<PAGE> 1
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION. A FINAL PROSPECTUS
SUPPLEMENT AND ACCOMPANYING PROSPECTUS WILL BE DELIVERED TO PURCHASERS.
THIS PRELIMINARY PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 5, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 1, 1996)
$125,000,000
CHIQUITA BRANDS INTERNATIONAL, INC.
[LOGO] % SENIOR NOTES DUE 2006
---------------------------
INTEREST PAYABLE MAY 1 AND NOVEMBER 1
---------------------------
Chiquita Brands International, Inc. ("Chiquita" or the "Company") is
offering (the "Offering") $125,000,000 aggregate principal amount of %
Senior Notes due 2006 (the "Senior Notes"). Interest on the Senior Notes is
payable semiannually on May 1 and November 1 each year commencing November 1,
1996. The Senior Notes will be redeemable at the option of the Company in whole
or in part, at any time on or after November 1, 2001, at the redemption prices
set forth herein, plus accrued and unpaid interest, if any, to the date of
redemption. The Senior Notes will not be subject to any sinking fund. Each
holder of Senior Notes may require the Company to repurchase such holder's
Senior Notes in the event of a Change of Control Triggering Event (as defined)
at 101% of the principal amount thereof, plus accrued and unpaid interest to the
date of repurchase.
The Senior Notes will be general unsecured obligations of the Company and
will rank pari passu with the Company's existing and future senior unsecured
Indebtedness (as defined). The Senior Notes are structurally subordinated to all
existing and future Indebtedness of the Company's subsidiaries, which
Indebtedness totalled approximately $552 million at March 31, 1996.
Concurrently with the Offering, the Company is making a public offering
through a separate prospectus supplement (the "Preferred Stock Offering") of
2,000,000 shares of $ convertible preferred stock with a liquidation
preference of $50.00 per share (the "Preferred Stock"). The Offering is not
contingent upon the consummation of the Preferred Stock Offering. See "Use of
Proceeds."
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 IN THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SENIOR NOTES.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
<CAPTION>
Underwriting
Price to Discounts Proceeds to
Public(1) and Commissions(2) Company(1)(3)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Per Senior Note.................. % % %
- ------------------------------------------------------------------------------------------------
Total............................ $ $ $
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from July , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses of the Company estimated at $ .
---------------------------
The Senior Notes offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of the Senior Notes
will be made through the facilities of The Depository Trust Company on or about
July , 1996.
---------------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
FURMAN SELZ
JULY , 1996
<PAGE> 2
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the detailed
information and the financial statements appearing elsewhere in this Prospectus
Supplement or incorporated by reference in the accompanying Prospectus.
THE COMPANY
Chiquita Brands International, Inc. is a leading international marketer,
producer and distributor of bananas and other quality fresh and processed food
products sold under the Chiquita and other brand names. In addition to bananas,
these products include other tropical fruit, such as mangoes, kiwi and citrus,
and a wide variety of other fresh produce. The Company's operations also include
fruit and vegetable juices and beverages; processed bananas and other processed
fruits and vegetables; fresh cut and ready-to-eat salads; and edible oil-based
consumer products.
American Financial Group, Inc. ("AFG") owns, either directly or through its
subsidiaries, approximately 43% of Chiquita's outstanding shares of Common
Stock. Approximately 44% of the outstanding common stock of AFG is owned by Carl
H. Lindner, members of his family and trusts for their benefit.
Chiquita is a New Jersey corporation. The address of its principal
executive offices is 250 East Fifth Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 784-8000. Unless the context indicates otherwise, the
term "Chiquita" or the "Company" also includes the subsidiaries of the Company.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
THE OFFERING
Securities Offered......... $125,000,000 aggregate principal amount of %
Senior Notes due 2006 (the "Senior Notes").
Maturity................... November 1, 2006.
Interest Payment Dates..... May 1 and November 1, commencing November 1, 1996.
Ranking.................... The Senior Notes will be general unsecured
obligations of the Company and will rank pari passu
with the Company's existing and future senior
unsecured Indebtedness. The Senior Notes are
structurally subordinated to all existing and
future Indebtedness of the Company's subsidiaries,
which indebtedness totalled approximately $552
million at March 31, 1996.
Optional Redemption........ The Senior Notes will be redeemable, in whole or in
part, at the option of the Company at any time on
or after November 1, 2001 at the redemption prices
set forth herein plus accrued and unpaid interest,
if any, to the date of redemption. See "Description
of Senior Notes -- Optional Redemption."
Certain Covenants.......... The Indenture relating to the Senior Notes
restricts, among other things, the ability of the
Company and its subsidiaries, subject to certain
exceptions, to (i) incur additional Indebtedness,
(ii) create certain Liens, (iii) engage in sale and
leaseback transactions, (iv) make Restricted
Payments, (v) engage in transactions with Related
Persons and (vi) merge or consolidate with or
transfer all or substantially all of its assets to
another entity.
Change of Control.......... If a Change of Control Triggering Event (as
defined) occurs at any time, each holder of Senior
Notes will have the right to require the Company to
purchase such holder's Senior Notes at 101% of the
principal amount thereof, plus accrued and unpaid
interest to the date of repurchase. See
"Description of Senior Notes."
Concurrent Offering........ Concurrently with the Offering, the Company is
making a public offering through a separate
prospectus supplement (the "Preferred Stock
Offering") of 2,000,000 shares of $
convertible preferred stock with a liquidation
preference of $50.00 per share. The Offering is not
contingent upon the consummation of the Preferred
Stock Offering.
Use of Proceeds............ The net proceeds from the sale of the Senior Notes
offered hereby are expected to be approximately
$ . The net proceeds from the Preferred
Stock Offering are expected to be approximately
$ . The net proceeds from these offerings
will be used primarily to repay outstanding debt of
the Company and its subsidiaries, as well as for
general corporate purposes. Pending application of
the net proceeds from these offerings as described
herein, such net proceeds may be invested in
short-term investments or used for general
corporate purposes. See "Use of Proceeds."
