being contested in good faith; (xii) Liens upon property of a foreign Subsidiary to secure Indebtedness of that foreign Subsidiary; (xiii) Liens in accordance with customary banking practice to secure Indebtedness in connection with foreign trade; (xiv) easements, rights-of-way, restrictions and other similar encumbrances to the extent incurred in the ordinary course of business; (xv) pledges or deposits in connection with workers' S-11 12 compensation, unemployment insurance and other social security legislation; and (xvi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds, interest rate, foreign exchange and commodity hedging transactions and other obligations of a like nature incurred in the ordinary course of business. "Permitted Lindner Holders" means, collectively, Carl H. Lindner, Robert D. Lindner, Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner, the respective estates, spouses, heirs, ancestors, lineal descendants, legatees and legal representatives of any of the foregoing and the trustee or other representative of any bona fide trust or other entity formed for estate or tax-planning purposes of which one or more of the foregoing are the sole beneficiaries or the grantors thereof or contributors thereto, American Financial Group, Inc., an Ohio corporation, or any entity of which any of the foregoing, individually or collectively, beneficially own more than 50% of the Voting Shares. "Purchase Date" means a date fixed by the Company that is no earlier than 30 days and no later than 60 days after the mailing of notice to bondholders of a Change of Control Triggering Event. "Rating Agencies" means S&P and Moody's or, if S&P or Moody's or both shall not make a rating of the Senior Notes publicly available, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P or Moody's or both, as the case may be. "Rating Category" means (i) with respect to S&P, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii) with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the equivalent of any such category of S&P or Moody's used by another Rating Agency. In determining whether the rating of the Senior Notes has decreased by one or more gradations, gradations within Rating Categories (+ and - for S&P, 1, 2, and 3 for Moody's or the equivalent gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as from BB - to B+, will constitute a decrease of one gradation). "Rating Date" means the date which is 90 days prior to the earlier of (i) a Change of Control and (ii) public notice of the occurrence of a Change of Control or of the intention by the Company to effect a Change of Control. "Rating Decline" means the occurrence of the following on, or within 90 days after, the earlier of (i) the occurrence of a Change of Control and (ii) the date of public notice of the occurrence of a Change of Control or of the public notice of the intention of the Company to effect a Change of Control (which 90 day period shall be extended so long as the rating of the Senior Notes is under publicly announced consideration for possible downgrading by any of the Rating Agencies): (a) in the event that the Senior Notes are rated by either Rating Agency on the Rating Date as Investment Grade, the rating of the Senior Notes shall be reduced below Investment Grade by both Rating Agencies; or (b) in the event the Senior Notes are rated below Investment Grade by both Rating Agencies on the Rating Date, the rating of the Senior Notes by either Rating Agency shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). "Refinancing Indebtedness" means any renewals, extensions, substitutions, refundings, refinancings, replacements, deferrals, restructurings, amendments, supplements or modifications of any Indebtedness (each, a "Refinancing") of the Company or any of its Subsidiaries outstanding on the date of the Indenture or other Indebtedness permitted to be incurred by the Company or any of its Subsidiaries pursuant to the terms of the Indenture (other than Indebtedness referred to in clauses (iii), (iv), (v), (vi), (vii) or (viii) of the definition of Permitted Indebtedness), but only to the extent that (i) the aggregate amount of Indebtedness represented thereby is not increased by such Refinancing, (ii) the Indebtedness incurred in such Refinancing is not incurred by a Subsidiary if the Company initially incurred the Indebtedness being renewed, extended, substituted, refunded, refinanced, replaced, deferred, restructured, amended, supplemented or modified and (iii) the Indebtedness incurred in such Refinancing is not incurred by the Company if a Subsidiary initially incurred the Indebtedness being renewed, extended, substituted, refunded, refinanced, replaced, deferred, restructured, amended, supplemented or modified, and such Indebtedness was non-recourse to the Company. S-12 13 "Related Person" means (i) any Affiliate of the Company, (ii) any individual or entity who directly or indirectly holds 10% or more of any class of capital stock of the Company, (iii) any relative of such individual by blood, marriage or adoption not more remote than first cousin and (iv) any officer or director of the Company. "S&P" means Standard and Poor's Rating Services, a division of McGraw Hill, Inc. CONSOLIDATION, MERGER AND SALE OF ASSETS The Company may not consolidate with or merge into any other entity or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to any entity, unless: (1) either (a) the Company shall be the continuing corporation or (b) the entity (if other than the Company) formed by such consolidation or into which the Company is merged or the entity that acquires, by sale, assignment, conveyance, transfer, lease or disposition, all or substantially all of the properties and assets of the Company as an entirety (in any such case, the "Surviving Entity") shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia, and shall expressly assume, by a supplemental indenture, the due and punctual payment of the principal of (and premium, if any) and interest on all the Senior Notes and the performance and observance of every covenant of the Indenture on the part of the Company to be performed or observed; (2) immediately thereafter, no Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing; (3) after giving effect to such transaction, the Company or the Surviving Entity could incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness or Refinancing Indebtedness) pursuant to the covenant of the Indenture entitled "Limitation on Indebtedness"; (4) immediately thereafter, the Company or the Surviving Entity shall have a Consolidated Net Worth equal to or greater than the lesser of (A) the Consolidated Net Worth of the Company immediately prior to such transaction or (B) 80% of the Consolidated Net Worth of the Company immediately prior to such transaction provided that such amount shall not be less than $500 million; (5) immediately thereafter, on a pro forma basis, the Fixed Charge Coverage Ratio of the Company or of the Surviving Entity shall be at least 2.0 to 1 for the four full fiscal quarters immediately preceding such transaction; provided, however, that if the Fixed Charge Coverage Ratio of the Company for the four full fiscal quarters immediately preceding such transaction is within the range set forth in column (A) below, then the Fixed Charge Coverage Ratio of the Company or of the Surviving Entity for the four full fiscal quarters immediately preceding such transaction on a pro forma basis shall be at least equal to the lesser of the ratio determined by multiplying the percentage set forth in column (B) below by the Fixed Charge Coverage Ratio of the Company for the four full fiscal quarters immediately preceding such transaction or the ratio set forth in column (C) below:
A B C -------------------------------------------------------------- --- ----- 2.2222:1 to 2.9999:1.......................................... 90% 2.4:1 3.00:1 to 3.9999:1............................................ 80% 2.8:1 4:00:1 or greater............................................. 70% 3.0:1
and PROVIDED, FURTHER, that, if immediately after giving effect to such transaction on a pro forma basis, the Fixed Charge Coverage Ratio of the Company or the Surviving Entity, as the case may be, for the four full fiscal quarters immediately preceding such transaction is 3.0 to 1 or more, the calculation in the preceding proviso shall be inapplicable and such transaction shall be deemed to have complied with the requirements of such provision; and (6) the Company or the Surviving Entity shall have delivered to the Trustee an officers' certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, conveyance, transfer, lease or disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the Indenture and that all conditions precedent therein relating to such transaction have been satisfied. Notwithstanding the foregoing, if the Company effects a consolidation, merger or sale, conveyance, assignment, transfer, lease or other disposition of assets, the conditions set forth in clauses (3) and (5) above shall not apply to a transaction involving a Surviving Entity which is otherwise subject to the foregoing provisions if the Surviving Entity (i) was formed for the purpose of S-13 14 effecting such transaction, (ii) did not engage in any business prior to such transaction and, (iii) immediately prior to such transaction, had no Indebtedness or liabilities, contingent or otherwise, of any kind whatsoever. In the event of any transaction (other than a lease) described in and complying with the conditions listed in the preceding paragraph in which the Company is not the continuing corporation, the successor entity formed or remaining would be substituted for the Company and the Company would be discharged from all obligations and covenants under the Indenture and the Senior Notes. CERTAIN COVENANTS OF THE COMPANY The Indenture contains, among others, the covenants summarized below, which will be applicable (unless waived or amended) so long as any of the Senior Notes are outstanding. Limitation on Indebtedness. The Company will not, and will not permit any Subsidiary to, create, incur, assume or guarantee the payment of any Indebtedness (including Acquired Indebtedness) other than Permitted Indebtedness or Refinancing Indebtedness, unless after giving effect to such event on a pro forma basis the Company's Fixed Charge Coverage Ratio for the four full fiscal quarters immediately preceding such event, taken as one period, is not less than 2.0 to 1. For the purposes of determining any particular amount of Indebtedness, there shall not be included the amount of any guarantees of (or obligations with respect to letters of credit supporting, or joint or joint and several obligations in respect of) Indebtedness, the amount of which is otherwise included. For purposes of determining compliance with this covenant, (i) in the event that an item of Indebtedness meets the criteria of more than one of the clauses of Permitted Indebtedness or Refinancing Indebtedness, the Company, in its sole discretion, shall classify such item of Indebtedness and shall be required to include the amount and type of such Indebtedness in only one of such clauses and (ii) the amount of Indebtedness issued at a price which is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP. Limitation on Liens. The Company will not, and will not permit any Subsidiary to, create, assume, incur or suffer to be created, assumed or incurred any Lien upon any of their respective assets without making effective provision whereby all the Senior Notes shall be directly secured equally and ratably with the Indebtedness or other obligations secured by such Lien, except for (i) Permitted Liens and (ii) Liens securing an aggregate amount of Indebtedness, which together with the aggregate "value" of sale and leaseback transactions referred to below (other than such transactions in which debt has been retired in accordance with the following paragraph), does not at the time exceed 5% of Adjusted Consolidated Assets. Limitation on Sale and Leaseback Transactions. The Company may not enter into any sale and leaseback transaction, or series of related such transactions, of assets with an aggregate fair market value of $10 million or more relating to Food-Related Businesses, unless an amount equal to the