-----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, FQe1CfUf0OS/X0dnuKXFxibXk0V/cQ1KdVbtFYAAP4EM6IV9NkSKgdUzrxT9Qp+v OPnheMPPFP59pdT4Dz6QKw== 0000950152-96-003559.txt : 19960725 0000950152-96-003559.hdr.sgml : 19960725 ACCESSION NUMBER: 0000950152-96-003559 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960724 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: 96598170 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 BRANDS INTERNATIONAL 424(B)(5) 1 This filing is made pursuant to Rule 424(b)(5) under the Securities Act of 1933 in connection with Registration No. 333-00789 PROSPECTUS SUPPLEMENT (To Prospectus dated May 1, 1996) 2,000,000 SHARES Logo CHIQUITA BRANDS INTERNATIONAL, INC. $3.75 CONVERTIBLE PREFERRED STOCK, SERIES B (LIQUIDATION PREFERENCE OF $50.00 PER SHARE) --------------------------- Chiquita Brands International, Inc. ("Chiquita" or the "Company") is offering (the "Offering") 2,000,000 shares of $3.75 Convertible Preferred Stock, Series B, a series of its Non-Voting Cumulative Preferred Stock, par value $1.00 per share (the "Series B Preferred Shares"). Dividends on the Series B Preferred Shares will accrue at an annual rate of $3.75 per share, will be cumulative from July 26, 1996 and will be payable quarterly in arrears, commencing September 7, 1996. The Series B Preferred Shares have a liquidation preference of $50.00 per share plus dividends in arrears, if any. The Series B Preferred Shares are not convertible at the option of the Company prior to September 10, 1999. On and after September 10, 1999, the Series B Preferred Shares will be convertible, in whole or in part, at the option of the Company. Each Series B Preferred Share as to which this option is exercised will be converted into that number of shares of the Company's Capital Stock, par value $0.33 per share (the "Common Stock"), which shall have a current market value (calculated by averaging the closing prices of the Common Stock on the New York Stock Exchange ("NYSE") for the 15 consecutive trading days ending on the second trading day preceding the conversion date) of $51.50 if converted during the twelve-month period beginning September 10, 1999 (and of amounts decreasing thereafter to $50.00 if converted on or after September 10, 2001). Prior to September 10, 2003, the Company may exercise this conversion option only if the average of the closing prices of the Common Stock on the NYSE for the 15 consecutive trading days ending on the second trading day preceding the date on which the Company gives notice of such conversion equals or exceeds $7.00, subject to adjustment in certain circumstances. However, in no event shall the number of shares of Common Stock into which each Series B Preferred Share is convertible exceed 10, subject to adjustment in certain circumstances. Each Series B Preferred Share will be convertible, at any time after the 60th day following the final closing of the Offering through the business day preceding a Company conversion, at the holder's option, into 3.3333 shares of Common Stock, subject to adjustment in certain circumstances. On July 22, 1996, the closing price of the Common Stock on the NYSE was $12.25 per share. The Series B Preferred Shares are not redeemable for cash, and there is no redemption or sinking fund obligation with respect to the Series B Preferred Shares. Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Senior Note Offering") of $150,000,000 aggregate principal amount of 10 1/4% Senior Notes due 2006 (the "Senior Notes"). The Offering is not contingent upon the consummation of the Senior Note Offering. See "Use of Proceeds." Application has been made to list the Series B Preferred Shares on the NYSE. --------------------------- 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 SERIES B PREFERRED SHARES. --------------------------- 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.
===================================================================================================================== PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO PUBLIC(1) AND COMMISSIONS(2) COMPANY(1)(3) - --------------------------------------------------------------------------------------------------------------------- Per Share....................................... $50.00 $1.625 $48.375 - --------------------------------------------------------------------------------------------------------------------- Total(4)........................................ $100,000,000 $3,250,000 $96,750,000 ===================================================================================================================== (1) Plus accrued dividends, if any, from July 26, 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 $375,000. (4) The Company has granted the Underwriters a 30-day option to purchase up to an aggregate of 300,000 additional shares solely to cover over-allotments. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company, before deducting expenses, will be $115,000,000, $3,737,500, and $111,262,500, respectively. See "Underwriting."