S-3
<PAGE> 4
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below for the years ended
December 31, 1991 through 1995 were derived from the Company's audited
consolidated financial statements. Information presented below for interim
periods was derived from the Company's unaudited consolidated financial
statements and in the opinion of management includes all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
results of operations for the interim periods. This information should be read
in conjunction with the Company's Consolidated Financial Statements and notes
thereto and "Management's Analysis of Operations and Financial Condition"
included or incorporated by reference in the Company's Reports on Forms 10-K and
10-Q for such periods. Interim results are subject to significant seasonal
variations and are not necessarily indicative of the results of operations for a
full fiscal year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- ----------------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................................ $ 624,806 $ 674,269 $2,565,992 $2,505,826 $2,532,925
Operating expenses
Cost of sales.................................. 471,999 495,995 1,958,063 1,996,179 1,993,552
Selling, general and administrative expenses... 73,235 77,403 333,537 331,498 332,934
Depreciation................................... 21,711 24,651 98,622 106,964 102,591
Restructuring and reorganization............... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
566,945 598,049 2,390,222 2,434,641 2,429,077
---------- ---------- ---------- ---------- ----------
Operating income (loss)1....................... 57,861 76,220 175,770 71,185 103,848
Interest income.................................. 7,340 6,670 28,157 22,902 20,377
Interest expense................................. (35,167) (41,417) (163,513) (167,464) (169,789)
Other income (expense), net...................... 194 426 1,455 2,566 6,483
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations
before income taxes.......................... 30,228 41,899 41,869 (70,811) (39,081)
Income taxes..................................... (6,000) (8,300) (13,900) (13,500) (12,000)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations....... 24,228 33,599 27,969 (84,311) (51,081)
Discontinued operations2......................... -- 4,029 (11,197) 35,611 --
---------- ---------- ---------- ---------- ----------
Income (loss) before extraordinary item........ 24,228 37,628 16,772 (48,700) (51,081)
Extraordinary loss from debt refinancing......... -- -- (7,560) (22,840) --
---------- ---------- ---------- ---------- ----------
Net income (loss)................................ $ 24,228 $ 37,628 $ 9,212 $ (71,540) $ (51,081)
========== ========== ========== ========== ==========
Fully diluted earnings (loss) per common share:
Continuing operations.......................... $ .38 $ .55 $ .37 $ (1.76) $ (.99)
Discontinued operations2....................... -- .07 (.21) .69 --
Extraordinary item............................. -- -- (.14) (.44) --
---------- ---------- ---------- ---------- ----------
Net income (loss).............................. $ .38 $ .62 $ .02 $ (1.51) $ (.99)
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges3.............. 1.71 1.78 1.20 --3 --3
Ratio of earnings to combined fixed charges and
preferred stock dividends3..................... 1.63 1.68 1.16 --3 --3
BALANCE SHEET DATA:
Cash and marketable securities4................ $ 243,679 $ 125,079 $ 271,418 $ 165,523 $ 151,226
Working capital................................ 400,071 258,095 366,893 230,434 266,793
Total assets................................... 2,594,978 2,744,564 2,623,533 2,774,239 2,722,824
Short-term debt................................ 157,246 200,073 172,333 221,051 192,207
Long-term debt4................................ 1,235,739 1,355,910 1,242,046 1,364,836 1,438,378
Shareholders' equity........................... 695,533 682,800 672,207 644,809 584,069
OTHER DATA:
Operating income (loss) plus depreciation and
amortization1................................ $ 81,006 $ 102,369 $ 280,351 $ 184,265 $ 213,559
Capital expenditures5.......................... 12,255 15,506 64,640 136,981 196,554
Dividends declared per common share............ .05 .05 .20 .20 .44
<CAPTION>
1992 1991
---------- ----------
<S> <C><C> <C>
INCOME STATEMENT DATA:
Net sales........................................ $2,723,250 $2,604,128
Operating expenses
Cost of sales.................................. 2,309,425 2,027,669
Selling, general and administrative expenses... 368,675 324,240
Depreciation................................... 80,438 54,401
Restructuring and reorganization............... 61,300 --
---------- ----------
2,819,838 2,406,310
---------- ----------
Operating income (loss)1....................... (96,588) 197,818
Interest income.................................. 43,301 47,319
Interest expense................................. (155,036) (88,406)
Other income (expense), net...................... (8,385) 3,278
---------- ----------
Income (loss) from continuing operations
before income taxes.......................... (216,708) 160,009
Income taxes..................................... (5,000) (49,100)
---------- ----------
Income (loss) from continuing operations....... (221,708) 110,909
Discontinued operations2......................... (62,332) 17,586
---------- ----------
Income (loss) before extraordinary item........ (284,040) 128,495
Extraordinary loss from debt refinancing......... -- --
---------- ----------
Net income (loss)................................ $ (284,040) $ 128,495
========== ==========
Fully diluted earnings (loss) per common share:
Continuing operations.......................... $ (4.28) $ 2.19
Discontinued operations2....................... (1.20) .33
Extraordinary item............................. -- --
---------- ----------
Net income (loss).............................. $ (5.48) $ 2.52
========== ==========
Ratio of earnings to fixed charges3.............. --3 1.73
Ratio of earnings to combined fixed charges and
preferred stock dividends3..................... --3 1.73
BALANCE SHEET DATA:
Cash and marketable securities4................ $ 413,181 $ 825,447
Working capital................................ 482,338 960,093
Total assets................................... 2,873,699 2,937,344
Short-term debt................................ 229,286 187,821
Long-term debt4................................ 1,411,319 1,202,839
Shareholders' equity........................... 667,962 967,925
OTHER DATA:
Operating income (loss) plus depreciation and
amortization1................................ $ (9,079) $ 258,076
Capital expenditures5.......................... 472,273 395,641
Dividends declared per common share............ .66 .55
</TABLE>
- ---------------
1 Includes the following unusual items: write-downs and costs of $12 million in
the quarter ended March 31, 1996 resulting from damage to banana producing
assets caused by industry-wide flooding in Costa Rica; a net gain of $19
million in fiscal 1995 resulting primarily from divestitures of operations and
sales of older ships; charges and losses of $67 million in 1994 resulting
primarily from farm closings and write-downs of banana cultivations following
a strike in Honduras and the substantial reduction of the Company's Japanese
"green" banana trading operations; and restructuring and reorganization
charges of $61 million in 1992.
2 Includes net operating results (and, in 1992, provision for loss on disposal)
of the Company's Meat Division operations, which were sold in December 1995.
See Note 2 to the Company's Consolidated Financial Statements for the year
ended December 31, 1995.
3 For purposes of calculating the ratios of earnings to fixed charges and of
earnings to combined fixed charges and preferred stock dividends, earnings are
calculated as the sum of the income (loss) from continuing operations before
income taxes, fixed charges (other than capitalized interest) and amortization
of capitalized interest, less undistributed earnings of less-than-fifty
percent owned investees. Fixed charges consist of interest on indebtedness
(including capitalized interest and amortization of debt discount) and a
portion of rent considered to represent interest cost. Fixed charges exceeded
earnings by approximately $75 million, $45 million and $239 million for the
years ended December 31, 1994, 1993 and 1992, respectively. Combined fixed
charges and preferred stock dividends exceeded earnings by approximately $86
million, $49 million and $239 million for the years ended December 31, 1994,
1993 and 1992, respectively.
4 Long-term debt includes approximately $66 million of 10 1/2% subordinated
debentures due 2004 (approximately $60 million net book value at March 31,
1996) which were called for redemption (at par) and defeased during the
quarter ended June 30, 1996. This reduced cash and marketable securities by
approximately $66 million.
5 Includes capital expenditures in connection with the acquisition of ships and
containers of approximately $70 million in 1994, $120 million in 1993, $280
million in 1992 and $180 million in 1991.
S-4
<PAGE> 5
RECENT DEVELOPMENTS
EUROPEAN UNION BANANA REGULATION
In connection with the international trade action pending in the World
Trade Organization ("WTO") filed by the United States, Ecuador, Guatemala,
Honduras and Mexico challenging the European Union ("EU") banana quota and
licensing regime and Framework Agreement (see "Risk Factors -- European Union
Banana Regulation" in the accompanying prospectus), the WTO panel that will hear
the case has now been selected and a timetable established, which calls on the
panel to issue its ruling by January 28, 1997. Following any ruling by the WTO
panel, certain appeal procedures are available that could extend by a few months
the time before the ruling is final. Thereafter, the parties have a limited
period of time to implement the ruling. There can be no assurance as to the
results of the WTO proceeding.
FIRST QUARTER RESULTS OF OPERATIONS
Net sales for the first quarter of 1996 of $625 million decreased 7% from
the comparable prior year amount of $674 million primarily as a result of the
sale of the Costa Rican operations of the Company's Numar edible oils group and
other non-core operations in 1995.