greater of the proceeds of sale or the fair value of the property is applied (a) to build or purchase capital assets used in the Company's business or (b) to retire long-term Indebtedness for money borrowed (including the Senior Notes) of the Company, except that the Company may enter into (i) intercompany sale and leaseback transactions, (ii) temporary sale and leaseback transactions with a term not to exceed three years and (iii) sale and leaseback transactions with respect to which the "value" thereof plus the other secured Indebtedness referred to in clause (ii) of the previous paragraph does not at the time exceed 5% of Adjusted Consolidated Assets. Limitation on Restricted Payments. The Company will not, directly or indirectly, (i) declare or pay any dividend on, or make any distribution in respect of, or purchase, redeem or retire for value, or permit any of its Subsidiaries, directly or indirectly, to so purchase, redeem or retire for value, any capital stock of the Company, other than through the issuance solely of the Company's own capital stock, or rights thereto, (ii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, prior to scheduled principal payment or maturity, Indebtedness of the Company (excluding Indebtedness of Subsidiaries) which is expressly subordinate in right of payment to the Senior Notes or permit any of its Subsidiaries, directly or indirectly, to do so or (iii) make any loan to, incur, create, assume or suffer to exist any guarantee of Indebtedness of, or make advancement to, or other investment in, or permit any of its Subsidiaries to make any loan, incur, create, assume or suffer to exist any guarantee of Indebtedness of, or S-14 15 make advancement to, or other investment in, any Related Person of the Company (other than a Subsidiary of the Company) except for any transaction with an officer or director of the Company entered into in the ordinary course of business (including compensation or employee benefit arrangements with any officer or director of the Company) (such payments or any other actions described in (i), (ii) and (iii), collectively, "Restricted Payments") unless (a) at the time of and after giving effect to the proposed Restricted Payment no Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing, and (b) at the time of and after giving effect to the proposed Restricted Payment (the value of any such payment, if other than cash, as determined by the Board of Directors, whose determination shall be conclusive and evidenced by a board resolution), the aggregate amount of all Restricted Payments declared or made after March 31, 1996 shall not exceed the sum of (A) 50% of the aggregate cumulative Consolidated Net Income of the Company accrued on a cumulative basis during the period beginning on April 1, 1996 and ending on the last day of the Company's last fiscal quarter ending prior to the date of such proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) plus (B) the aggregate proceeds received by the Company as capital contributions to the Company after March 31, 1996, or from the issuance and sale (other than to a Subsidiary) after March 31, 1996 of capital stock of the Company (excluding the issuance or sale of preferred stock that is mandatorily redeemable, or redeemable at the option of the holder of such preferred stock, in either case, prior to the Stated Maturity of the Senior Notes (collectively, the "Disqualified Stock")) and any Indebtedness or other securities of the Company convertible into or exercisable for capital stock (other than Disqualified Stock) of the Company which has been so converted or exercised, as the case may be, plus (C) the aggregate proceeds received by the Company from the issuance in February 1994 of its $2.875 Non-Voting Cumulative Preferred Stock, Series A, plus (D) $70 million; PROVIDED, HOWEVER, that the foregoing provisions will not prevent the payment of any dividend, within 60 days after the date of its declaration, if at the date of declaration such payment would be permitted by such provisions. For the purposes of the foregoing provisions, the term "Restricted Payment" shall not include the making of any principal payment on, or redemption, repurchase, defeasance or other acquisition or retirement for value, prior to scheduled principal payment or maturity, of (1) any of the Company's subordinated Indebtedness existing at the date of the Indenture as long as no such acquisition or retirement is made with the proceeds of Indebtedness which has a maturity date earlier than the existing subordinated Indebtedness being acquired or retired or (2) any subordinated Indebtedness of the Company incurred after the date of the Indenture, if such acquisition or retirement is made with the proceeds of subordinated Indebtedness which has a maturity date no earlier than the latest maturity date of any then Outstanding Senior Notes. TRANSACTIONS WITH RELATED PERSONS. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with any Related Person (other than a Subsidiary) unless (i) such transaction or series of transactions is on terms that are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in a comparable transaction with an unrelated third party and (ii) (A) with respect to a transaction or series of transactions involving aggregate payments in excess of $10 million but less than $20 million, the Company delivers an officer's certificate to the Trustee certifying that such transaction complies with the clause (i) above and (B) with respect to a transaction or series of transactions involving aggregate payments equal to or greater than $20 million, such transaction or series of related transactions is approved by a majority of the Board of Directors of the Company including the approval of a majority of the disinterested directors. Notwithstanding the foregoing, this provision will not apply to (i) any transaction with an officer or director of the Company entered into in the ordinary course of business (including compensation or employee benefit arrangements with any officer or director of the Company) and (ii) any transaction entered into in the ordinary course of business with a Subsidiary. PURCHASE OF SENIOR NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT. In the event that there occurs at any time a Change of Control Triggering Event, each holder of Senior Notes shall have the right, at the holder's option, to require the Company to purchase all or any part (in integral multiples of $1,000) of such holder's Senior Notes on the Purchase Date at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Purchase Date. S-15 16 The Company is obligated to give notice to holders of the Senior Notes and the Trustee within 30 days following a Change of Control Triggering Event. The notice must specify the Purchase Date, the place at which the Senior Notes shall be presented and surrendered for purchase, that interest accrued to the Purchase Date will be paid upon such presentation and surrender and that interest will cease to accrue on the Senior Notes surrendered for purchase as of the Purchase Date. The Company agrees that it will comply with all applicable tender offer rules, including Rule 14e-1 under the Exchange Act, if the purchase option is triggered upon the occurrence of a Change of Control Triggering Event. In order for a holder of the Senior Notes properly to put its Senior Notes to the Company for purchase, the holder must present and surrender the Senior Notes to the Company at the place specified in the Company's aforementioned notice at least 15 days prior to the Purchase Date. Any such tender by a holder of Senior Notes shall be irrevocable. The Company is not obligated to notify holders of or to purchase the Senior Notes with respect to more than one Change of Control Triggering Event. There can be no assurance that sufficient funds will be available at the time of any Change of Control Triggering Event to make the required purchases. In the event that the Company is unable to comply with its purchase obligations, it would constitute an event of default under the Senior Debt Indenture, which would lead to cross defaults or cross accelerations of certain other debt then outstanding. At March 31, 1996, an aggregate of approximately $847 million principal amount of outstanding debt of the Company and its Subsidiaries (after giving effect to the redemption of the Company's 10 1/2% subordinated debentures due 2004 but without giving effect to the repayment of any debt with the proceeds from the sale of the Senior Notes offered hereby and from the Preferred Stock Offering, as described in "Use of Proceeds") contained provisions which would permit cross defaults or cross accelerations upon such an event of default under the Senior Debt Indenture. Such cross defaults and cross accelerations could, in turn, make it more difficult, if not impossible, for the Company to meet its obligations under the Senior Notes. DEFEASANCE OF CERTAIN OBLIGATIONS The terms of the Senior Notes provide that the Company may omit to comply with the restrictive covenants in the terms of the Senior Notes relating to Consolidation, Merger and Sale of Assets; Limitation on Liens; Limitation on Sale and Leaseback Transactions; Limitation on Indebtedness; Limitation on Restricted Payments; Transactions with Related Persons; Purchase of Senior Notes upon a Change of Control Triggering Event; and any such omission with respect to such covenants shall not be an Event of Default with respect to the Senior Notes, if (a) the Company deposits or causes to be deposited with the Trustee for the Senior Notes in trust an amount of cash, U.S. government securities or a combination of cash and U.S. government securities sufficient to pay and discharge when due the entire indebtedness on all such Outstanding Senior Notes for unpaid principal (and premium, if any) and interest to the Stated Maturity or any Redemption Date, as the case may be and (b) certain other conditions are met. The obligations of the Company under the Indenture with respect to the Senior Notes, other than with respect to the covenants referred to above, shall remain in full force and effect. This defeasance is in addition to the defeasance described under "Satisfaction and Discharge" in the accompanying Prospectus. BOOK-ENTRY, DELIVERY AND FORM The Notes will initially be issued in the form of one Global Note (the "Global Note") held in book-entry form. The Global Note will be deposited on the date of the closing of the sale of the Senior Notes offered hereby (the "Closing Date") with, or on behalf of, The Depository Trust Company ("DTC" or the "Depository") and registered in the name of Cede & Co., as nominee of the Depository (such nominee being referred to herein as the "Global Note holder"). DTC has advised the Company that it is a limited-purpose trust company that was created to hold securities for its participating organizations (collectively, the "Participants" or the "Depository's Participants") and to facilitate the clearance and settlement of transactions in such securities between Participants through electronic book-entry changes in accounts of its Participants. The Depository's Participants include securities brokers and dealers (including the Underwriters), banks and trust companies, clearing corporations and certain other organizations. Access to the Depository's system is also available to other entities such as S-16 17 banks, brokers, dealers and trust companies (collectively, the "Indirect Participants" or the "Depository's Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of the Depository only through the Depository's Participants or the Depository's Indirect Participants. So long as the Global Note holder is the registered owner of any Senior Notes, the Global Note holder will be considered the sole holder under the Indenture of any Senior Notes evidenced by the Global Note. Beneficial owners of Senior Notes evidenced by the Global Note will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any directions, instructions or approvals to the Trustee thereunder. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records of the Depository or for maintaining, supervising or reviewing any records of the Depository relating to the Senior Notes. A Global Note may not be transferred except as a whole by DTC to a nominee of DTC. A Global Note representing Senior Notes is exchangeable only if (1) DTC notifies the Company that it is unwilling or unable to continue as a Depository for such Global Note or if at any time DTC ceases to be a clearing agency registered under the Exchange Act, (2) the Company in its sole discretion determines that all such Global Notes shall be exchangeable or (3) there shall have occurred and be continuing an Event of Default or an event which with the giving of notice or lapse of time or both would constitute an Event of Default with respect to the Senior Notes represented by such Global Notes. Any Global Note that is exchangeable pursuant to the preceding sentence shall be exchangeable for certificates in definitive form representing Senior Notes in authorized denominations and registered in such names as the Depository holding such Global Note shall direct. Subject to the foregoing, the Global Note is not exchangeable, except for a Global Note of like denomination to be registered in the name of the Depository or its nominee. Payments in respect of the principal of, premium, if any, and interest on any Senior Notes registered in the name of the Global Note holder on the applicable record date will be payable by the Trustee to or at the direction of the Global Note holder in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee may treat the persons in whose names the Senior Notes, including the Global Note, are registered as the owners thereof for the purpose of receiving such payments. Consequently, neither the Company nor the Trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of the Senior Notes (including principal, premium, if any, or interest). The Company believes, however, that it is currently the policy of the Depository to immediately credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant security as shown on the records of the Depository. Payments by the Depository's Participants and the Depository's Indirect Participants to the beneficial owners of the Senior Notes will be governed by standing instructions and customary practice and will be the responsibility of the Depository's Participants or the Depository's Indirect Participants. SAME-DAY SETTLEMENT AND PAYMENT The Senior Notes will trade in DTC's Same-Day Funds Settlement System. Settlement for the Senior Notes will be made by the Underwriters in immediately available funds. All payments of principal and interest will be made by the Company in immediately available funds or the equivalent, so long as the Global Note is held of record by DTC and DTC continues to make the Same-Day Funds Settlement System available to the Company. Secondary market trading activity in the Senior Notes will also be required by DTC to settle in immediately available funds. S-17 18 UNDERWRITING The Underwriters named below (the "Underwriters") have severally agreed, subject to the terms and conditions of the Underwriting Agreement and the related Terms Agreement referred to therein (the "Underwriting Agreement"), to purchase from the Company the principal amount of Senior Notes set forth opposite their respective names below:
PRINCIPAL AMOUNT UNDERWRITER OF SENIOR NOTES ----------- ------------------- Lehman Brothers Inc................................................. Bear, Stearns & Co. Inc............................................. Furman Selz LLC..................................................... -------------- Total.......................................................... $ 125,000,000 ==============
The Underwriting Agreement provides that the obligations of the Underwriters to purchase the Senior Notes are subject to certain conditions and that if any of the Senior Notes are purchased by the Underwriters pursuant to the Underwriting Agreement all the Senior Notes agreed to be purchased by the Underwriters must be so purchased. The Company has been advised by the Underwriters that they propose to offer the Senior Notes offered hereby initially at the public offering price set forth on the cover page of this Prospectus Supplement and to certain selected dealers (who may include Underwriters) at such public offering price less a selling concession not to exceed % of the principal amount of the Senior Notes. The Underwriters or such selected dealers may reallow a selling concession to certain other dealers not to exceed % of the principal amount of the Senior Notes. After the initial public offering of the Senior Notes, the public offering price and such concessions may be changed by the Underwriters. There is no public market for the Senior Notes and the Company has no plans to apply for listing of the Senior Notes on any national securities exchange or for quotation of the Senior Notes on any automated quotation system. The Company has been advised by the Underwriters that they intend to make a market in the Senior Notes; however, they are not obligated to do so, and market making with respect to the Senior Notes may be discontinued at any time, for any reason, without notice. There can be no assurance that an active public market for the Senior Notes will develop or, if a market does develop, at what prices the Senior Notes will trade. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the Underwriters may be required to make in respect thereof. Certain of the Underwriters have provided from time to time, and expect to provide in the future, financial advisory and investment banking services to the Company and its affiliates, for which such Underwriters have received and will receive customary fees and commissions. S-18 19 PROSPECTUS $500,000,000 [LOGO] CHIQUITA BRANDS INTERNATIONAL, INC. DEBT SECURITIES PREFERRED STOCK COMMON STOCK SECURITIES WARRANTS Chiquita Brands International, Inc. ("Chiquita" or the "Company") may offer from time to time (i) in one or more series unsecured debt securities which may be either senior or subordinated debt securities (together, the "Debt Securities"), consisting of debentures, notes and/or other evidences of indebtedness; (ii) in one or more series shares of preferred stock (together "Preferred Stock") which may be either Non-Voting Cumulative Preferred Stock, par value $1.00 per share ("Non-Voting Preferred Stock") or Cumulative Preference Stock, without par value ("Preference Stock"), either of which may be issued in the form of depositary shares evidenced by depositary receipts ("Depositary Shares"), (iii) shares of its Capital Stock, par value $0.33 per share ("Common Stock") and (iv) securities warrants ("Securities Warrants") to purchase Debt Securities, Preferred Stock, Depositary Shares or Common Stock (the Debt Securities, Preferred Stock, Common Stock and Securities Warrants being collectively referred to as the "Securities"), or any combination of the foregoing, at an aggregate initial offering price not to exceed $500,000,000, at prices and on terms to be determined at or prior to the time of sale. Specific terms of the Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement ("Prospectus Supplement"), together with the terms of the offering of the Securities and the initial price and the net proceeds to Chiquita from the sale thereof. The Prospectus Supplement will set forth with regard to the particular Securities, without limitation, the following: (i) in the case of Debt Securities, the specific designation, aggregate principal amount, ranking as senior debt or subordinated debt, authorized denominations, maturity, rate (or method of calculation thereof) of interest and dates (or method of determination thereof) for payment thereof, and any exchangeability, conversion, redemption, prepayment or sinking fund provisions, (ii) in the case of Preferred Stock, the designation, including whether Non-Voting Preferred Stock or Preference Stock, number of shares, voting rights (for Preference Stock), liquidation preference per share, initial public offering price, dividend rate (or method of calculation thereof), dates on which dividends shall be payable and dates from which dividends shall accrue, any redemption or sinking fund provisions, any conversion or exchange rights and any special voting or other special rights, (iii) in the case of Common Stock, the number of shares of Common Stock and the terms of the offering and sale thereof and (iv) in the case of Securities Warrants, the number and terms thereof, the designation and number or amount of Securities issuable upon their exercise, the exercise price, the terms of the offering and sale thereof and, where applicable, the duration and detachability thereof. The Prospectus Supplement will also contain information, where applicable, about certain Federal income tax considerations relating to, and any listing on a securities exchange of, the Securities covered by the Prospectus Supplement. The Securities may be offered for sale directly, through agents, to or through underwriters or dealers designated from time to time or through a combination of such methods. If agents of Chiquita or any underwriters or dealers are involved in the sale of the Securities, the names of such agents, underwriters or dealers and any applicable commission or discounts will be set forth in the Prospectus Supplement. See "Plan of Distribution." SEE "RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES. ------------------------ 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 MAY 1, 1996. LOGO 20 NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT, UNDERWRITER OR DEALER. THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. 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 on Form S-3 (together with all amendments and exhibits, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Securities 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., and at the Regional Offices of the Commission at Suite 1300, 7 World Trade Center, New York, New York, and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois. 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 1 Boston Place, Boston, Massachusetts; and at the Listing Department of the Pacific Stock Exchange at 301 Pine Street, San Francisco, California. 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, 1995 (which incorporates by reference certain information contained in the Company's 1995 Annual Report to Shareholders) (the "1995 10-K") filed by Chiquita with the Commission (Commission file number 1-1550) is incorporated herein by reference and made a part hereof. All documents filed by the Company 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 of the Securities 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. 2 21 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, these products include other tropical fruit, such as mangoes, kiwi and citrus, and a wide variety of other fresh produce. The Company's operations also include fruit and vegetable juices and beverages; processed bananas and other processed fruits and vegetables; fresh cut and ready-to-eat salads; and edible oil-based consumer products. American Financial Group, Inc. ("AFG") owns, either directly or through its subsidiaries, approximately 43% of Chiquita's outstanding shares of Common Stock. Approximately 44% of the outstanding common 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 the subsidiaries of the Company. RISK FACTORS In addition to the other information set forth in this Prospectus, prospective investors should carefully consider the following before making an investment in the Securities. EUROPEAN UNION BANANA REGULATION On July 1, 1993, the European Union ("EU") implemented a new quota effectively restricting the volume of Latin American bananas imported into the EU. Implementation of the quota had the effect of decreasing the Company's volume and market share in Europe. The quota is administered through a licensing system and grants preferred status to producers and importers within the EU and its former colonies, while imposing 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 this banana policy to be illegal. In March 1994, four of the countries which had filed GATT actions against the EU banana policy (Costa Rica, Colombia, Nicaragua and Venezuela) reached a settlement with the EU by signing a "Framework Agreement." The Framework Agreement authorizes the imposition of additional restrictive and discriminatory quotas and export licenses on U.S. banana marketing firms, while leaving EU firms exempt. Costa Rica and Colombia implemented this agreement in 1995, significantly increasing the Company's cost to export bananas from these sources. Three additional European countries (Sweden, Finland and Austria) joined the EU effective January 1, 1995. These countries, which had substantially unrestricted banana markets in which the Company supplied a significant portion of the bananas, are in the process of transition to the restrictive EU quota and licensing environment. The timing and exact nature of any adjustments in the quota and licensing regulations that will be made for these new EU members have not yet been determined. Implementation of the quota regime continues to evolve, and there can be no assurance that the EU banana regulation will not change further. 