--------------------------- The Series B Preferred Shares 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 Series B Preferred Shares will be made at the offices of Lehman Brothers Inc., New York, New York, on or about July 26, 1996. --------------------------- LEHMAN BROTHERS BEAR, STEARNS & CO. INC. PRUDENTIAL SECURITIES INCORPORATED SBC WARBURG INC. JULY 22, 1996 A SUBSIDIARY OF SWISS BANK CORPORATION 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 SERIES B PREFERRED SHARES OFFERED HEREBY OR THE COMMON STOCK AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 3 THE OFFERING Securities Offered......... 2,000,000 shares of $3.75 Convertible Preferred Stock, Series B, a series of the Company's Non-Voting Cumulative Preferred Stock, par value $1.00 per share (the "Series B Preferred Shares"); 2,300,000 shares if the Underwriters' over-allotment option is exercised in full. Dividends.................. Cumulative from July 26, 1996 at an annual rate of $3.75 per share, payable in cash quarterly in arrears, commencing September 7, 1996, when, as and if declared by the Board of Directors of the Company. See "Description of Series B Preferred Shares -- Dividends." Liquidation Preference..... $50.00 per share, plus dividends in arrears, if any. See "Description of Series B Preferred Shares -- Liquidation Preference." Conversion at the Option of the Company................ The Series B Preferred Shares are not convertible at the option of the Company prior to September 10, 1999. On and after September 10, 1999, the Series B Preferred Shares will be convertible, in whole or in part, at the option of the Company. Each Series B Preferred Share as to which this option is exercised will be converted into that number of shares of Common Stock which shall have a current market value (calculated by averaging the closing prices of the Common Stock on the NYSE for the 15 consecutive trading days ending on the second trading day preceding the conversion date) of $51.50 if converted during the twelve-month period beginning September 10, 1999 (and of amounts decreasing thereafter to $50.00 if converted on or after September 10, 2001). Prior to September 10, 2003, the Company may exercise this conversion option only if the average of the closing prices of the Common Stock on the NYSE for the 15 consecutive trading days ending on the second trading day preceding the date on which the Company gives notice of such conversion equals or exceeds $7.00, subject to adjustment in certain circumstances. However, in no event shall the number of shares of Common Stock into which each Series B Preferred Share is convertible exceed 10, subject to adjustment in certain circumstances. See "Description of Series B Preferred Shares -- Conversion -- At the Option of the Company." Conversion at the Option of the Holder................. Each Series B Preferred Share is convertible, at any time after the 60th day following the final closing of the Offering through the business day preceding a Company conversion, at the holder's option, into 3.3333 shares of Common Stock, subject to adjustment in certain circumstances. See "Description of Series B Preferred Shares -- Conversion -- At the Option of the Holder." Voting Rights.............. If dividends are in arrears for the equivalent of six or more quarterly dividend periods, whether or not consecutive, the number of directors of the Company shall be increased by two and holders of the Series B Preferred Shares, voting separately as a class with any other holders of preferred or preference stock of the Company having similar rights, at any annual or special meeting called for such purpose, will be entitled to elect two additional directors to serve until such dividend arrearage is eliminated. Except as described in the last sentence of this paragraph, a two-thirds vote of all outstanding Series B Preferred Shares, voting as a class with all other affected series of Non-Voting Cumulative Preferred S-3 4 Stock having similar voting rights, is required to amend the Company's Second Restated Certificate of Incorporation (the "Certificate of Incorporation"), to authorize the creation of any class or series of stock having a preference as to dividends or upon liquidation senior to or on a parity with the Series B Preferred Shares or to amend, alter or repeal the Certificate of Incorporation in a manner that would materially adversely affect the terms of the Series B Preferred Shares. In all other respects, except as required by law, the holders of the Series B Preferred Shares will have no voting rights. The Company's Certificate of Incorporation presently permits the Company to issue, without the consent of any holder of Series B Preferred Shares, in one or more series, up to 9,125,000 currently authorized and unissued shares (after giving effect to the Offering) of preferred or preference stock which could rank senior to or pari passu with the Series B Preferred Shares as to dividends or upon liquidation. See "Description of Series B Preferred Shares -- Voting Rights." Redemption................. The Series B Preferred Shares are not redeemable for cash, and there is no redemption or sinking fund obligation with regard to the Series B Preferred Shares. Ranking.................... The Series B Preferred Shares will rank senior to the Common Stock with respect to dividends and liquidating distributions and pari passu with the Company's $2.875 Non-Voting Cumulative Preferred Stock, Series A, of which 2,875,000 shares are currently outstanding. See "Description of Series B Preferred Shares -- Ranking." Concurrent Offering........ Concurrently with the Offering, the Company is making a public offering through a separate prospectus supplement (the "Senior Note Offering") of $150,000,000 aggregate principal amount of 10 1/4% Senior Notes due 2006 (the "Senior Notes"). The Offering is not contingent upon the consummation of the Senior Note Offering. Use of Proceeds............ The net proceeds from the issuance of Series B Preferred Shares offered hereby are expected to be approximately $96,375,000. The net proceeds from the Senior Note Offering are expected to be approximately $144,635,500. 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." Application for Listing.... Application has been made to list the Series B Preferred Shares on the NYSE. S-4 5 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 operations(2)....................... -- 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 operations(2)..................... -- .07 (.21) .69 -- Extraordinary item............................. -- -- (.14) (.44) -- ---------- ---------- ---------- ---------- ---------- Net income (loss).............................. $ .38 $ .62 $ .02 $ (1.51) $ (.99) ========== ========== ========== ========== ========== Ratio of earnings to fixed charges(3)............ 1.71 1.78 1.20 --(3) --(3) Ratio of earnings to combined fixed charges and preferred stock dividends(3)................... 1.63 1.68 1.16 --(3) --(3) BALANCE SHEET DATA: Cash and marketable securities(4).............. $ 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 debt(4).............................. 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 amortization(1).............................. $ 81,006 $ 102,369 $ 280,351 $ 184,265 $ 213,559 Capital expenditures(5)........................ 12,255 15,506 64,640 136,981 196,554 Dividends declared per common share............ .05 .05 .20 .20 .44 YEAR ENDED DECEMBER 31, ------------------------- 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 operations(2)....................... (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 operations(2)..................... (1.20) .33 Extraordinary item............................. -- -- ---------- ---------- Net income (loss).............................. $ (5.48) $ 2.52 ========== ========== Ratio of earnings to fixed charges(3)............ --(3) 1.73 Ratio of earnings to combined fixed charges and preferred stock dividends(3)................... --(3) 1.73 BALANCE SHEET DATA: Cash and marketable securities(4).............. $ 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 debt(4).............................. 1,411,319 1,202,839 Shareholders' equity........................... 667,962 967,925 OTHER DATA: Operating income (loss) plus depreciation and amortization(1).............................. $ (9,079) $ 258,076 Capital expenditures(5)........................ 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-5 6 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-6 7 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Series B Preferred Shares offered hereby, assuming no exercise of the over-allotment option, will be approximately $96,375,000. The net proceeds to be received by the Company from the Senior Note Offering (if such offering is consummated) will be approximately $144,635,500. 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 Senior Note 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-7 8 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 issuance of the Series B Preferred Shares offered hereby (assuming no exercise of the over-allotment option) and the sale of the Senior Notes, 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 Series B Preferred Shares and Senior Notes 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 Series B Preferred Shares and the Senior Notes. 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 10 1/4% Senior Notes due 2006 offered in the Senior Note Offering, less unamortized discount of $889 (imputed interest rate of 10.3%)................................................ -- 149,111 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 hereby (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 issuance of the Series B Preferred Shares and the sale of the Senior Notes 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 Shares (assuming no exercise of the over-allotment option).