Income from continuing operations before income taxes was $30 million in
the first quarter of 1996 compared to $42 million in 1995. The 1996 amount
includes write-downs and costs of $12 million resulting from damage to the
Company's banana producing assets caused by industry-wide flooding in Costa Rica
during the quarter. The elimination of earnings from Numar and other divested
operations was offset by reduced net interest expense resulting from sales of
non-core assets as well as the Company's refinancing and deleveraging program.
Banana operating results for the first quarter, excluding flood-related
charges, were comparable to the prior year. The effect of lower banana prices in
the EU and higher costs caused by the banana Framework Agreement, which was not
fully implemented until the second quarter of 1995, was offset by benefits from
the Company's overall cost reduction program. The lower EU pricing resulted
primarily from the carryover into early 1996 of the overissuance of special
import licenses to European-based banana companies under the pretext of relief
from hurricane damage sustained in the Caribbean in 1995.
Net income for the first quarter of 1996 was $24.2 million, or $.38 per
share. In 1995, first quarter net income was $37.6 million, or $.62 per share,
which included $4.0 million, or $.07 per share, of income from the Company's
discontinued meat business.
OTHER
In June 1996, the Company called for redemption (at par) and defeased its
10 1/2% subordinated debentures due 2004 having an aggregate outstanding
principal amount of approximately $66 million (approximately $60 million after
deducting unamortized discount).
In 1993, Great White Fleet Ltd., the Company's shipping subsidiary ("GWF"),
redelivered three cargo ships to RSG Reefer Services GmbH ("RSG"), in reliance
on the force majeure provisions of the applicable contract of affreightment with
RSG, due to the imposition of the EU banana quota and licensing regime referred
to above. In 1994, RSG commenced an arbitration proceeding in London, England
disputing the occurrence of a force majeure event and seeking damages from GWF.
A hearing on the merits was held in May and June of 1996 during which RSG
claimed it suffered damages in the range of $16 million to $20 million. The
parties are awaiting the arbitrators' decision. Although the outcome of this
proceeding cannot be predicted, the Company's management believes, based on
advice of counsel, that GWF was contractually entitled to redeliver the ships
and that RSG's damage claim is exaggerated.
S-5
<PAGE> 6
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Senior
Notes offered hereby will be approximately $ . The net proceeds to be
received by the Company from the Preferred Stock Offering (if such offering is
consummated) will be approximately $ . The net proceeds from these
offerings will be used primarily to repay outstanding debt of the Company and
its subsidiaries, as well as for general corporate purposes. The Company will
determine which debt to repay with the net proceeds from the Offering and the
Preferred Stock Offering based on factors including, without limitation,
prevailing market interest rates, redemption prices, maturities and other terms
of the debt. Pending application of the net proceeds from such offerings as
described herein, such net proceeds may be invested in short-term investments or
used for general corporate purposes.
S-6
<PAGE> 7
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company at March 31, 1996 and as adjusted to give effect to (i) the
application of the aggregate proceeds from the sale of the Senior Notes offered
hereby and the issuance of the Preferred Stock (assuming no exercise of the
over-allotment option provided for therein), and (ii) the repayment of the
Company's 10 1/2% subordinated debentures due 2004, which were called for
redemption and defeased in June 1996. The table assumes that all of the net
proceeds of the offerings of the Senior Notes and Preferred Stock are used to
repay subordinated debt of the Company and outstanding debt of its subsidiaries.
See "Use of Proceeds." The table excludes (a) the effect of any loss which might
result from early retirement of any of the Company's existing debt (other than
the write-off of approximately $5 million of unamortized discount on the 10 1/2%
subordinated debentures due 2004) and (b) fees and expenses associated with the
offerings of the Senior Notes and the Preferred Stock. Such loss, fees and
expenses would not be material to the Company's total shareholders' equity. The
table should be read in conjunction with "Selected Consolidated Financial Data"
appearing elsewhere in this Prospectus Supplement and the Company's Consolidated
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Notes and loans payable....................................... $ 107,370 $ 107,370
Long-term debt due within one year............................ 49,876 49,876
---------- --------
Total short-term debt................................. $ 157,246 $ 157,246
========== ========
Long-term debt:
Long-term debt of parent company
9 1/8% senior notes due 2004(a)............................ $ 175,000 $ 175,000
9 5/8% senior notes due 2004, less unamortized discount of
$2,389 (imputed interest rate of 9.8%)(a)................ 247,611 247,611
% Senior Notes due 2006 offered hereby................... -- 125,000
7% subordinated debentures, due 2001, convertible into
capital stock at $43 per share(a)........................ 138,000 (b)
10 1/2% subordinated debentures, due 2004, less unamortized
discount of $5,363 (imputed interest rate of 12.1%)...... 60,456 --
11 1/2% subordinated notes, due 2001(a).................... 220,000 (b)
Long-term debt of subsidiaries(c)............................. 394,672 (b)
---------- --------
Total long-term debt.................................. 1,235,739 1,075,283
---------- --------
Shareholders' equity:
Series A Preferred Stock (2,875,000 shares outstanding)....... 138,369 138,369
Series B Preferred Stock offered in the Preferred Stock
Offering
(2,000,000 shares)......................................... -- 100,000
Capital stock, $.33 par value per share
(55,234,823 shares outstanding)(d)........................ 18,412 18,412
Capital surplus............................................... 584,786 584,786
Accumulated deficit........................................... (46,034) (51,397)
---------- --------
Total shareholders' equity............................ 695,533 790,170
---------- --------
Total long-term capitalization........................ $1,931,272 $ 1,865,453
========== ========
<FN>
- ---------------
(a) The 9 1/8% senior notes and the 9 5/8% senior notes are not redeemable. The 11 1/2% subordinated notes are currently
redeemable at 105.7% of par and the 7% subordinated convertible debentures are currently redeemable at par.
(b) The proceeds from the sale of the Senior Notes and the issuance of the Preferred Stock will be used primarily to repay
debt of the Company and its subsidiaries. To the extent that such proceeds are not used for such repayments they will
be used for general corporate purposes and, in any event, until such application, will increase the Company's cash and
marketable securities. See "Use of Proceeds." As of March 31, 1996, the Company had $243.7 million of cash and
marketable securities ($177.9 million after giving effect to the redemption at par of the 10 1/2% subordinated
debentures).
(c) See Note 6 to the Company's Consolidated Financial Statements for the year ended December 31, 1995 for discussion of
operating lease commitments for ships and other facilities.
(d) Excludes approximately 12.3 million shares of Common Stock reserved at March 31, 1996 for issuance in connection with
options (consisting of approximately 2.6 million shares issuable under currently exercisable options, approximately
4.7 million shares that may be issued under options not currently exercisable, and approximately 5.0 million shares
available for future grant) and approximately 2.4 million shares reserved at March 31, 1996 for purchase or Company
contributions under other employee benefit plans. See Notes 10 and 11 to the Company's Consolidated Financial
Statements for the year ended December 31, 1995. Also excludes approximately 3.2 million shares reserved for issuance
upon conversion of the Company's 7% Convertible Subordinated Debentures due 2001, approximately 28.7 million shares
reserved for issuance upon conversion of the Series A Preferred Stock and 20 million shares to be reserved for
issuance upon conversion of the Series B Preferred Stock (assuming no exercise of the over-allotment option).