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 response to this petition, the U.S. Government initiated formal investigations of the EU banana import policy and of the Colombian and Costa Rican Framework Agreement export policies. In January 1995, the U.S. Government announced a preliminary finding against the EU banana import policy and in September 1995, based on information obtained in the USTR's investigation under Section 301, the United States, joined by Guatemala, Honduras and Mexico, commenced a new international trade challenge against the EU regime using the procedures of the World 3 22 Trade Organization ("WTO"). In January 1996, the USTR announced it had found the banana export policies of Costa Rica and Colombia to be unfair. The USTR further announced it was not imposing sanctions at that time, pending further consultations with those countries to eliminate harm to U.S. commerce. In February 1996, Ecuador, the world's largest exporter of bananas, joined the United States, Guatemala, Honduras and Mexico in challenging the EU regime under the WTO. Both the WTO and Section 301 authorize retaliatory measures, such as tariffs or withdrawal of trade concessions, against the offending countries. However, there can be no assurance as to the results of the WTO and Section 301 proceedings, the nature and extent of actions that may be taken by the United States or other adversely affected countries, or the impact on the EU quota regime or the Framework Agreement. RECENT LOSSES From 1984 to 1991, the Company reported a continuous record of growth in annual earnings. However, the Company reported net losses for 1992, 1993 and 1994 of $284 million, $51 million and $72 million, respectively. The 1992 net loss included restructuring and reorganization charges of $61 million and losses relating to discontinued Meat Division operations of $62 million. The 1993 net loss was reduced as a result of benefits from the Company's multiyear investment spending program and its restructuring and cost reduction efforts. The 1994 net loss included income from discontinued operations of $36 million, extraordinary charges of $23 million from prepayment of debt and charges and losses totaling $67 million resulting primarily from farm closings and banana cultivation write-downs in Honduras following an unusually severe strike, the substantial reduction of the Company's Japanese "green" banana trading operations and a write-down of ships held for sale. The Company reported net income of $9 million for 1995. LEVERAGE As of December 31, 1995, the Company and its subsidiaries had short-term notes and loans payable of $119 million and long-term debt (including current maturities) of approximately $1.3 billion. Required debt maturities for the years 1996 through 2000 are $53 million, $61 million, $97 million, $36 million and $37 million, respectively. The percentage of total debt to total capitalization for the Company was 68% at December 31, 1995. SUBSIDIARIES Substantially all of the operations of the Company are conducted through its subsidiaries and the Company is therefore dependent on the cash flow of its subsidiaries to meet its obligations. The claims of holders of the Securities will be structurally subordinated to any existing and future obligations (whether or not for borrowed money) of such subsidiaries, some of which are highly leveraged. As of December 31, 1995, the total debt of the Company's subsidiaries aggregated $573 million, of which $295 million represented non- recourse long-term debt of the Company's shipping subsidiaries secured by ships and related equipment and $119 million represented short-term notes and loans payable. COMPETITION AND PRICING Approximately 60% of the Company's consolidated net sales comes from the sale of bananas. Banana marketing is highly competitive. While smaller companies, including growers' cooperatives, are a competitive factor, the Company's principal competitors are a limited number of large international companies. The Company has been able to obtain a premium price for its bananas due to its reputation for quality and its innovative marketing techniques. In order to compete successfully, the Company must be able to source bananas of uniformly high quality and distribute them in worldwide markets on a timely basis. Bananas are highly perishable and must be brought to market and sold generally within 60 days after harvest. Therefore, selling prices which importers receive for bananas depend on the available supplies of bananas and other fruit in each market, the relative quality, and wholesaler and retailer acceptance of bananas offered by competing importers. Excess supplies may result in increased price competition. 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. 4 23 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, which may result in lower sales volume and increased costs, may also restrict worldwide supplies and result in 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 sources of bananas than any of its competitors. During 1995, approximately one-third of all bananas sold by Chiquita were sourced from Panama. Bananas are sourced from numerous other countries, including Colombia, Costa Rica, Ecuador, Guatemala and Honduras which comprised 6% to 23% (depending on the country) of bananas sold by Chiquita during 1995. LABOR RELATIONS The Company employs a total of approximately 36,000 associates. Approximately 32,000 of these associates are employed in Central and South America, including 28,000 workers covered by approximately 85 labor contracts with terms expiring from 1996 to 1999. Strikes or other labor-related actions are often encountered upon expiration of labor contracts and also frequently occur during the term of the contracts. OTHER RISKS OF INTERNATIONAL OPERATIONS The Company's operations are conducted in many areas of the world, and are subject to risks that are inherent in operating in foreign countries, including government regulation, currency restrictions and other restraints, risks of expropriation, burdensome taxes, quotas and tariffs. There is also a risk that legal or regulatory requirements will be changed or that administration and enforcement policies will change. Certain of the Company's operations are dependent upon leases and other agreements with the governments of the countries. Although the Company's operations are a significant factor in the economies of many of the countries in Central and South America where the Company produces and purchases bananas and other agricultural and consumer products, the Company believes its 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. The Company's operations worldwide and the products it sells are subject to numerous governmental regulations and inspections by environmental, food safety and health authorities. Although the Company 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 Preferred Stock, or the availability of such shares for future sales, will have on the market price of Common Stock or any then outstanding Preferred Stock prevailing from time to time. Sales of substantial amounts of Common Stock or Preferred Stock, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Stock or, in certain instances, the Preferred Stock. At April 1, 1996, the Company had outstanding 55,234,823 shares of Common Stock, including 23,996,295 shares held, directly or indirectly, by AFG, and 2,875,000 shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A. ABSENCE OF PUBLIC MARKET FOR SECURITIES (OTHER THAN COMMON STOCK) Since the Debt Securities, the Preferred Stock and the Securities Warrants will be newly issued, there is no current market for such Securities. The Company may, but has no obligation to, apply for listing of such Securities on the New York Stock Exchange or another stock exchange, and there can be no assurance that the applicable listing requirements of any such exchange will be met. There can be no assurance that there will be an active trading market for such Securities. 5 24 USE OF PROCEEDS Unless otherwise indicated in the Prospectus Supplement, the net proceeds to be received by the Company from the sale of the Securities will be used to repay outstanding debt of the Company and its subsidiaries and for general corporate purposes. RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The Company's ratio of earnings to fixed charges and ratio of earnings to combined fixed charges and preferred stock dividends for the years ended December 31, 1991 through 1995 were as follows:
YEAR ENDED DECEMBER 31, ---------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Ratio of earnings to fixed charges...................... 1.20 --(1) --(1) --(1) 1.73 Ratio of earnings to combined fixed charges and preferred stock dividends............................. 1.16 --(1) --(1) --(1) 1.73
- --------------- (1) Fixed charges exceeded earnings by approximately $75 million, $45 million and $239 million for the years ended December 31, 1994, 1993 and 1992, respectively. Combined fixed charges and preferred stock dividends exceeded earnings by approximately $86 million, $49 million and $239 million for the years ended December 31, 1994, 1993 and 1992, respectively. For purposes of calculating the ratios of earnings to fixed charges and of earnings to combined fixed charges and preferred stock dividends, earnings are calculated as the sum of the income (loss) from continuing operations before income taxes, fixed charges (other than capitalized interest) and amortization of capitalized interest, less undistributed earnings of less-than-fifty-percent-owned investees. Fixed charges consist of interest on indebtedness (including capitalized interest and amortization of debt discount) and a portion of rent considered to represent interest cost. 6 25 DESCRIPTION OF DEBT SECURITIES The following description of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement, including any covenants which may be applicable to a particular series of Debt Securities, and the extent, if any, to which the following general provisions do not apply to those Debt Securities will be described in the Prospectus Supplement relating to such Debt Securities. The Debt Securities will be general unsecured obligations of the Company and will constitute either senior debt securities or subordinated debt securities. In the case of Debt Securities that will be senior debt securities ("Senior Debt Securities"), the Debt Securities will be issued under an Indenture (the "Senior Indenture") dated as of February 15, 1994 between the Company and The Fifth Third Bank, Cincinnati, Ohio, as trustee (the "Senior Debt Trustee"), under the Senior Indenture. In the case of Debt Securities that will be subordinated debt securities ("Subordinated Debt Securities"), the Debt Securities will be issued under an Indenture (the "Subordinated Indenture") to be executed by the Company and Star Bank, N.A., Cincinnati, Ohio, as trustee (the "Subordinated Debt Trustee"), under the Subordinated Indenture. The Senior Indenture and the Subordinated Indenture are sometimes referred to herein individually as an "Indenture" and collectively as the "Indentures." The Senior Debt Trustee and the Subordinated Debt Trustee are sometimes referred to herein individually as the "Trustee" or collectively as the "Trustees." The statements made under this caption relating to the Debt Securities and the Indentures are summaries only, do not purport to be complete and are qualified in their entirety by reference