S-8 9 COMMON STOCK PRICE RANGE AND DIVIDENDS Chiquita's Common Stock is listed on the New York, Boston and Pacific Stock Exchanges (symbol: CQB). The following table lists for the periods indicated the high and low closing prices of the Common Stock as reported on the New York Stock Exchange Composite Tape.
1996(A) 1995 1994 ----------------- ----------------- ----------------- CALENDAR QUARTER HIGH LOW HIGH LOW HIGH LOW ----------------------------- ------ ------ ------ ------ ------ ------ First Quarter................ $16.38 $12.63 $14.50 $12.25 $19.25 $11.25 Second Quarter............... 15.50 13.00 14.00 12.63 17.63 12.13 Third Quarter................ 13.50 12.25 17.25 13.63 17.00 12.13 Fourth Quarter............... 18.00 13.38 16.50 12.38 - --------------- (a) Third quarter data through July 22, 1996.
As of July 1, 1996, there were approximately 6,500 record holders of Chiquita's Common Stock. Since August 1993, Chiquita has paid dividends on its Common Stock at an annual rate of $.20 per share (a quarterly dividend of $.05 per share). 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 March 31, 1996, these restrictions would have allowed the payment of approximately $200 million for dividends and other corporate distributions, redemptions or repurchases. DESCRIPTION OF SERIES B PREFERRED SHARES GENERAL Under the Company's Second Restated Certificate of Incorporation (the "Certificate of Incorporation"), the Board of Directors of the Company is authorized without further shareholder action to provide for the issuance of up to 10,000,000 shares of Non-Voting Cumulative Preferred Stock, par value $1.00 per share, in one or more series, with such designated preferences, rights, qualifications, voting powers, restrictions, limitations and other terms and conditions as shall be set forth in resolutions providing for the issuance thereof adopted by the Board of Directors. The Company has previously authorized and issued 2,875,000 shares of $2.875 Non-Voting Cumulative Preferred Stock, Series A (the "Series A Preferred Stock"), all of which are currently outstanding. The Series B Preferred Shares will, when issued, be fully paid and nonassessable. The Series B Preferred Shares are not redeemable, and there is no redemption or sinking fund obligation with respect to the Series B Preferred Shares. The Series B Preferred Shares may be converted at the option of the Company as described under "Conversion -- At the Option of the Company" below. The holders of Series B Preferred Shares have no preemptive rights with respect to any securities of the Company. The transfer agent, registrar, dividend disbursing agent and conversion agent for the Series B Preferred Shares will be Securities Transfer Company (the "Transfer Agent"). Securities Transfer Company is an affiliate of the Company and of AFG. The following statements are summaries of certain provisions that will be contained in the Certificate of Amendment to the Certificate of Incorporation authorizing the issuance of the Series B Preferred Shares and setting forth the preferences, rights, qualifications and limitations of the Series B Preferred Shares. These statements do not purport to be complete and are qualified in their entirety by reference to such Certificate of Amendment, a copy of the form of which will be filed as an exhibit to the Company's Current Report on Form 8-K dated July 22, 1996 and which will be incorporated by reference in the accompanying Prospectus, and to the Certificate of Incorporation, a copy of which is an exhibit to the Registration Statement of which the accompanying Prospectus is a part. The Certificate of Amendment will be filed with the Secretary of State of New Jersey prior to the issuance of the Series B Preferred Shares. S-9 10 DIVIDENDS Holders of Series B Preferred Shares are entitled to receive, when, as and if declared by the Board of Directors of the Company out of assets of the Company legally available therefor, and subject to the rights of holders of the Series A Preferred Stock and other preferred or preference stock of the Company ranking senior to or on a parity with the Series B Preferred Shares, an annual cash dividend of $3.75 per share. Dividends on the Series B Preferred Shares will be payable quarterly in arrears on March 7, June 7, September 7 and December 7, commencing September 7, 1996, except that if any such date is not a business day, then such dividend will be payable on the next succeeding business day. Dividends on the Series B Preferred Shares will accrue and be cumulative from the date of initial issuance. Dividends will be payable to holders of record as they appear on the stock transfer books of the Company on such record dates, not less than 10 nor more than 60 days preceding the payment dates thereof, as shall be fixed by the Board of Directors. Dividends payable on the Series B Preferred Shares for any period greater or less than a full dividend period shall be computed on the basis of a 360-day year consisting of four 90-day quarters or twelve 30-day months. Holders of Series B Preferred Shares shall not be entitled to any dividend, whether payable in cash, property or securities, in excess of full cumulative dividends on the Series B Preferred Shares. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments which may be in arrears. Dividends paid on Series B Preferred Shares in an amount less than the total amount of dividends in arrears at the time accumulated and payable on such shares shall be allocated pro rata among all such shares at the time outstanding except as set forth in the following paragraph. On and after September 10, 1999, if the Company is in arrears in the payment of dividends, at the time of a conversion (whether at the option of the Company, at the option of the holder or pursuant to a mandatory conversion), the Company has the option to pay dividends in arrears and accrued and unpaid dividends in cash or in shares of Common Stock. Except as set forth below, if shares of any other series of preferred or preference stock of the Company are outstanding which rank junior to or on a parity with the Series B Preferred Shares as to dividends, no full dividends shall be declared or paid or set apart for payment on any such other series for any period unless full cumulative dividends have been or contemporaneously are declared and paid, or declared and a sum sufficient for the payment thereof set apart for such payment, on the Series B Preferred Shares for all dividend payment periods terminating on or prior to the date of the payment of such full cumulative dividends. If dividends are not paid in full, or declared in full and sums set apart for the payment thereof, upon the Series A Preferred Stock, the Series B Preferred Shares and any other preferred or preference stock ranking on a parity as to dividends with the Series B Preferred Shares, all dividends upon Series B Preferred Shares and such other parity preferred or preference stock will be declared pro rata so that in all cases the amount of dividends declared and