</TABLE>
S-7
<PAGE> 8
DESCRIPTION OF SENIOR NOTES
The following description of the particular terms of the Senior Notes
offered hereby (referred to in the Prospectus as "Senior Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of Senior Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
GENERAL
The % Senior Notes due 2006 (the "Senior Notes") are to be issued as a
series of Senior Debt Securities under the Indenture, dated as of February 15,
1994, as supplemented to date, between the Company and The Fifth Third Bank, as
Trustee (the "Trustee"), which is also described in the accompanying Prospectus.
The following statements are summaries of certain provisions that will be
contained in the second supplemental indenture to be dated as of July , 1996
to the Indenture and the certificate of terms of the Senior Notes to be adopted
pursuant to the provisions of, and incorporated into, the Indenture. These
statements do not purport to be complete and are qualified in their entirety by
reference to the second supplemental indenture and the certificate of terms,
copies of the forms of which will be filed as exhibits to the Company's Current
Report on Form 8-K dated July , 1996, which will be incorporated by reference
in the accompanying Prospectus.
The Senior Notes will be general unsecured obligations of the Company and
will rank pari passu with the Company's existing and future senior unsecured
Indebtedness. The Senior Notes are structurally subordinated to all existing and
future Indebtedness of the Company's subsidiaries, which Indebtedness totalled
approximately $552 million at March 31, 1996.
The Senior Notes will be limited to $125,000,000 aggregate principal amount
and will mature on November 1, 2006. The Senior Notes will bear interest at the
rate per annum shown on the cover of this Prospectus Supplement from July ,
1996 or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semi-annually on May 1 and November 1 of each
year, commencing November 1, 1996, to the person in whose name a Senior Note (or
any predecessor Senior Note) is registered at the close of business on the April
15 or October 15, as the case may be, next preceding such Interest Payment Date.
The Senior Notes will be issued only in fully registered form in denominations
of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
The Senior Notes will not be redeemable at the Company's option prior to
November 1, 2001. Thereafter, the Senior Notes will be subject to redemption at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
but not including the applicable redemption date, if redeemed during the
twelve-month period beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
2001.............................................................. %
2002.............................................................. %
2003.............................................................. %
2004 and thereafter............................................... 100.000%
</TABLE>
The Senior Notes will not be subject to any sinking fund payment
obligations.
S-8
<PAGE> 9
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms and for the definitions of other defined terms used in this
Prospectus Supplement and not defined below.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets of such Person.
"Adjusted Consolidated Assets" on any date means the amount of (i) all
assets of the Company and the Subsidiaries on a consolidated basis less (ii) all
Indebtedness of Subsidiaries on a consolidated basis, in each case as determined
as of the last day of the immediately preceding fiscal quarter in accordance
with GAAP.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Change of Control" means an event or series of events by which (i) any
"person" (as such term is used in Sections 13 (d) and 14 (d) of the Exchange
Act) other than Permitted Lindner Holders is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all shares that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 40% of
the total voting power of all classes of capital stock then outstanding of the
Company normally entitled to vote in elections of directors ("Voting Shares"),
provided that the Permitted Lindner Holders "beneficially own" (as so defined) a
lesser percentage of the Voting Shares than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company; (ii)
the Company consolidates with or merges into another corporation or conveys,
transfers or leases all or substantially all of its assets to any person, or any
corporation consolidates with or merges into the Company, in either event
pursuant to a transaction in which the outstanding Voting Shares of the Company
are changed into or exchanged for cash, securities or other property, other than
any such transaction between the Company and a wholly-owned Subsidiary; (iii)
the Company or any Subsidiary purchases or otherwise acquires, directly or
indirectly, beneficial ownership of 30% or more of the Company's capital stock
within any 12-month period; (iv) on any date, the individuals who at the
beginning of the two-year period immediately preceding such date constituted the
Company's Board of Directors (together with any new directors whose election by
the Company's Board of Directors, or whose nomination for election by the
Company's shareholders, was approved by a vote of at least 66 2/3% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors then in
office; or (v) on any day (a "Calculation Date") the Company makes any
distribution or distributions of cash, property or securities (other than
regular quarterly dividends, Common Stock, preferred stock which is
substantially equivalent to Common Stock or rights to acquire such stock) to
holders of capital stock of the Company or purchases or otherwise acquires
capital stock (other than upon the conversion of a security convertible into
capital stock) of the Company and the sum of the Fair Market Value of such
distribution or purchase, plus the Fair Market Value of all other such
distributions and purchases which have occurred during the preceding 12-month
period, exceeds 30% of the Fair Market Value of the Company's outstanding
capital stock. This percentage is calculated on each Calculation Date by
determining the percentage of the Fair Market Value of the Company's outstanding
Common Stock as of such Calculation Date which is represented by the Fair Market
Value of the distributions and purchases which have occurred on such date and
adding to that percentage all of the percentages which have been similarly
calculated on the dates of all such distributions and purchases during the
preceding 12-month period.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
S-9
<PAGE> 10
"Consolidated Interest Expense" means for any period the sum of (i) the
aggregate of the interest expense on Indebtedness of the Company and its
Subsidiaries for such period, on a consolidated basis, plus (ii) without
duplication, that portion of capital lease rentals of the Company and its
Subsidiaries representative of the interest factor for such period, in each case
as determined in accordance with GAAP.
"Consolidated Net Income" means for any period the net income or loss of
the Company and its Subsidiaries for such period on a consolidated basis as
determined in accordance with GAAP adjusted by excluding the after-tax effect of
(i) net gains or losses in respect of dispositions of assets other than in the
ordinary course of business, (ii) any gains or losses from currency exchange
transactions not in the ordinary course of business consistent with past
practice, (iii) the net income of any Subsidiary to the extent that dividends or
distributions by such Subsidiary in the amount of such net income are restricted
or prohibited and (iv) any gains or losses attributable to write-ups or
write-downs of assets or liabilities other than in the ordinary course of
business.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person and its Subsidiaries, as determined in accordance with
GAAP.
"Consolidated Tax Expense" of the Company means for any period the
aggregate of the federal, state, local and foreign income tax expense of the
Company and its consolidated Subsidiaries for such period, determined in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means for any period the ratio of (i) the sum
of Consolidated Net Income, Consolidated Interest Expense and Consolidated Tax
Expense, plus all depreciation and, without duplication, all amortization, in
each case, for such period, of the Company and its Subsidiaries on a
consolidated basis, all as determined in accordance with GAAP, to (ii)
Consolidated Interest Expense for such period; PROVIDED, HOWEVER, that in making
such computation, the Consolidated Interest Expense attributable to interest on
any Indebtedness computed on a pro forma basis and bearing a floating interest
rate shall be computed as if the rate in effect on the date of computation had
been the applicable rate for the entire period.
"Food-Related Businesses" means businesses or operations involving food or
food products, including, without limitation, sourcing, processing,
transportation, shipping and distribution, and related assets and
infrastructure.
"GAAP" means generally accepted accounting principles as in effect and as
implemented by the Company on the date of the Indenture.
"Indebtedness" means (i) any liability of any Person (A) for borrowed
money, or under any reimbursement obligation relating to a letter of credit
(other than letters of credit obtained in the ordinary course of business), or
(B) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than accounts payable or other
Indebtedness to trade creditors arising in the ordinary course of business), or
(C) for the payment of money relating to a Capitalized Lease Obligation; (ii)
any liability of others described in the preceding clause (i) that the Person
has guaranteed or that is otherwise its legal liability; and (iii) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (i) and (ii) above.