to the Indenture or form of Indenture filed with the Commission in connection with the issuance of any series of Debt Securities. Such summaries make use of terms defined in the Indentures. Wherever such terms are used herein, such terms are incorporated by reference from the Indentures as part of the statements made herein. Summaries of certain terms used herein will be included in the Prospectus Supplement relating to the issuance of any particular series of Debt Securities. PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES GENERAL. Except as may be set forth in the terms of the Debt Securities and described in the Prospectus Supplement relating to such Debt Securities, neither of the Indentures limits the amount of Debt Securities which can be issued thereunder and each provides that additional Debt Securities may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by the Company's Board of Directors. Reference is made to the Prospectus Supplement for the following terms of the particular series of Debt Securities being offered thereby: (i) the designation, aggregate principal amount and authorized denominations of the series; (ii) the price at which the series will be issued; (iii) the date or dates on which the series will mature (or manner of determining the same); (iv) the rate or rates per annum, if any, at which the series will bear interest (or the manner of calculation thereof) and the date or dates from which such interest will accrue; (v) certain covenants which will be applicable to that series of Debt Securities; (vi) the times at which any interest will be payable (or manner of determining the same) and the Regular Record Dates for Interest Payment Dates; (vii) the place or places where the principal of (and premium, if any) and interest, if any, on the series will be payable and each office or agency, as described below under "Denominations, Registration and Transfer," where the Debt Securities may be presented for transfer or exchange; (viii) any mandatory or optional sinking fund or analogous provisions; (ix) the date, if any, after which, and the price at which, such Debt Securities are payable pursuant to any optional or mandatory redemption provisions; (x) the terms and conditions upon which the Debt Securities of such series may be repayable prior to maturity at the option of the holder thereof and the price at which such Debt Securities are so repayable; (xi) any provisions regarding exchangeability or conversion of the Debt Securities; (xii) information with respect to book-entry procedures, if any; (xiii) any provisions of the Indenture which will not be applicable to that series of Debt Securities; (xiv) whether the Debt Securities are Senior Debt Securities or Subordinated Debt Securities; and (xv) any other additional provisions or specific terms which may be applicable to that series of Debt Securities. Some of the Debt Securities may be issued as Discounted Securities (bearing no interest or interest at a rate which at the time of issuance is below market rates) to be sold at a substantial discount below their stated 7 26 principal amount. Federal income tax consequences and other special considerations applicable to any Discounted Securities will be described in the Prospectus Supplement relating thereto. DENOMINATIONS, REGISTRATION AND TRANSFER. Unless otherwise indicated in the applicable Prospectus Supplement, the Debt Securities of a series will be issuable only in fully registered form. Unless otherwise provided in an applicable Prospectus Supplement with respect to a series of Debt Securities, Debt Securities will be issued only in denominations of $1,000 or any integral multiple thereof. Debt Securities of any series will be exchangeable for other Debt Securities of the same series and of a like aggregate principal amount and tenor of different authorized denominations. Debt Securities may be presented for exchange or for registration of transfer (with the form of transfer duly executed) at the office of a transfer agent designated by the Company for such purpose with respect to any series of Debt Securities. If a Prospectus Supplement refers to any transfer agent initially designated by the Company with respect to any series of Debt Securities, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for such series. The Company is not required to issue, register the transfer of or exchange Debt Securities of any series for the 15-day period prior to the mailing of a notice of redemption and, with respect to any Debt Securities called for redemption in whole or in part (except for the unredeemed portion of any Debt Securities being redeemed in part), following such mailing. PAYMENT AND PAYING AGENTS. Unless otherwise indicated in an applicable Prospectus Supplement, payment of principal of (and premium, if any) and interest, if any, on Debt Securities will be made (i) by check mailed or delivered to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer to an account (with a bank located inside the United States) maintained by the Person entitled thereto. Unless otherwise indicated in an applicable Prospectus Supplement, payment of any installment of interest on any Debt Security will be made to the Person in whose name such Debt Security is registered at the close of business on the Regular Record Date for such interest payment. All moneys paid by the Company to the Trustee or a Paying Agent for the payment of principal of (and premium, if any) and interest, if any, on any Debt Security which remains unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company and the holder of such Debt Security will thereafter look only to the Company for payment thereof. CONSOLIDATION, MERGER AND SALE OF ASSETS. Under each of the Indentures, the Company may not consolidate with or merge into any other entity or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to any entity, unless: (1) either (a) the Company shall be the continuing corporation or (b) the entity (if other than the Company) formed by such consolidation or into which the Company is merged or the entity that acquires, by sale, assignment, conveyance, transfer, lease or disposition, all or substantially all of the properties and assets of the Company as an entirety shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia, and shall expressly assume by a supplemental indenture, the due and punctual payment of the principal of and premium, if any, and interest on all the Debt Securities and the performance and observance of every covenant of the Indenture on the part of the Company to be performed or observed; (2) immediately thereafter, no Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing; and (3) certain other conditions, if any, are met, as are described in the Prospectus Supplement relating to the Debt Securities being offered thereby. In the event of any transaction (other than a lease) described in and complying with the conditions listed in the immediately preceding paragraphs in which the Company is not the continuing corporation, the successor entity formed or remaining would be substituted for the Company and the Company would be discharged from all obligations and covenants under the Indenture and the Debt Securities. 8 27 EVENTS OF DEFAULT. The following events are defined in each of the Indentures as "Events of Default" with respect to a series of Debt Securities: (i) default in the payment of any installment of interest on any Debt Securities in such series for 30 consecutive days after becoming due; (ii) default in the payment of the principal of (or premium, if any, on) any Debt Securities in such series when due; (iii) default in the performance of any other covenant applicable to such series contained in the Debt Securities or the Indenture for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee or to the Company and the Trustee by the holders of 25% in aggregate principal amount of such series of Debt Securities then Outstanding; (iv) default shall have occurred under any other series of Debt Securities or any agreements, indentures or instruments under which the Company then has outstanding Indebtedness in excess of $10 million in the aggregate and, if not already matured in accordance with its terms, such Indebtedness shall have been accelerated and such acceleration shall not have been rescinded or annulled within ten days after notice thereof shall have been given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of such series of Debt Securities then Outstanding, PROVIDED, that if, prior to the entry of judgment in favor of the Trustee, such default under such indenture or instrument shall be remedied or cured by the Company, or waived by the holders of such Indebtedness, then the Event of Default under such Indenture shall be deemed likewise to have been remedied, cured or waived and PROVIDED, FURTHER, that if such default results from an action of the United States government or a foreign government which prevents the Company from performing its obligations under such agreement, indenture or instrument, the occurrence of such default will not be an Event of Default under such Indenture; (v) one or more judgments, orders or decrees for the payment of money in excess of $10 million, either individually or in the aggregate, shall be entered against the Company and shall not be discharged, there shall have been a period of 60 days during which a stay of enforcement of such judgment or order, by reason of an appeal or otherwise, shall not be in effect and there shall have been given written notice of the default to the Company by the Trustee or to the Company and the Trustee by the holders of 25% in aggregate principal amount of such series of Debt Securities then Outstanding; or (vi) certain events of bankruptcy, insolvency or reorganization with respect to the Company shall have occurred. If an Event of Default shall occur and be continuing with respect to a series of Debt Securities, either the Trustee or the holders of at least 25% in principal amount of the Outstanding Debt Securities of such series may declare the entire principal amount, or, in the case of Discounted Securities, such lesser amount as may be provided for in such Discounted Securities, of all the Debt Securities of such series to be immediately due and payable. Under each of the Indentures, the Company is required to furnish the Trustee annually a statement by certain officers of the Company to the effect that to the best of their knowledge the Company is not in default in the fulfillment of any of its obligations under the Indenture or, if there has been a default in the fulfillment of any such obligation, specifying each such default. Each of the Indentures provides that the Trustee shall, within 90 days after the occurrence of a default with respect to a particular series of Debt Securities (unless such default has been cured or waived), give the holders of the Debt Securities of such series notice of such default known to it (the term default to mean the events specified above without grace periods); PROVIDED that, except in the case of a default in the payment of principal of (or premium, if any) or interest, if any, on any of the Debt Securities of such series, the Trustee shall be protected in withholding such notice if it in good faith determines the withholding of such notice is in the interest of the holders of the Debt Securities of such series. The holders of a majority in principal amount of a particular series of Debt Securities Outstanding have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such series or exercising any trust or power conferred on the Trustee, and to waive certain defaults. Each of the Indentures provides that in case an Event of Default shall occur and be continuing, the Trustee shall exercise such of its rights and powers under the Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of the 9 28 Debt Securities unless they shall have offered to the Debt Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request. SATISFACTION AND DISCHARGE. Except as may otherwise be set forth in the Prospectus Supplement relating to a series of Debt Securities, each of the Indentures provides that the Company shall be discharged from its obligations under the Debt Securities of such series (with certain exceptions) at any time prior to the