paid per share on the Series B Preferred Shares and such other parity preferred or preference stock will bear to each other the same ratio that accumulated dividends per share on the Series B Preferred Shares and such other preferred or preference stock bear to each other. Except as set forth above, unless full cumulative dividends on the Series B Preferred Shares have been paid, or declared and sums set aside for the payment thereof, dividends (other than in Common Stock or any other stock of the Company ranking junior to the Series B Preferred Shares as to dividends and upon liquidation) may not be paid, or declared and set aside for payment, and other distributions may not be made upon the Common Stock or on any other stock of the Company ranking junior to or on a parity with the Series B Preferred Shares as to dividends; and neither Common Stock nor any other stock of the Company ranking junior to the Series B Preferred Shares as to dividends may be redeemed, purchased or otherwise acquired for any consideration by the Company. The Company may, however, convert or exchange such junior stock for stock of the Company ranking junior to the Series B Preferred Shares as to dividends and upon liquidation. 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 March 31, 1996, these restrictions would have allowed the payment of approximately $200 million for dividends and other corporate distributions, redemptions or repurchases. The ability of the Company to pay dividends on the Series B Preferred Shares when, as and if declared by the Board of Directors may also 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. S-10 11 LIQUIDATION PREFERENCE In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series B Preferred Shares are entitled to receive (after payment of all debts and other liabilities of the Company and all liquidation preferences of holders of any class or series of preferred or preference stock which the Company may issue in the future that ranks prior to the Series B Preferred Shares upon liquidation) a liquidation preference of $50.00 per share, plus an amount equal to any dividends in arrears to the date of payment (but not any dividends accrued since the last dividend payment date), before any distribution of assets is made to holders of Common Stock or any other stock that ranks junior to the Series B Preferred Shares upon liquidation. The holders of Series A Preferred Stock, Series B Preferred Shares, and all series or classes of the Company's capital stock hereafter issued that rank on a parity upon liquidation with the Series B Preferred Shares are entitled to share ratably, in accordance with the respective preferential amounts payable on such stock, in any distribution which is not sufficient to pay in full the aggregate of the amounts payable thereon. After payment in full of the liquidation preference of the Series B Preferred Shares, the holders of such shares will not be entitled to any further participation in any distribution of assets by the Company. Neither a consolidation or merger of the Company with or into another corporation or other entity nor a sale, transfer or lease of all or part of the Company's assets for cash, securities or other property will be considered a liquidation, dissolution or winding up of the Company. CONVERSION At the Option of the Company. Series B Preferred Shares will not be convertible at the option of the Company prior to September 10, 1999. On and after September 10, 1999, the Series B Preferred Shares will be convertible at the option of the Company, in whole or in part, on not less than 15 nor more than 60 days' notice. Each Series B Preferred Share as to which this option is exercised will be converted into that number of shares of Common Stock which shall have a current market value as set forth in the table below (calculated by averaging the closing prices of the Common Stock on the NYSE for the 15 consecutive trading days ending on the second trading day preceding the conversion date), plus a payment equal to dividends in arrears, if any, and (except where the conversion date follows a dividend payment record date and precedes the next succeeding dividend payment date, in which case the holder will be entitled to receive the dividend payable on such dividend payment date) a payment equal to dividends accrued since the last dividend payment date. If converted during the 12-month period beginning September 10:
CURRENT MARKET VALUE OF COMMON STOCK YEAR TO BE ISSUED ---- --------------- 1999................................................. $51.50 2000................................................. $50.75 2001 and thereafter.................................. $50.00
Prior to September 10, 2003, the Company may exercise this conversion option only if the average of the closing prices of the Common Stock on the NYSE for the 15 consecutive trading days ending on the second trading day preceding the date on which the Company gives notice of such conversion equals or exceeds $7.00, subject to adjustment in certain circumstances (the "Conversion Protection Price"). Notwithstanding the foregoing, in no event shall the number of shares of Common Stock into which each Series B Preferred Share is convertible exceed 10, subject to adjustment in certain circumstances (the "Maximum Conversion Rate"). Therefore, holders of Series B Preferred Shares converted at the option of the Company on any date on which the current market price (as determined in the manner set forth above) of the Common Stock is less than $5.00 per share will receive shares of Common Stock with an aggregate current market price of less than $50.00 of Series B Preferred Shares converted. If fewer than all Series B Preferred Shares are to be converted, the shares to be converted shall be selected by lot, pro rata or by another method as reasonably determined by the Board of Directors to be appropriate and fair to the holders of Series B Preferred Shares. In the event that full cumulative dividends on S-11 12 the Series B Preferred Shares and any parity stock have not been paid or declared and set apart for payment, the Series B Preferred Shares may not be converted at the option of the Company in part and the Company may not purchase or acquire Series B Preferred Shares otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of Series B Preferred Shares. Mandatory. Except as provided in the last sentence of this paragraph, if a consolidation or merger of the Company shall occur as a result of which holders of Common Stock shall be entitled to receive cash, securities or other assets with respect to or in exchange for Common Stock, then all outstanding Series B Preferred Shares shall be converted into the maximum number of shares of Common Stock into which such shares shall then be convertible (at the option of the holder or the Company) on the effective date of and immediately prior to such merger or consolidation. Upon any such conversion, each holder of Series B Preferred Shares will have the right to receive all dividends in arrears