"Intercompany Debt Obligations" means any Indebtedness of the Company or
any Subsidiary which, in the case of the Company, is owing to any Subsidiary and
which, in the case of any Subsidiary, is owing to the Company or any other
Subsidiary.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's or any other Rating Agency
permitted to be used.
"Lien" means any mortgage, lien, pledge, security interest, conditional
sale or other title retention agreement, charge or other security interest or
encumbrance of any kind.
S-10
<PAGE> 11
"Moody's" means Moody's Investors Services, Inc.
"Permitted Indebtedness" means (i) Indebtedness of the Company or any
Subsidiary outstanding on the date of the Indenture; (ii) the Senior Notes;
(iii) Indebtedness of the Company not in excess of $250 million in principal
amount outstanding at any time under revolving credit or similar bank facilities
and any refinancings, replacements, renewals, extensions, substitutions,
refundings, deferrals, restructurings, amendments, supplements or modifications
of such Indebtedness; provided, however, that the proceeds of such Indebtedness
referred to in this clause (iii) shall be invested in, or used in connection
with, Food-Related Businesses; (iv) Indebtedness of a Subsidiary (including
Acquired Indebtedness), which is non-recourse to the Company, the proceeds of
which are or have been used for working capital purposes or for capital
expenditures in Food-Related Businesses; (v) Acquired Indebtedness of a
Subsidiary incurred in the acquisition of a Food-Related Business, PROVIDED,
HOWEVER, that (A) such Acquired Indebtedness is non-recourse to the Company and
not incurred in contemplation of such acquisition and (B) the Company's Fixed
Charge Coverage Ratio for the prior four full fiscal quarters, on a pro forma
basis after giving effect to such acquisition, exceeds the Company's Fixed
Charge Coverage Ratio for the prior four full fiscal quarters immediately
preceding such acquisition; (vi) Indebtedness of (A) the Company or any
Subsidiary denominated in or measured by the currency of any country other than
the United States, which Indebtedness is incurred for hedging purposes in the
ordinary course of business consistent with past practice or (B) the Company or
any other Subsidiary (in either case, other than for borrowed money) incurred in
connection with Indebtedness of a Subsidiary referred to in clause (A) above
which is (y) a guarantee of such Subsidiary Indebtedness, or (z) a reimbursement
obligation relating to a letter of credit supporting such Subsidiary
Indebtedness; (vii) Intercompany Debt Obligations; PROVIDED,HOWEVER, that the
obligations of the Company with respect to such Indebtedness shall be evidenced
by an intercompany note and shall be subordinated in right of payment from and
after such time as all Senior Notes issued and outstanding shall become due and
payable (whether at Stated Maturity, by acceleration or otherwise) to the
payment and performance of the Company's obligations under the Senior Notes;
(viii) guarantees by a Subsidiary, which are non-recourse to the Company, of
Indebtedness of a Person that is not the Company, another Subsidiary nor a
Related Person; PROVIDED, HOWEVER, that the aggregate amount of Indebtedness so
guaranteed at any time shall not exceed $15 million principal amount
outstanding; and PROVIDED, FURTHER, that the proceeds of such Indebtedness are
or have been used by such Person in Food-Related Businesses; and (ix) additional
Indebtedness of the Company (including Acquired Indebtedness) the aggregate
principal amount of which outstanding at any time does not exceed 5% of Adjusted
Consolidated Assets.
"Permitted Liens" means (i) Liens existing on the date of the Indenture on
assets of the Company or any Subsidiary; (ii) Liens on assets acquired after the
date of the Indenture or Liens to secure the purchase price of assets to be
acquired; (iii) Liens on properties of any Subsidiary securing Indebtedness the
proceeds of which are or have been used for working capital or capital
expenditures relating to Food-Related Businesses; (iv) Liens securing
Indebtedness of (A) the Company or any Subsidiary denominated in or measured by
the currency of any country other than the United States which Indebtedness is
incurred for hedging purposes in the ordinary course of business consistent with
past practice and (B) the Company or any other Subsidiary, to the extent
permitted under clause (vi)(B) of Permitted Indebtedness; (v) Liens of a Person
existing at the time such Person becomes a Subsidiary or assumed in connection
with the acquisition of assets of such Person; (vi) Liens on working capital
assets; (vii) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of the foregoing; (viii)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business and with respect to amounts not
overdue for a period of more than 90 days or being contested in good faith by
appropriate proceedings; (ix) judgment Liens and other similar Liens arising in
the ordinary course of business; PROVIDED, HOWEVER, that the execution or other
enforcement thereof is being effectively stayed and the claims secured thereby
are being actively contested in good faith and by appropriate proceedings; (x)
Liens securing Intercompany Debt Obligations; (xi) Liens for taxes not yet due
or payable under law or being contested in good faith; (xii) Liens upon property
of a foreign Subsidiary to secure Indebtedness of that foreign Subsidiary;
(xiii) Liens in accordance with customary banking practice to secure
Indebtedness in connection with foreign trade; (xiv) easements, rights-of-way,
restrictions and other similar encumbrances to the extent incurred in the
ordinary course of business; (xv) pledges or deposits in connection with
workers'
S-11
<PAGE> 12
compensation, unemployment insurance and other social security legislation; and
(xvi) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds, interest rate, foreign exchange and commodity hedging
transactions and other obligations of a like nature incurred in the ordinary
course of business.
"Permitted Lindner Holders" means, collectively, Carl H. Lindner, Robert D.
Lindner, Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner, the
respective estates, spouses, heirs, ancestors, lineal descendants, legatees and
legal representatives of any of the foregoing and the trustee or other
representative of any bona fide trust or other entity formed for estate or
tax-planning purposes of which one or more of the foregoing are the sole
beneficiaries or the grantors thereof or contributors thereto, American
Financial Group, Inc., an Ohio corporation, or any entity of which any of the
foregoing, individually or collectively, beneficially own more than 50% of the
Voting Shares.
"Purchase Date" means a date fixed by the Company that is no earlier than
30 days and no later than 60 days after the mailing of notice to bondholders of
a Change of Control Triggering Event.
"Rating Agencies" means S&P and Moody's or, if S&P or Moody's or both shall
not make a rating of the Senior Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Company, which shall be substituted for S&P or Moody's or both, as the case
may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining whether
the rating of the Senior Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P, 1, 2, and 3 for Moody's or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as
from BB - to B+, will constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention by the Company to effect a Change of Control.
"Rating Decline" means the occurrence of the following on, or within 90
days after, the earlier of (i) the occurrence of a Change of Control and (ii)
the date of public notice of the occurrence of a Change of Control or of the
public notice of the intention of the Company to effect a Change of Control
(which 90 day period shall be extended so long as the rating of the Senior Notes
is under publicly announced consideration for possible downgrading by any of the
Rating Agencies): (a) in the event that the Senior Notes are rated by either
Rating Agency on the Rating Date as Investment Grade, the rating of the Senior
Notes shall be reduced below Investment Grade by both Rating Agencies; or (b) in
the event the Senior Notes are rated below Investment Grade by both Rating
Agencies on the Rating Date, the rating of the Senior Notes by either Rating
Agency shall be decreased by one or more gradations (including gradations within
Rating Categories as well as between Rating Categories).