Stated Maturity or redemption thereof when (a) the Company has deposited with the Trustee, in trust, sufficient funds to pay the principal of (and premium, if any) and interest, if any, to Stated Maturity (or to Redemption Date) on, the Debt Securities of such series, (b) the Company has paid all other sums payable with respect to the Debt Securities of such series and (c) certain other conditions are met. Upon such discharge, the holders of the Debt Securities of such series shall no longer be entitled to the benefits of the Indenture, except for certain rights, including registration of transfer and exchange of the Debt Securities of such series and replacement of mutilated, destroyed, lost or stolen Debt Securities, and shall look only to such deposited funds. Such discharge may be treated as a taxable exchange of the related Debt Securities for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, holders of such Debt Securities would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Debt Securities. Such holders thereafter might be required to include in income a different amount than would be includable in the absence of discharge. Prospective investors are urged to consult their own tax advisors as to the specific consequences of discharge. MODIFICATION AND WAIVER. Certain modifications and amendments (which, generally, either benefit or do not affect the holders of Outstanding Debt Securities) of each of the Indentures may be made by the Company and the Trustee without the consent of holders of the Debt Securities. Other modifications and amendments of each Indenture require the consent of the holders of more than 50% in principal amount of the Outstanding Debt Securities of each series issued under the Indenture affected by the modification or amendment; PROVIDED, HOWEVER, that no such modification or amendment may, without the consent of the holder of each Outstanding Debt Security affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of or interest, if any, on any Debt Security, (b) reduce the principal amount of (or premium, if any) or interest, if any, on any Debt Security, (c) reduce the amount of principal of a Discounted Security payable upon acceleration of the Maturity thereof, (d) change the Place of Payment, (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date) or (f) reduce the percentage in principal amount of Outstanding Debt Securities of any series, the consent of the holders of which is required for modification or amendment of such Indenture or for waiver of compliance with certain provisions of such Indenture or for waiver of certain defaults. The holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the holders of all Debt Securities of that series waive, insofar as that series is concerned, compliance by the Company with certain restrictive provisions of the Indenture. The holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may on behalf of the holders of all Debt Securities of that series waive any past default under the Indenture with respect to that series, except a default in the payment of the principal of (or premium, if any) and interest, if any, on any Debt Security of that series or in respect of a provision which under the Indenture cannot be modified or amended without the consent of the holder of each Outstanding Debt Security of that series affected. NOTICES. Notices to holders of Debt Securities will be given by mail to the addresses of such holders as they appear in the Debt Security Register. GOVERNING LAW. The Indentures and the Debt Securities are to be governed by and construed in accordance with the laws of the State of New York. 10 29 PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES Senior Debt Securities will be issued under the Senior Indenture and will rank PARI PASSU with all other existing and future unsecured Senior Indebtedness of the Company. Senior Debt Securities will be structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which Indebtedness totalled $578 million at December 31, 1995. PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES GENERAL. Subordinated Debt Securities will be issued under the Subordinated Indenture and will rank PARI PASSU with certain other subordinated debt of the Company that may be outstanding from time to time and will rank junior to all Senior Indebtedness of the Company (including any Senior Debt Securities) that may be outstanding from time to time. At December 31, 1995, the Company had $423 million of Senior Indebtedness outstanding. Subordinated Debt Securities will also be structurally subordinated to all existing and future Indebtedness of the Company's subsidiaries, which Indebtedness totalled $578 million at December 31, 1995. SUBORDINATION. The Indebtedness represented by the Subordinated Debt Securities is subordinated in right of payment to the prior payment in full of all Senior Indebtedness. No payment or distribution shall be made on account of the principal of or premium, if any, or interest on, or the purchase, redemption or other acquisition of, the Subordinated Debt Securities in the event and during the continuation of any default in the payment of any Senior Indebtedness beyond any applicable grace period. Payments of principal, premium, if any, and interest on, or redemption or other acquisition by the Company of, the Subordinated Debt Securities may also be blocked in the event of other defaults which allow acceleration of the maturity of any Senior Indebtedness. The Subordinated Indenture will provide that in the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or its assets, or any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary, or any assignment for the benefit of creditors or other marshaling of assets or liabilities of the Company, all Senior Indebtedness must be paid in full, or provision made for such payment, before any payment or distribution (excluding certain permitted equity or subordinated securities) is made on account of the principal of or premium, if any, or interest on the Subordinated Debt Securities. By reason of such subordination, in the event of liquidation or insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the holders of the Subordinated Debt Securities. By reason of such subordination, in the event of liquidation or insolvency, creditors of the Company who are holders of Senior Indebtedness may recover more, ratably, than the holders of the Subordinated Debt Securities. For purposes of the foregoing, Senior Indebtedness will be defined to mean all Indebtedness of the Company and any accrued but unpaid interest on such Indebtedness, unless in each case by the terms of the instrument creating or evidencing such Indebtedness it is provided that such Indebtedness is not senior in right of payment to the Subordinated Debt Securities or that such Indebtedness is PARI PASSU with or subordinate in right of payment to the Subordinated Debt Securities; provided that Senior Indebtedness does not include (i) the Company's 10 1/2% Subordinated Debentures due August 1, 2004, 11 1/2% Subordinated Notes due June 1, 2001 and 7% Convertible Subordinated Debentures due March 28, 2001, (ii) any obligations of the Company to any of its subsidiaries, or (iii) any obligations of the Company arising from redeemable stock. CONCERNING THE TRUSTEES The Senior Debt Trustee, The Fifth Third Bank, Cincinnati, Ohio, is a state banking association organized under the laws of the State of Ohio. The Bank is a regional commercial bank offering a wide range of banking services to individual and business customers. The Subordinated Debt Trustee, Star Bank, N.A., Cincinnati, Ohio, is a national banking association organized under the laws of the United States of America. 11 30 DESCRIPTION OF EQUITY SECURITIES Chiquita has 150,000,000 authorized shares of Capital Stock, par value $.33 per share (the "Common Stock"), of which 55,234,823 shares were outstanding on April 1, 1996. Chiquita has authorized 10,000,000 shares of Non-Voting Cumulative Preferred Stock, $1.00 par value per share (the "Non-Voting Preferred Stock"), of which 2,875,000 shares were outstanding on April 1, 1996 designated as $2.875 Non-Voting Cumulative Preferred Stock, Series A; and 4,000,000 shares of Cumulative Preference Stock, without par value (the "Preference Stock"), no shares of which were outstanding on April 1, 1996. Each of the Non-Voting Preferred Stock and the Preference Stock may be issued in one or more series having such designated preferences and rights, qualifications and limitations as the Board of Directors may from time to time determine without requiring any vote of the shareholders. The issuance of preferred or preference stock by the Board of Directors could be utilized, under certain circumstances, as a method of preventing a takeover of Chiquita. There are no other provisions in the Company's Second Restated Certificate of Incorporation or By-Laws that would have an effect of delaying, deferring or preventing a change in control of Chiquita. Various debt instruments of the Company restrict, among other things, dividends and other distributions on, and repurchases or redemptions of, the Company's capital stock. At December 31, 1995, these restrictions would have allowed the payment of approximately $160 million for dividends and other corporate distributions, redemptions or repurchases. The ability of the Company to pay dividends when, as and if declared by the Board of Directors, may be subject to restrictions contained in any future debt agreements and to limitations contained in future series or classes of preferred or preference shares and is subject to the legal availability of funds. DESCRIPTION OF COMMON STOCK Chiquita has 150,000,000 authorized shares of Common Stock, of which 55,234,823 shares were outstanding on April 1, 1996. Holders of Common Stock are entitled to one vote per share on the election of directors and all other matters submitted to a vote of shareholders. Shares of Common Stock do not have cumulative voting rights. Holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors, out of funds legally available therefor; provided, however, that all dividends on any preferred stock and preference stock which may be issued in the future must be fully paid or declared and set apart before any dividends can be paid or declared and set apart with respect to the Common Stock. Upon liquidation, dissolution or winding-up of Chiquita, the holders of the Common Stock are entitled to share ratably in the assets of Chiquita remaining after the payment of its obligations and liabilities and after payment due the holders of Chiquita's preferred stock and preference stock. Holders of Common Stock have no preemptive or other rights to subscribe for or purchase additional securities of Chiquita. All outstanding shares of Common Stock are fully paid and nonassessable. DESCRIPTION OF PREFERENCE STOCK The Board of Directors of the Company may provide for the issuance of up to 4,000,000 shares of Preference Stock in one or more series. The rights, preferences, privileges and restrictions, including dividend rights, voting rights, conversion rights, terms of redemption and liquidation preferences of each series may be fixed or designated by the Board of Directors without any further vote or action by the Company's shareholders. Upon issuance after full payment of the purchase price therefor, shares of Preference Stock offered hereby will be fully paid and nonassessable. 