to the date of payment (but not any dividends accrued since the last dividend payment date). Depending upon the terms of such merger or consolidation, the aggregate amount of cash, securities or other assets which holders of Series B Preferred Shares may receive could be more or less than the liquidation preference with respect to the Series B Preferred Shares. Notwithstanding the foregoing, such conversion will not occur in the event of a consolidation or merger in which the Series B Preferred Shares will otherwise remain outstanding, if the holders of Series B Preferred Shares will be entitled, upon ultimate conversion, to receive the same amount of cash, securities or other assets with respect to their Series B Preferred Shares that they would have received with respect to the maximum number of shares of Common Stock into which such shares shall then be convertible (at the option of the holder or the Company) had a conversion occurred immediately prior to such consolidation or merger (other than with respect to dividends in arrears). At the Option of the Holder. At any time after the 60th day following the final closing of the Offering and prior to 5:00 p.m. New York City time on the business day preceding a Company conversion, each Series B Preferred Share will be convertible at the option of the holder into 3.3333 shares of Common Stock, subject to adjustment in certain circumstances (the "Conversion Rate"), plus dividends in arrears (but not dividends accrued since the last dividend payment date). Conversion of the Series B Preferred Shares may be effected by delivering shares being converted to the Transfer Agent, or such other office or agency to be maintained by the Company for that purpose. Series B Preferred Shares surrendered for conversion at the option of the holder after the close of business on a record date for payment of dividends and before the opening of business on the corresponding dividend payment date must be accompanied by payment of an amount equal to the dividend thereon which is to be paid on such dividend payment date. CERTAIN EFFECTS OF CONVERSION On the conversion date, the Company must pay any dividends in arrears for any dividend period ending on or prior to the conversion date and, in the case of a conversion at the option of the Company, any dividends accrued from the immediately preceding dividend payment date to the conversion date. In the case of a conversion date falling after a dividend payment record date and prior to the dividend payment date, the holders of Series B Preferred Shares on such record date will be entitled to receive the dividend payable on such shares on the corresponding dividend payment date, notwithstanding the conversion of such shares following such dividend payment record date. As set forth above, holders whose Series B Preferred Shares are converted at the option of the Company will receive payment equal to dividends accrued since the last dividend payment date. Except as provided in the preceding sentences, no payment or allowance will be made for accrued dividends on any Series B Preferred Shares converted into Common Stock or on the shares of Common Stock issuable upon such conversion. On and after September 10, 1999, if the Company is in arrears in the payment of dividends at the time of a conversion (whether at the option of the Company, at the option of the holder or pursuant to a mandatory conversion), the Company has the option to pay dividends in arrears and accrued and unpaid dividends in cash or in shares of Common Stock or any combination thereof. On and after any date fixed for conversion, provided that the Company has made available at the office of the Transfer Agent a sufficient number of shares of Common Stock and, if applicable, a sufficient amount of S-12 13 cash to effect the conversion, dividends will cease to accrue on the Series B Preferred Shares to be converted, such shares shall no longer be deemed to be outstanding and all rights of the holders of Series B Preferred Shares as such shall cease, except the right to receive any shares of Common Stock issuable and any cash payable upon such conversion, without interest from the date of such conversion. No holder of a certificate which immediately prior to the conversion date represented Series B Preferred Shares shall be, or have any rights as, a holder of the Common Stock issuable in connection with such conversion, including without limitation voting rights or the right to receive any dividend or other distribution from the Company with respect to any Common Stock, until surrender of such holder's certificate which represented Series B Preferred Shares for a certificate representing such Common Stock. Upon such surrender, there shall be paid to the holder the amount of any dividend or other distribution (without interest) which became payable on or after the conversion date, but which was not paid by reason of any failure to deliver certificates that represented Series B Preferred Shares, with respect to the number of whole shares of Common Stock issued upon such surrender. No interest will be payable with respect to any consideration to be received in connection with a conversion or any such dividends. Fractional shares of Common Stock will not be issued upon conversion of the Series B Preferred Shares, but, in lieu thereof, the Company will pay a cash adjustment based on the current market price of the Common Stock (as determined by averaging the closing prices of the Common Stock on the NYSE for the 15 consecutive trading days ending on the second trading day preceding the conversion date). If fewer than all the shares represented by any certificate are to be converted, a new certificate will be issued representing the unconverted shares. ADJUSTMENTS TO CONVERSION RATE The Conversion Rate is subject to adjustment upon certain events, including (i) the issuance of Common Stock as a dividend or distribution on the Common Stock; (ii) a combination, subdivision or reclassification of Common Stock; (iii) the issuance to all holders of Common Stock of rights or warrants entitling them to subscribe for or purchase Common Stock at less than the then current market price; (iv) the distribution to all holders of Common Stock of capital stock of the Company (other than Common Stock), evidences of indebtedness of the Company, and/or assets (excluding dividends or other distributions paid exclusively in cash); (v) payments of dividends or other distributions consisting exclusively of cash (excluding any cash portion of distributions referred to in clause (iv)) (collectively, "all-cash distributions") to all holders of Common Stock to the extent such distributions, combined with (A) all other such all-cash distributions made within the preceding 12 months in respect of which no adjustment has been made plus (B) any cash and the fair market value of other consideration payable in respect of any tender offers by the Company or any of its subsidiaries for Common Stock (a "Company Tender Offer") concluded within the preceding 12 months