"Refinancing Indebtedness" means any renewals, extensions, substitutions,
refundings, refinancings, replacements, deferrals, restructurings, amendments,
supplements or modifications of any Indebtedness (each, a "Refinancing") of the
Company or any of its Subsidiaries outstanding on the date of the Indenture or
other Indebtedness permitted to be incurred by the Company or any of its
Subsidiaries pursuant to the terms of the Indenture (other than Indebtedness
referred to in clauses (iii), (iv), (v), (vi), (vii) or (viii) of the definition
of Permitted Indebtedness), but only to the extent that (i) the aggregate amount
of Indebtedness represented thereby is not increased by such Refinancing, (ii)
the Indebtedness incurred in such Refinancing is not incurred by a Subsidiary if
the Company initially incurred the Indebtedness being renewed, extended,
substituted, refunded, refinanced, replaced, deferred, restructured, amended,
supplemented or modified and (iii) the Indebtedness incurred in such Refinancing
is not incurred by the Company if a Subsidiary initially incurred the
Indebtedness being renewed, extended, substituted, refunded, refinanced,
replaced, deferred, restructured, amended, supplemented or modified, and such
Indebtedness was non-recourse to the Company.
S-12
<PAGE> 13
"Related Person" means (i) any Affiliate of the Company, (ii) any
individual or entity who directly or indirectly holds 10% or more of any class
of capital stock of the Company, (iii) any relative of such individual by blood,
marriage or adoption not more remote than first cousin and (iv) any officer or
director of the Company.
"S&P" means Standard and Poor's Rating Services, a division of McGraw Hill,
Inc.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other entity or
sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to any entity,
unless: (1) either (a) the Company shall be the continuing corporation or (b)
the entity (if other than the Company) formed by such consolidation or into
which the Company is merged or the entity that acquires, by sale, assignment,
conveyance, transfer, lease or disposition, all or substantially all of the
properties and assets of the Company as an entirety (in any such case, the
"Surviving Entity") shall be a corporation, partnership or trust organized and
validly existing under the laws of the United States or any State thereof or the
District of Columbia, and shall expressly assume, by a supplemental indenture,
the due and punctual payment of the principal of (and premium, if any) and
interest on all the Senior Notes and the performance and observance of every
covenant of the Indenture on the part of the Company to be performed or
observed; (2) immediately thereafter, no Event of Default (and no event that,
after notice or lapse of time, or both, would become an Event of Default) shall
have occurred and be continuing; (3) after giving effect to such transaction,
the Company or the Surviving Entity could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness or Refinancing Indebtedness)
pursuant to the covenant of the Indenture entitled "Limitation on Indebtedness";
(4) immediately thereafter, the Company or the Surviving Entity shall have a
Consolidated Net Worth equal to or greater than the lesser of (A) the
Consolidated Net Worth of the Company immediately prior to such transaction or
(B) 80% of the Consolidated Net Worth of the Company immediately prior to such
transaction provided that such amount shall not be less than $500 million; (5)
immediately thereafter, on a pro forma basis, the Fixed Charge Coverage Ratio of
the Company or of the Surviving Entity shall be at least 2.0 to 1 for the four
full fiscal quarters immediately preceding such transaction; provided, however,
that if the Fixed Charge Coverage Ratio of the Company for the four full fiscal
quarters immediately preceding such transaction is within the range set forth in
column (A) below, then the Fixed Charge Coverage Ratio of the Company or of the
Surviving Entity for the four full fiscal quarters immediately preceding such
transaction on a pro forma basis shall be at least equal to the lesser of the
ratio determined by multiplying the percentage set forth in column (B) below by
the Fixed Charge Coverage Ratio of the Company for the four full fiscal quarters
immediately preceding such transaction or the ratio set forth in column (C)
below:
<TABLE>
<CAPTION>
A B C
-------------------------------------------------------------- --- -----
<S> <C> <C>
2.2222:1 to 2.9999:1.......................................... 90% 2.4:1
3.00:1 to 3.9999:1............................................ 80% 2.8:1
4:00:1 or greater............................................. 70% 3.0:1
</TABLE>
and PROVIDED, FURTHER, that, if immediately after giving effect to such
transaction on a pro forma basis, the Fixed Charge Coverage Ratio of the Company
or the Surviving Entity, as the case may be, for the four full fiscal quarters
immediately preceding such transaction is 3.0 to 1 or more, the calculation in
the preceding proviso shall be inapplicable and such transaction shall be deemed
to have complied with the requirements of such provision; and (6) the Company or
the Surviving Entity shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, conveyance, transfer, lease or disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with the Indenture and that all conditions
precedent therein relating to such transaction have been satisfied.
Notwithstanding the foregoing, if the Company effects a consolidation, merger or
sale, conveyance, assignment, transfer, lease or other disposition of assets,
the conditions set forth in clauses (3) and (5) above shall not apply to a
transaction involving a Surviving Entity which is otherwise subject to the
foregoing provisions if the Surviving Entity (i) was formed for the purpose of
S-13
<PAGE> 14
effecting such transaction, (ii) did not engage in any business prior to such
transaction and, (iii) immediately prior to such transaction, had no
Indebtedness or liabilities, contingent or otherwise, of any kind whatsoever.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the preceding paragraph in which the
Company is not the continuing corporation, the successor entity formed or
remaining would be substituted for the Company and the Company would be
discharged from all obligations and covenants under the Indenture and the Senior
Notes.
CERTAIN COVENANTS OF THE COMPANY
The Indenture contains, among others, the covenants summarized below, which
will be applicable (unless waived or amended) so long as any of the Senior Notes
are outstanding.
Limitation on Indebtedness. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or guarantee the payment of any
Indebtedness (including Acquired Indebtedness) other than Permitted Indebtedness
or Refinancing Indebtedness, unless after giving effect to such event on a pro
forma basis the Company's Fixed Charge Coverage Ratio for the four full fiscal
quarters immediately preceding such event, taken as one period, is not less than
2.0 to 1. For the purposes of determining any particular amount of Indebtedness,
there shall not be included the amount of any guarantees of (or obligations with
respect to letters of credit supporting, or joint or joint and several
obligations in respect of) Indebtedness, the amount of which is otherwise
included. For purposes of determining compliance with this covenant, (i) in the
event that an item of Indebtedness meets the criteria of more than one of the
clauses of Permitted Indebtedness or Refinancing Indebtedness, the Company, in
its sole discretion, shall classify such item of Indebtedness and shall be
required to include the amount and type of such Indebtedness in only one of such
clauses and (ii) the amount of Indebtedness issued at a price which is less than
the principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in accordance with GAAP.
Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, create, assume, incur or suffer to be created, assumed or
incurred any Lien upon any of their respective assets without making effective
provision whereby all the Senior Notes shall be directly secured equally and
ratably with the Indebtedness or other obligations secured by such Lien, except
for (i) Permitted Liens and (ii) Liens securing an aggregate amount of
Indebtedness, which together with the aggregate "value" of sale and leaseback
transactions referred to below (other than such transactions in which debt has
been retired in accordance with the following paragraph), does not at the time
exceed 5% of Adjusted Consolidated Assets.
Limitation on Sale and Leaseback Transactions. The Company may not enter
into any sale and leaseback transaction, or series of related such transactions,
of assets with an aggregate fair market value of $10 million or more relating to
Food-Related Businesses, unless an amount equal to the greater of the proceeds
of sale or the fair value of the property is applied (a) to build or purchase
capital assets used in the Company's business or (b) to retire long-term
Indebtedness for money borrowed (including the Senior Notes) of the Company,
except that the Company may enter into (i) intercompany sale and leaseback
transactions, (ii) temporary sale and leaseback transactions with a term not to
exceed three years and (iii) sale and leaseback transactions with respect to
which the "value" thereof plus the other secured Indebtedness referred to in
clause (ii) of the previous paragraph does not at the time exceed 5% of Adjusted
Consolidated Assets.