12 31 The specific terms of a particular series of Preference Stock offered hereby will be described in a Prospectus Supplement relating to such series and will include, without limitation, the following: (i) the maximum number of shares to constitute the series and the distinctive designation thereof; (ii) the annual dividend rate, if any, on shares of the series, whether such rate is fixed or variable or both, the date or dates from which dividends will begin to accrue or accumulate and whether dividends will be cumulative; (iii) whether the shares of the series will be redeemable and, if so, the price at and the terms and conditions on which the shares of the series may be redeemed, including the time during which shares of the series may be redeemed and any accumulated dividends thereon that the holders of the series shall be entitled to receive upon the redemption thereof; (iv) the liquidation preference, if any, applicable to shares of the series; (v) whether the shares of the series will be subject to operation of a retirement or sinking fund and, if so, the extent and manner in which any such fund shall be applied to the purchase or redemption of the shares of the series for retirement or for other corporate purposes, and the terms and provisions relating to the operation of such fund; (vi) the terms and conditions, if any, on which the shares of the series shall be convertible into, or exchangeable for, any other debt or equity securities; (vii) the voting power, if any, of any series; and (viii) any other preferences and relative, participating, optional or other special rights or qualifications, limitations or restrictions thereof. DESCRIPTION OF NON-VOTING PREFERRED STOCK Chiquita has 10,000,000 authorized shares of Non-Voting Preferred Stock, of which 2,875,000 shares, designated as $2.875 Non-Voting Cumulative Preferred Stock, Series A, par value $1.00 per share (the "Series A Preferred Stock"), were outstanding on April 1, 1996. The Non-Voting Preferred Stock may be issued in one or more series and the rights, preferences, privileges and restrictions, including dividend rights, conversion rights, terms of redemption and liquidation preferences of each series may be fixed or designated by the Board of Directors of the Company without any further vote or action by the Company's shareholders; provided however, that no series of Preferred Stock shall have the right to vote unconditionally in the election of directors of the Company. Upon issuance after full payment of the purchase price therefor, shares of Non-Voting Preferred Stock offered hereby will be fully paid and nonassessable. The specific terms of a particular series of Non-Voting Preferred Stock offered hereby will be described in a Prospectus Supplement relating to such series and will include, without limitation, the following: (i) the maximum number of shares to constitute the series and the distinctive designation thereof; (ii) the annual dividend rate, if any, on shares of the series, whether such rate is fixed or variable or both, the date or dates from which dividends will begin to accrue or accumulate and whether dividends will be cumulative; (iii) whether the shares of the series will be redeemable and, if so, the price at and the terms and conditions on which the shares of the series may be redeemed, including the time during which shares of the series may be redeemed and any accumulated dividends thereon that the holders of shares of the series shall be entitled to receive upon the redemption thereof; (iv) the liquidation preference, if any, applicable to shares of the series; (v) whether the shares of the series will be subject to operation of a retirement or sinking fund and, if so, the extent and manner in which any such fund shall be applied to the purchase or redemption of the 13 32 shares of the series for retirement or for other corporate purposes, and the terms and provisions relating to the operation of such fund; (vi) the terms and conditions, if any, on which the shares of the series shall be convertible into, or exchangeable for, any other debt or equity securities; (vii) special voting rights, if any, of any series; and (viii) any other preferences and relative, participating, optional or other special rights or qualifications, limitations or restrictions thereof. THE SERIES A PREFERRED STOCK. Dividends on the Series A Preferred Stock accrue at an annual rate of $2.875 per share, are cumulative from February 15, 1994, and are payable quarterly in arrears, commencing June 7, 1994. The shares of Series A Preferred Stock have a liquidation preference of $50.00 per share plus dividends in arrears, if any. The Series A Preferred Stock is not convertible at the option of the Company prior to February 15, 1997. On and after February 15, 1997 until February 15, 2001, the Series A Preferred Stock will be convertible, in whole or in part, at the option of the Company, for such number of shares of the Company's Common Stock as are issuable at a conversion rate of 2.6316 shares of Common Stock for each share of Series A Preferred Stock, subject to adjustment in certain circumstances. The Company may exercise this option only if for 20 trading days within any period of 30 consecutive trading days, including the last trading day of such 30 trading day period, the closing price of the Common Stock on the New York Stock Exchange (the "NYSE") exceeds $24.70, subject to adjustment in certain circumstances. On and after February 15, 2001, the Series A Preferred Stock will be convertible, in whole or in part, at the option of the Company, into that number of shares of Common Stock which shall have a current market price (calculated by averaging the closing prices of the Common Stock on the NYSE for the five trading days immediately preceding the conversion date) equal to $50.00 per share of Series A Preferred Stock. However, in no event shall the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible exceed 10, subject to adjustment in certain circumstances. Each share of Series A Preferred Stock is convertible at any time, at the holder's option, into 2.6316 shares of Common Stock, subject to adjustment in certain circumstances. The Series A Preferred Stock is not redeemable, and there is no redemption or sinking fund obligation with respect to the Series A Preferred Stock. DEPOSITARY SHARES GENERAL. The Company may, at its option, elect to offer fractional shares of Preferred Stock (either Non-Voting Preferred Stock or Preference Stock) rather than full shares of Preferred Stock. In the event such option is exercised, the Company will issue to the public receipts for Depositary Shares, each of which will represent a fraction (to be set forth in the Prospectus Supplement relating to a particular series of Preferred Stock) of a share of a particular series of Preferred Stock as described below. The shares of any series of Preferred Stock represented by Depositary Shares will be deposited under a Deposit Agreement (the "Deposit Agreement") between the Company and, unless otherwise indicated in the Prospectus Supplement, a bank or trust company selected by the Company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will be entitled, in proportion to the applicable fraction of a share of Preferred Stock represented by such Depositary Share, to all the rights and preferences of the Preferred Stock represented thereby (including dividend, voting, redemption and liquidation rights). The Depositary Shares will be evidenced by depositary receipts issued pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts will be distributed to those persons purchasing the fractional shares of Preferred Stock in accordance with the terms of the offering. Copies of the forms of 14 33 Deposit Agreement and Depositary Receipt are filed as exhibits to the Registration Statement of which this Prospectus is a part, and the following summary is qualified in its entirety by reference to such exhibits. If required by law or applicable securities exchange rules, engraved Depositary Receipts will be prepared. Pending the preparation of definitive engraved Depositary Receipts, the Depositary may, upon the written order of the Company, issue temporary Depositary Receipts substantially identical to (and entitling the holders thereof to all the rights pertaining to) the definitive Depositary Receipts but not in definitive form. Definitive Depositary Receipts will be prepared thereafter without unreasonable delay, and temporary Depositary Receipts will be exchangeable for definitive Depositary Receipts at the Company's expense. DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary will distribute all cash dividends or other cash distributions received in respect of the Preferred Stock to the record holders of Depositary Shares relating to such Preferred Stock in proportion to the number of such Depositary Shares owned by such holders. In the event of a distribution other than in cash, the Depositary will distribute property received by it to the record holders of Depositary Shares entitled thereto, as nearly as practicable, in proportion to the number of Depositary Shares owned by such holder, unless the Depositary determines that it is not feasible to make such distribution, in which case the Depositary may, with the approval of the Company, sell such property and distribute the net proceeds from such sale to such holders. REDEMPTION OF DEPOSITARY SHARES. If a series of Preferred Stock represented by Depositary Shares is subject to redemption, the Depositary Shares will be redeemed from the proceeds received by the Depositary resulting from the redemption, in whole or in part, of such series of Preferred Stock held by the Depositary. The redemption price per Depositary Share will be equal to the applicable fraction of the redemption price per share payable with respect to such series of the Preferred Stock. Whenever the Company redeems shares of Preferred Stock held by the Depositary, the Depositary will redeem as of the same redemption date the number of Depositary Shares representing the shares of Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by lot or pro rata as may be determined by the Depositary. VOTING THE PREFERRED STOCK. Upon receipt of notice of any meeting at which the holders of the Preferred Stock are entitled to vote, the Depositary will mail the information contained in such notice of meeting to the record holders of the Depositary Shares relating to such Preferred Stock. Each record holder of such Depositary Shares on the record date (which will be the same date as the record date for the Preferred Stock) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of the Preferred Stock represented by such holder's Depositary Shares. The Depositary will endeavor, insofar as practicable, to vote the amount of the Preferred Stock represented by such Depositary Shares in accordance with such instructions, and the Company will agree to take all action that may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will abstain from voting shares of the Preferred Stock to the extent it does not receive specific instructions from the holders of Depositary Shares representing such Preferred Stock. AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT. The form of Depositary Receipt evidencing the Depositary Shares and any provision of the Deposit Agreement may at any time be amended by agreement between the Company and the Depositary. However, any amendment that materially adversely alters the rights of the holders of Depositary Shares will not be effective unless such amendment has been approved by the holders of at least a majority of the Depositary Shares then outstanding. The Deposit Agreement may be terminated by the Company or the Depositary only if (i) all outstanding Depositary Shares have been redeemed and all accumulated and unpaid dividends on the Preferred Stock, together with all other money or property, if any, to which holders of Depositary Shares are entitled, shall have been paid or distributed, or (ii) there has been a final distribution in respect of the Preferred Stock in connection with any liquidation, dissolution or winding up of the Company and such distribution has been distributed to the holders of Depositary Receipts. CHARGES OF DEPOSITARY. The Company will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. The Company will pay the Depositary's fees 15 34 and its reasonable charges in connection with the initial deposit of the Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary Receipts will pay other transfer and other taxes and governmental charges and such other charges, including a fee for the withdrawal of shares of Preferred Stock upon surrender of Depositary Receipts, as are expressly provided in the Deposit Agreement to be for their accounts. WITHDRAWAL OF PREFERRED STOCK. Upon surrender of Depositary Receipts at the principal office of the Depositary, subject to the terms of the Deposit Agreement, the owner of the Depositary Shares evidenced thereby is entitled to delivery of the number of whole shares of Preferred Stock and all money and other property, if any, represented by such Depositary Shares. Partial shares