in respect of which no adjustment has been made, exceed 10% of the Company's market capitalization (being the product of the then current market price of the Common Stock, as determined above, times the number of shares of Common Stock then outstanding or issuable upon conversion of outstanding securities convertible at the option of the holder) on the record date for such distribution; and (vi) payment of any cash or other consideration payable in respect of any Company Tender Offer to the extent such Company Tender Offer involves an aggregate consideration that, combined with (A) any cash and fair market value of other consideration payable in respect of any Company Tender Offer concluded within the preceding 12 months in respect of which no adjustment has been made plus (B) any all-cash distributions made within the preceding 12 months in respect of which no adjustment has been made, exceed 10% of the Company's market capitalization on the expiration of such Company Tender Offer; provided, however, that no such adjustment shall be made in respect of any issuance or distribution described in clause (iii), (iv), (v), or (vi) above which was also made on a pro rata basis to holders of Series B Preferred Shares. Except as stated above, the Conversion Rate will not be adjusted for the issuance of Common Stock, or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing, in exchange for cash, property or services. No adjustment of less than 1% of the Conversion Rate will be required; however, any such adjustment not made due to this limitation will be carried forward and taken into account in any subsequent adjustment. No adjustment to the Conversion Rate will be made with S-13 14 respect to rights or warrants issued pursuant to certain employee benefit plans or dividend reinvestment plans. The Maximum Conversion Rate and the Conversion Protection Price will be proportionately adjusted if, as and when the Conversion Rate is adjusted as described above. From time to time, to the extent permitted by law, the Company may make upward adjustments to the Conversion Rate by any amount for any period of at least 20 days, in which case the Company shall give not less than 15 nor more than 60 days' notice of such adjustment, if the Board of Directors has made a determination that such adjustment would be in the best interests of the Company, which determination shall be conclusive. In addition to the foregoing adjustments, the Company will be permitted to make such upward adjustments in the Conversion Rate as it determines to be advisable in order that any event treated for Federal income tax purposes as a dividend of stock or stock rights made by the Company with respect to Common Stock (or rights to acquire such stock) will not be taxable to the recipients of such dividends. VOTING RIGHTS The holders of the Series B Preferred Shares will have no voting rights except as described below or as required by law. In exercising any such vote, each outstanding Series B Preferred Share will be entitled to a number of votes equal to the maximum number of shares of Common Stock into which such share would be convertible at the option of the Company or the holder on the applicable record date (assuming that such share was converted on that date). Series B Preferred Shares held by the Company or any entity controlled by the Company will have no voting rights. Whenever dividends on the Series B Preferred Shares have not been paid in an aggregate amount equivalent to at least six quarterly dividends on such shares (whether or not consecutive), the number of directors of the Company will be increased by two, and the holders of the Series B Preferred Shares (voting separately as a class with the holders of any outstanding shares of stock on a parity as to dividends with the Series B Preferred Shares upon which like voting rights have been conferred and are exercisable) will be entitled to elect such two additional directors to the Board of Directors at any meeting of shareholders of the Company at which directors are to be elected to serve until all such dividend arrearage is eliminated and dividends have been paid in full or set apart for payment in full. The term of office of all directors so elected will terminate immediately upon such payment or setting apart for payment and the number of directors of the Company will be thereafter decreased by two. In addition, except as described in the following sentence, a two-thirds vote of all outstanding shares of Series B Preferred Shares, voting as a class with all other affected series of Non-Voting Cumulative Preferred Stock having similar voting rights, is required to amend the Certificate of Incorporation to authorize the creation of any class or series of stock having a preference as to dividends or upon liquidation senior to or on a parity with the Series B Preferred Shares, or to amend, alter or repeal the Company's Certificate of Incorporation in a manner which would materially adversely affect the terms of the Series B Preferred Shares. The Company's Certificate of Incorporation presently permits the Company to issue, without the consent of any holder of Series B Preferred Shares, one or more new series of Non-Voting Cumulative Preferred Stock (of which 10,000,000 shares are currently authorized and, after giving effect to the Offering (assuming no exercise of the over-allotment option), 4,875,000 shares will be outstanding) or Cumulative Preference Stock (of which 4,000,000 shares are currently authorized and none outstanding) having rights or preferences senior or pari passu with those of the Series B Preferred Shares. RANKING The Series B Preferred Shares will rank, as to dividends and upon liquidation, prior to the Company's Common Stock and pari passu with the Company's Series A Preferred Stock. In addition, the Company currently has authorized and unissued additional shares of preferred and preference stock which could be issued in the future in one or more series which could rank senior to the Series B Preferred Shares as to dividends and/or upon liquidation. S-14 15 CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS This discussion is a general summary of federal income tax consequences under present law to holders of the Series B Preferred Shares. This discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations, rulings and judicial decisions thereunder as of the date hereof; such authorities may be repealed, revoked or modified so as to result in Federal income tax consequences different from those discussed below. This discussion does not purport to deal with all aspects of federal income taxation that may be relevant to particular investors in light of their personal investment circumstances or to certain types of investors subject to special treatment under the federal income tax laws (including, without limitation, financial institutions, broker-dealers, regulated investment companies, life insurance companies, tax exempt organizations, foreign corporations or non-resident aliens), nor does it deal with any aspects of state, local or foreign tax laws. The Company will not seek a ruling from the Internal Revenue Service regarding any of the federal income tax issues relative to the sale of the Series B Preferred Shares. The following discussion also assumes that the Series B Preferred Shares are held as capital assets within the meaning of Section 1221 of the Code. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF SERIES B PREFERRED SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. DIVIDENDS ON AND DISPOSITION OF SERIES B PREFERRED SHARES Distributions made to a shareholder with respect to the Series B Preferred Shares will be taxable as ordinary income to the extent of such shareholder's allocable share of current or accumulated earnings and profits. To the extent the amount of distribution to a shareholder exceeds such shareholder's allocable share of current or accumulated earnings and profits, such excess will be treated as a nontaxable recovery of the shareholder's basis in such Series B Preferred Shares and will be treated as a capital gain to the extent the amount exceeds the shareholder's basis in such stock. Distributions received by corporate shareholders on the Series B Preferred Shares may qualify for the dividends-received deduction to the extent of such corporate shareholder's allocable share of the Company's current or accumulated earnings and profits. Subject to certain limitations relating to the shareholder's net income, this deduction is 70% of the dividend in the event that the corporate shareholder owns less than 20% of the Company and 80% if the corporate shareholder owns 20% or more (but less than 100%) of the Company. However, the 70% and 80% dividends-received deduction with respect to debt-financed portfolio stock is reduced by a percentage related to the amount of debt directly attributable to investment in the stock. The dividends-received deduction is also limited with respect to shares which are held for less than 46 days (91 days in the case of certain preferred stock dividends). No days on which a shareholder of the Series B Preferred Shares has a "diminished risk of loss" will be counted toward this 46-day period (or 91-day period, where applicable). Under certain circumstances, a corporate shareholder may be subject to the alternative minimum tax with respect to the amount of the dividends-received deduction. Recent legislative proposals, if enacted, would (i) reduce the dividends-received deduction from 70% to 50% (where a corporate shareholder owns less than 20% of the Company) and (ii) provide that a corporate shareholder would not be entitled to a dividends-received deduction if such shareholder has a diminished risk of loss immediately before or immediately after the shareholder becomes entitled to the dividend. It is unclear whether, and in what form, such proposals will be enacted. In general, a corporate shareholder's basis in any share of stock (including Series B Preferred Shares) which is held for two years or less before the dividend announcement date is reduced by the non-taxed portion of any "extraordinary" dividend received with respect to such stock. If any part of the nontaxed portion of an extraordinary dividend is not applied to reduce the corporate shareholder's tax basis as a result of the limitation on reducing such basis below zero, such part will be treated as gain upon sale or exchange of the Series B Preferred Shares. However, a recent legislative proposal, if enacted, would require gain on the nontaxed portion of an extraordinary dividend to be recognized at the time when the extraordinary dividend is paid rather than at the time of the sale or exchange of the Series B Preferred Shares. It is unclear whether, and S-15 16 in what form, such proposal will be enacted. An extraordinary dividend is generally defined to include, among other things, all dividends payable within any period of 85 days or less if all such dividends equal or exceed 5% of the corporate shareholder's adjusted tax basis in such shares. Additionally, all dividends within any one-year period will be treated as extraordinary dividends if the total of the dividends exceeds 20% of the corporate shareholder's adjusted basis in such stock. Shareholders may elect to determine whether a dividend is extraordinary by reference to the fair market value of the stock, rather than adjusted basis, if fair market value is established to the satisfaction of the IRS. Special rules will apply with respect to any dividend paid on the Series B Preferred Shares if no such dividends were in arrears at the time the stock was acquired by the corporate shareholder and the actual annual rate of return on the Series B Preferred Shares does not exceed 15% (a "qualified Preferred dividend"). A qualified Preferred dividend will not be an extraordinary dividend if the corporate shareholder holds such stock for more than five years. Alternatively, a qualified Preferred dividend will be an extraordinary dividend if the shareholder disposes of the Series B Preferred Shares before they have been held for five years, but only to the extent the actual rate of return exceeds the stated rate of return. In addition, all dividends on certain preferred stocks whose dividend rate declines (or can be expected to decline) or whose issue price exceeds its liquidation value or stated redemption price may be treated as extraordinary dividends regardless of their holding period. Except as provided below under "Conversion of Series B Preferred Shares into Common Stock," any sale or exchange of shares of Series B Preferred Shares other than certain redemptions should give rise to capital gain or loss for Federal income tax purposes. CONVERSION OF SERIES B PREFERRED SHARES INTO COMMON STOCK A shareholder whose Series B Preferred Shares are converted into shares of Common Stock generally will not recognize gain or loss with respect to such conversion if no cash is received. Income may be recognized, however, to the extent Common Stock or cash is received in payment of accrued and unpaid dividends upon a conversion. Such income would likely be characterized as dividend income although some uncertainty exists as to the appropriate characterization of payments in satisfaction of undeclared, accrued and unpaid dividends. In addition, a holder who receives cash in lieu of a fractional share will be treated as having received such fractional share and as having exchanged it for cash in a transaction subject to Section 302 of the Code and related provisions. Such exchange should generally result in capital gain or loss measured by the difference between the cash received for the fractional share interest and the holder's basis in the fractional share interest. A shareholder who converts Series B Preferred Shares into Common Stock will have an aggregate basis in such Common Stock equal to his aggregate basis in such converted Series B Preferred Shares (exclusive of any basis allocated to a fractional share interest) plus the amount of gain (if any) recognized, minus the amount