Limitation on Restricted Payments. The Company will not, directly or
indirectly, (i) declare or pay any dividend on, or make any distribution in
respect of, or purchase, redeem or retire for value, or permit any of its
Subsidiaries, directly or indirectly, to so purchase, redeem or retire for
value, any capital stock of the Company, other than through the issuance solely
of the Company's own capital stock, or rights thereto, (ii) make any principal
payment on, or redeem, repurchase, defease or otherwise acquire or retire for
value, prior to scheduled principal payment or maturity, Indebtedness of the
Company (excluding Indebtedness of Subsidiaries) which is expressly subordinate
in right of payment to the Senior Notes or permit any of its Subsidiaries,
directly or indirectly, to do so or (iii) make any loan to, incur, create,
assume or suffer to exist any guarantee of Indebtedness of, or make advancement
to, or other investment in, or permit any of its Subsidiaries to make any loan,
incur, create, assume or suffer to exist any guarantee of Indebtedness of, or
S-14
<PAGE> 15
make advancement to, or other investment in, any Related Person of the Company
(other than a Subsidiary of the Company) except for any transaction with an
officer or director of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with any
officer or director of the Company) (such payments or any other actions
described in (i), (ii) and (iii), collectively, "Restricted Payments") unless
(a) at the time of and after giving effect to the proposed Restricted Payment
no Event of Default (and no event that, after notice or lapse of time, or both,
would become an Event of Default) shall have occurred and be continuing, and
(b) at the time of and after giving effect to the proposed Restricted Payment
(the value of any such payment, if other than cash, as determined by the Board
of Directors, whose determination shall be conclusive and evidenced by a board
resolution), the aggregate amount of all Restricted Payments declared or made
after March 31, 1996 shall not exceed the sum of (A) 50% of the aggregate
cumulative Consolidated Net Income of the Company accrued on a cumulative basis
during the period beginning on April 1, 1996 and ending on the last day of the
Company's last fiscal quarter ending prior to the date of such proposed
Restricted Payment (or, if such aggregate cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) plus (B) the aggregate proceeds
received by the Company as capital contributions to the Company after March 31,
1996, or from the issuance and sale (other than to a Subsidiary) after March
31, 1996 of capital stock of the Company (excluding the issuance or sale of
preferred stock that is mandatorily redeemable, or redeemable at the option of
the holder of such preferred stock, in either case, prior to the Stated
Maturity of the Senior Notes (collectively, the "Disqualified Stock")) and any
Indebtedness or other securities of the Company convertible into or exercisable
for capital stock (other than Disqualified Stock) of the Company which has been
so converted or exercised, as the case may be, plus (C) the aggregate proceeds
received by the Company from the issuance in February 1994 of its $2.875
Non-Voting Cumulative Preferred Stock, Series A, plus (D) $70 million;
PROVIDED, HOWEVER, that the foregoing provisions will not prevent the payment
of any dividend, within 60 days after the date of its declaration, if at the
date of declaration such payment would be permitted by such provisions. For the
purposes of the foregoing provisions, the term "Restricted Payment" shall not
include the making of any principal payment on, or redemption, repurchase,
defeasance or other acquisition or retirement for value, prior to scheduled
principal payment or maturity, of (1) any of the Company's subordinated
Indebtedness existing at the date of the Indenture as long as no such
acquisition or retirement is made with the proceeds of Indebtedness which has a
maturity date earlier than the existing subordinated Indebtedness being
acquired or retired or (2) any subordinated Indebtedness of the Company
incurred after the date of the Indenture, if such acquisition or retirement is
made with the proceeds of subordinated Indebtedness which has a maturity date
no earlier than the latest maturity date of any then Outstanding Senior Notes.
TRANSACTIONS WITH RELATED PERSONS. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into or suffer
to exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Related Person (other than a Subsidiary) unless (i) such
transaction or series of transactions is on terms that are no less favorable to
the Company or such Subsidiary, as the case may be, than would be available in a
comparable transaction with an unrelated third party and (ii) (A) with respect
to a transaction or series of transactions involving aggregate payments in
excess of $10 million but less than $20 million, the Company delivers an
officer's certificate to the Trustee certifying that such transaction complies
with the clause (i) above and (B) with respect to a transaction or series of
transactions involving aggregate payments equal to or greater than $20 million,
such transaction or series of related transactions is approved by a majority of
the Board of Directors of the Company including the approval of a majority of
the disinterested directors. Notwithstanding the foregoing, this provision will
not apply to (i) any transaction with an officer or director of the Company
entered into in the ordinary course of business (including compensation or
employee benefit arrangements with any officer or director of the Company) and
(ii) any transaction entered into in the ordinary course of business with a
Subsidiary.
PURCHASE OF SENIOR NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT. In the
event that there occurs at any time a Change of Control Triggering Event, each
holder of Senior Notes shall have the right, at the holder's option, to require
the Company to purchase all or any part (in integral multiples of $1,000) of
such holder's Senior Notes on the Purchase Date at a purchase price of 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
Purchase Date.
S-15
<PAGE> 16
The Company is obligated to give notice to holders of the Senior Notes and
the Trustee within 30 days following a Change of Control Triggering Event. The
notice must specify the Purchase Date, the place at which the Senior Notes shall
be presented and surrendered for purchase, that interest accrued to the Purchase
Date will be paid upon such presentation and surrender and that interest will
cease to accrue on the Senior Notes surrendered for purchase as of the Purchase
Date. The Company agrees that it will comply with all applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, if the purchase option is
triggered upon the occurrence of a Change of Control Triggering Event. In order
for a holder of the Senior Notes properly to put its Senior Notes to the Company
for purchase, the holder must present and surrender the Senior Notes to the
Company at the place specified in the Company's aforementioned notice at least
15 days prior to the Purchase Date. Any such tender by a holder of Senior Notes
shall be irrevocable. The Company is not obligated to notify holders of or to
purchase the Senior Notes with respect to more than one Change of Control
Triggering Event.
There can be no assurance that sufficient funds will be available at the
time of any Change of Control Triggering Event to make the required purchases.
In the event that the Company is unable to comply with its purchase obligations,
it would constitute an event of default under the Senior Debt Indenture, which
would lead to cross defaults or cross accelerations of certain other debt then
outstanding. At March 31, 1996, an aggregate of approximately $847 million
principal amount of outstanding debt of the Company and its Subsidiaries (after
giving effect to the redemption of the Company's 10 1/2% subordinated debentures
due 2004 but without giving effect to the repayment of any debt with the
proceeds from the sale of the Senior Notes offered hereby and from the Preferred
Stock Offering, as described in "Use of Proceeds") contained provisions which
would permit cross defaults or cross accelerations upon such an event of default
under the Senior Debt Indenture. Such cross defaults and cross accelerations
could, in turn, make it more difficult, if not impossible, for the Company to
meet its obligations under the Senior Notes.