of Preferred Stock will not be issued. If the Depositary Receipts delivered by the holder evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of Preferred Stock to be withdrawn, the Depositary will deliver to such holder at the same time a new Depositary Receipt evidencing such excess number of Depositary Shares. Holders of Preferred Stock thus withdrawn will not thereafter be entitled to deposit such shares under the Deposit Agreement or to receive Depositary Receipts evidencing Depositary Shares therefor. MISCELLANEOUS. The Depositary will forward to holders of Depository Receipts all reports and communications that the Company is required to furnish to the holders of the Preferred Stock and that are delivered to the Depositary. Neither the Depositary nor the Company will be liable if it is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the Deposit Agreement. The obligations of the Company and the Depositary under the Deposit Agreement will be limited to performance of their duties thereunder and they will not be obligated to prosecute or defend any legal proceeding in respect of any Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished. Neither the Depositary nor any agent nor the Company shall be subject to any liability to any holder other than for gross negligence or willful misconduct. They may rely upon written advice of counsel or accountants, or upon information provided by persons presenting Preferred Stock for deposit, holders of Depositary Receipts or other persons believed to be competent and on documents believed to be genuine. RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may resign at any time by delivering to the Company notice of its election to do so, and the Company may at any time remove the Depositary, any such resignation or removal to take effect upon the appointment of a successor Depositary and its acceptance of such appointment. Such successor Depositary must be appointed within 60 days after delivery of the notice of resignation or removal and, unless otherwise indicated in the Prospectus Supplement, must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50,000,000. DESCRIPTION OF SECURITIES WARRANTS The Company may issue Securities Warrants for the purchase of Debt Securities, Preferred Stock, Depositary Shares or Common Stock. Securities Warrants may be issued independently or together with Debt Securities, Preferred Stock, Depositary Shares or Common Stock offered by any Prospectus Supplement and may be attached to or separate from any such Offered Securities. Each series of Securities Warrants will be issued under a separate warrant agreement (a "Securities Warrant Agreement") to be entered into between the Company and a bank or trust company, as warrant agent (the "Securities Warrant Agent"), all as set forth in the Prospectus Supplement relating to the particular issue of Securities Warrants. The Securities Warrant Agent will act solely as an agent of the Company in connection with the Securities Warrants and will not assume any obligation or relationship of agency or trust for or with any holders of Securities Warrants or beneficial owners of Securities Warrants. The following summary of certain provisions of the Securities Warrants does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all provisions of the Securities Warrant Agreements. Reference is made to the Prospectus Supplement relating to the particular issue of Securities Warrants offered thereby for the terms of and information relating to such Securities Warrants, including, where 16 35 applicable: (i) the designation, aggregate principal amount, currencies, denominations, and terms of the series of Debt Securities purchasable upon exercise of Debt Warrants and the price at which such Debt Securities may be purchased upon such exercise; (ii) the number of shares of Common Stock purchasable upon the exercise of Common Stock Warrants and the price at which such number of shares of Common Stock may be purchased upon such exercise; (iii) the number of shares and series of Preferred Stock and/or Depositary Shares purchasable upon the exercise of Preferred Stock Warrants and the price at which such number of shares of such series of Preferred Stock and/or Depositary Shares may be purchased upon such exercise; (iv) the date on which the right to exercise such Securities Warrants shall commence and the date on which such right shall expire (the "Expiration Date"); (v) United States Federal income tax consequences applicable to such Securities Warrants; (vi) the amount of warrants outstanding as of the most recent practicable date; and (vii) any other terms of such Securities Warrants. Common Stock Warrants will be offered and exercisable for U.S. Dollars or foreign currency, as specified in the Prospectus Supplement. Securities Warrants will be issued in registered form only. Each Securities Warrant will entitle the holder thereof to purchase such principal amount of Debt Securities or such number of shares of Preferred Stock, Depositary Shares or Common Stock at such exercise price as shall in each case be set forth in, or calculable from, the Prospectus Supplement relating to the Securities Warrants, which exercise price may be subject to adjustment upon the occurrence of certain events as set forth in such Prospectus Supplement. After the close of business on the Expiration Date (or such later date to which such Expiration Date may be extended by the Company), unexercised Securities Warrants will become void. The place or places where, and the manner in which, Securities Warrants may be exercised shall be specified in the Prospectus Supplement relating to such Securities Warrants. Prior to the exercise of any Securities Warrants to purchase Debt Securities, Preferred Stock, Depositary Shares or Common Stock, holders of such Securities Warrants will not have any of the rights of holders of Debt Securities, Preferred Stock, Depositary Shares or Common Stock, as the case may be, purchasable upon such exercise, including the right to receive payments of principal of, premium, if any, or interest, if any, on the Debt Securities purchasable upon such exercise or to enforce covenants in the applicable Indenture, or to receive payments of dividends, if any, on the Preferred Stock, Depositary Shares or Common Stock purchasable upon such exercise, or to exercise any applicable right to vote. PLAN OF DISTRIBUTION The Company may sell the Securities (i) through underwriters or dealers; (ii) through agents; (iii) directly to one or more institutional purchasers; or (iv) through a combination of any such methods of sale. The Prospectus Supplement with respect to the Securities offered thereby will set forth the terms of the offering of such Securities, including the name or names of any underwriters, dealers or agents, the purchase price of such Securities and the proceeds to the Company from such sale, any underwriting discounts and other items constituting compensation to underwriters, dealers or agents, any initial public offering price, any discounts or concessions allowed or reallowed or paid by underwriters or dealers to other dealers and any securities exchanges on which such Securities may be listed. Only underwriters so named in the Prospectus Supplement are deemed to be underwriters in connection with the Securities offered thereby. If underwriters or dealers are used in the sale, the Securities will be acquired by the underwriters or dealers for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more of such firms. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase such Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of the Securities offered by the Prospectus Supplement if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Securities may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offering and sale of the Securities in respect of which this Prospectus is 17 36 delivered will be named, and any commissions payable by the Company to such agent (or the method by which such commissions can be determined) will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the Prospectus Supplement, the Company will authorize underwriters, dealers or other persons acting as the Company's agents to solicit offers by certain specified institutions to purchase Securities from the Company at the public offering price set forth in the Prospectus Supplement pursuant to contracts providing for payment and delivery on a specified date in the future. Institutional investors to which such offers may be made, when authorized, include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and such other institutions as may be approved by the Company. The obligations of any such purchasers pursuant to such delayed delivery and payment arrangements will not be subject to any conditions except that (i) such purchase shall not at the time of delivery be prohibited under the laws of any jurisdiction to which such purchaser is subject and (ii) the Company shall have sold to the Underwriters the total amount of Securities being offered pursuant to the Prospectus Supplement less the amount of Securities subject to such delayed delivery and payment arrangements. The Prospectus Supplement will set forth the commission payable for solicitation of such contracts. The underwriters and other persons soliciting such contracts will have no responsibility for the validity or performance of any such contracts. Underwriters, dealers and agents may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution by the Company with respect to payments they may be required to make in respect thereof. Underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for the Company in the ordinary course of business. Securities other than the Company's Common Stock may or may not be listed on a national securities exchange. No assurances can be given that there will be a market for such Securities. LEGAL MATTERS The legality of the Securities and certain other legal matters in connection with the offering will be passed upon for the Company by Robert W. Olson, Vice President, General Counsel and Secretary of the Company. Certain legal matters will be passed upon for any underwriter or agent by Simpson Thacher & Bartlett (a partnership which includes professional corporations), New York, New York. Mr. Olson presently holds shares of Chiquita Common Stock and employee stock options to purchase shares of Chiquita Common Stock, as well as shares of AFG common stock and options to purchase shares of AFG common stock. EXPERTS The consolidated financial statements of Chiquita Brands International, Inc. incorporated by reference in Chiquita Brands International, Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1995 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated by reference therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 18 37 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, BY THE UNDERWRITERS OR BY ANY OTHER PERSON. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. --------------------------- TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- Prospectus Supplement Summary......... S-2 Selected Consolidated Financial Data................................ S-4 Recent Developments................... S-5 Use of Proceeds....................... S-6 Capitalization........................ S-7 Description of Senior Notes........... S-8 Underwriting.......................... S-18 PROSPECTUS Available Information................. 2 Incorporation of Certain Documents by Reference........................... 2 The Company........................... 3 Risk Factors.......................... 3 Use of Proceeds....................... 6 Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends........................... 6 Description of Debt Securities........ 7 Description of Equity Securities...... 12 Description of Securities Warrants.... 16 Plan of Distribution.................. 17 Legal Matters......................... 18 Experts............................... 18
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- $125,000,000 [LOGO] CHIQUITA BRANDS INTERNATIONAL % SENIOR NOTES DUE 2006 --------------------------- PROSPECTUS SUPPLEMENT JULY , 1996 --------------------------- LEHMAN BROTHERS BEAR, STEARNS & CO. INC. FURMAN SELZ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----