of cash (if any) received, except that the portion (if any) of Common Stock so received that constitutes a dividend distribution, as described above, will have a basis equal to its fair market value at the time of conversion. The holding period for Common Stock received on conversion will include the holding period for such converted Series B Preferred Shares, except that the portion (if any) of Common Stock so received that constitutes a dividend distribution will have a new holding period commencing the day following the conversion. ADJUSTMENT OF CONVERSION RATE If at any time the Company makes a distribution of property to its shareholders that is taxable to such shareholders as a dividend, and the Company adjusts the conversion rate of the Series B Preferred Shares to reflect such distribution or otherwise, or the conversion rate is adjusted for any other reason described in "Adjustments to Conversion Rates" above, such adjustment in the conversion rate may be taxable to the holders of such Series B Preferred Shares as a dividend under Section 305 of the Code. In addition, the failure to adjust fully the conversion rate of the Series B Preferred Shares to reflect distributions of stock dividends S-16 17 with respect to the Common Stock (or rights to acquire such stock) may result in a taxable dividend to the holders of such Common Stock or rights. See "Adjustments to Conversion Rates." BACKUP WITHHOLDING Federal income tax law requires that unless the holder of a security provides the issuer with his correct taxpayer identification number or establishes a basis for exemption from backup withholding, the holder of the security may be subject to a $50.00 penalty imposed by the IRS, and all "reportable payments," such as dividends, may be subject to backup withholding in an amount equal to 31% of such "reportable payments." If withholding results in an overpayment of taxes, a refund may be obtained provided the required information is furnished to the IRS. To prevent backup withholding, each holder of a security must either (i) provide his correct taxpayer identification number and certify under penalty of perjury that the taxpayer identification number provided is correct (or that such holder is awaiting a taxpayer identification number) and that (a) such holder has not been notified by the IRS that he is subject to backup withholding as a result of a failure to report all interest and dividends or (b) the IRS has notified such holder that he is no longer subject to backup withholding, or (ii) provide an adequate basis for exemption. 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 following number of Series B Preferred Shares:
UNDERWRITER NUMBER OF SHARES ----------- ---------------- Lehman Brothers Inc.................................................. 500,000 Bear, Stearns & Co. Inc.............................................. 500,000 Prudential Securities Incorporated................................... 500,000 SBC Warburg Inc...................................................... 500,000 --------- Total........................................................... 2,000,000 =========
The Underwriting Agreement provides that the obligations of the Underwriters to purchase Series B Preferred Shares are subject to certain conditions and that if any of the foregoing Series B Preferred Shares are purchased by the Underwriters pursuant to the Underwriting Agreement all the Series B Preferred Shares agreed to be purchased by the Underwriters must be so purchased. The Underwriters propose to offer the Series B Preferred Shares directly to the public 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 concession not to exceed $.975 per share. The selected dealers may reallow a concession to other dealers not to exceed $.10 per share. After the initial offering to the public, the public offering price, the concession to selected dealers and the reallowance to other dealers may be changed by the Underwriters. The Company has granted to the Underwriters an option to purchase up to an aggregate of 300,000 additional Series B Preferred Shares, exercisable solely to cover over-allotments, at the offering price to the public less the underwriting discounts and commissions shown on the cover page of this Prospectus Supplement. Such option may be exercised at any time until 30 days after the date of the Underwriting Agreement. To the extent that the option is exercised, each Underwriter will be committed, subject to certain conditions, to purchase a number of the additional Series B Preferred Shares proportionate to such Underwriter's initial commitment, as indicated in the preceding table. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments that 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. Subject to certain exceptions, AFG, the Company and the Company's executive officers and directors have agreed that they will not sell or otherwise dispose of any shares of Common Stock or preferred stock of the Company for a period of 90 days from the date of Prospectus Supplement without the prior written consent of Lehman Brothers Inc. 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. 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) and the Current Reports on Form 8-K dated December 20, 1995, February 7, 1996, February 26, 1996 and April 30, 1996 are 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 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 15, 1996, the Company had outstanding 55,262,205 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 55,262,205 shares were outstanding on April 15, 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 15, 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 15, 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 55,262,205 shares were outstanding on April 15, 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 15, 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
PAGE ---- PROSPECTUS SUPPLEMENT Prospectus Supplement Summary......... S-2 Selected Consolidated Financial Data................................ S-5 Recent Developments................... S-6 Use of Proceeds....................... S-7 Capitalization........................ S-8 Common Stock Price Range and Dividends........................... S-9 Description of Series B Preferred Shares.............................. S-9 Certain U.S. Federal Income Tax Considerations...................... S-15 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
====================================================== ====================================================== 2,000,000 SHARES LOGO Chiquita Brands International $3.75 CONVERTIBLE PREFERRED STOCK, SERIES B (LIQUIDATION PREFERENCE OF $50.00 PER SHARE) --------------------------- PROSPECTUS SUPPLEMENT JULY 22, 1996 --------------------------- LEHMAN BROTHERS BEAR, STEARNS & CO. INC. PRUDENTIAL SECURITIES INCORPORATED SBC WARBURG INC. A SUBSIDIARY OF SWISS BANK CORPORATION ================================================================================ -----END PRIVACY-ENHANCED MESSAGE-----