DEFEASANCE OF CERTAIN OBLIGATIONS
The terms of the Senior Notes provide that the Company may omit to comply
with the restrictive covenants in the terms of the Senior Notes relating to
Consolidation, Merger and Sale of Assets; Limitation on Liens; Limitation on
Sale and Leaseback Transactions; Limitation on Indebtedness; Limitation on
Restricted Payments; Transactions with Related Persons; Purchase of Senior Notes
upon a Change of Control Triggering Event; and any such omission with respect to
such covenants shall not be an Event of Default with respect to the Senior
Notes, if (a) the Company deposits or causes to be deposited with the Trustee
for the Senior Notes in trust an amount of cash, U.S. government securities or a
combination of cash and U.S. government securities sufficient to pay and
discharge when due the entire indebtedness on all such Outstanding Senior Notes
for unpaid principal (and premium, if any) and interest to the Stated Maturity
or any Redemption Date, as the case may be and (b) certain other conditions are
met. The obligations of the Company under the Indenture with respect to the
Senior Notes, other than with respect to the covenants referred to above, shall
remain in full force and effect. This defeasance is in addition to the
defeasance described under "Satisfaction and Discharge" in the accompanying
Prospectus.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will initially be issued in the form of one Global Note (the
"Global Note") held in book-entry form. The Global Note will be deposited on the
date of the closing of the sale of the Senior Notes offered hereby (the "Closing
Date") with, or on behalf of, The Depository Trust Company ("DTC" or the
"Depository") and registered in the name of Cede & Co., as nominee of the
Depository (such nominee being referred to herein as the "Global Note holder").
DTC has advised the Company that it is a limited-purpose trust company that
was created to hold securities for its participating organizations
(collectively, the "Participants" or the "Depository's Participants") and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Depository's Participants include securities brokers and
dealers (including the Underwriters), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depository's system
is also available to other entities such as
S-16
<PAGE> 17
banks, brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depository's Indirect Participants") that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants.
So long as the Global Note holder is the registered owner of any Senior
Notes, the Global Note holder will be considered the sole holder under the
Indenture of any Senior Notes evidenced by the Global Note. Beneficial owners of
Senior Notes evidenced by the Global Note will not be considered the owners or
holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depository or for maintaining,
supervising or reviewing any records of the Depository relating to the Senior
Notes.
A Global Note may not be transferred except as a whole by DTC to a nominee
of DTC. A Global Note representing Senior Notes is exchangeable only if (1) DTC
notifies the Company that it is unwilling or unable to continue as a Depository
for such Global Note or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act, (2) the Company in its sole discretion
determines that all such Global Notes shall be exchangeable or (3) there shall
have occurred and be continuing an Event of Default or an event which with the
giving of notice or lapse of time or both would constitute an Event of Default
with respect to the Senior Notes represented by such Global Notes. Any Global
Note that is exchangeable pursuant to the preceding sentence shall be
exchangeable for certificates in definitive form representing Senior Notes in
authorized denominations and registered in such names as the Depository holding
such Global Note shall direct. Subject to the foregoing, the Global Note is not
exchangeable, except for a Global Note of like denomination to be registered in
the name of the Depository or its nominee.
Payments in respect of the principal of, premium, if any, and interest on
any Senior Notes registered in the name of the Global Note holder on the
applicable record date will be payable by the Trustee to or at the direction of
the Global Note holder in its capacity as the registered Holder under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the Senior Notes, including the Global Note,
are registered as the owners thereof for the purpose of receiving such payments.
Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of the Senior Notes (including principal, premium, if any, or interest). The
Company believes, however, that it is currently the policy of the Depository to
immediately credit the accounts of the relevant Participants with such payments,
in amounts proportionate to their respective holdings of beneficial interests in
the relevant security as shown on the records of the Depository. Payments by the
Depository's Participants and the Depository's Indirect Participants to the
beneficial owners of the Senior Notes will be governed by standing instructions
and customary practice and will be the responsibility of the Depository's
Participants or the Depository's Indirect Participants.
SAME-DAY SETTLEMENT AND PAYMENT
The Senior Notes will trade in DTC's Same-Day Funds Settlement System.
Settlement for the Senior Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds or the equivalent, so long as the Global
Note is held of record by DTC and DTC continues to make the Same-Day Funds
Settlement System available to the Company. Secondary market trading activity in
the Senior Notes will also be required by DTC to settle in immediately available
funds.
S-17
<PAGE> 18
UNDERWRITING
The Underwriters named below (the "Underwriters") have severally agreed,
subject to the terms and conditions of the Underwriting Agreement and the
related Terms Agreement referred to therein (the "Underwriting Agreement"), to
purchase from the Company the principal amount of Senior Notes set forth
opposite their respective names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF SENIOR NOTES
----------- -------------------
<S> <C>
Lehman Brothers Inc.................................................
Bear, Stearns & Co. Inc.............................................
Furman Selz LLC.....................................................
--------------
Total.......................................................... $ 125,000,000
==============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the Senior Notes are subject to certain conditions and
that if any of the Senior Notes are purchased by the Underwriters pursuant to
the Underwriting Agreement all the Senior Notes agreed to be purchased by the
Underwriters must be so purchased.
The Company has been advised by the Underwriters that they propose to offer
the Senior Notes offered hereby initially at the public offering price set forth
on the cover page of this Prospectus Supplement and to certain selected dealers
(who may include Underwriters) at such public offering price less a selling
concession not to exceed % of the principal amount of the Senior Notes. The
Underwriters or such selected dealers may reallow a selling concession to
certain other dealers not to exceed % of the principal amount of the Senior
Notes. After the initial public offering of the Senior Notes, the public
offering price and such concessions may be changed by the Underwriters.
There is no public market for the Senior Notes and the Company has no plans
to apply for listing of the Senior Notes on any national securities exchange or
for quotation of the Senior Notes on any automated quotation system. The Company
has been advised by the Underwriters that they intend to make a market in the
Senior Notes; however, they are not obligated to do so, and market making with
respect to the Senior Notes may be discontinued at any time, for any reason,
without notice. There can be no assurance that an active public market for the
Senior Notes will develop or, if a market does develop, at what prices the
Senior Notes will trade.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
thereof.
Certain of the Underwriters have provided from time to time, and expect to
provide in the future, financial advisory and investment banking services to the
Company and its affiliates, for which such Underwriters have received and will
receive customary fees and commissions.
S-18
<PAGE> 19
PROSPECTUS
$500,000,000
[LOGO] CHIQUITA BRANDS INTERNATIONAL, INC.
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
SECURITIES WARRANTS
Chiquita Brands International, Inc. ("Chiquita" or the "Company") may offer
from time to time (i) in one or more series unsecured debt securities which may
be either senior or subordinated debt securities (together, the "Debt
Securities"), consisting of debentures, notes and/or other evidences of
indebtedness; (ii) in one or more series shares of preferred stock (together
"Preferred Stock") which may be either Non-Voting Cumulative Preferred Stock,
par value $1.00 per share ("Non-Voting Preferred Stock") or Cumulative
Preference Stock, without par value ("Preference Stock"), either of which may be
issued in the form of depositary shares evidenced by depositary receipts
("Depositary Shares"), (iii) shares of its Capital Stock, par value $0.33 per
share ("Common Stock") and (iv) securities warrants ("Securities Warrants") to
purchase Debt Securities, Preferred Stock, Depositary Shares or Common Stock
(the Debt Securities, Preferred Stock, Common Stock and Securities Warrants
being collectively referred to as the "Securities"), or any combination of the
foregoing, at an aggregate initial offering price not to exceed $500,000,000, at
prices and on terms to be determined at or prior to the time of sale.
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Securities and the initial price and the net proceeds to Chiquita from the sale
thereof. The Prospectus Supplement will set forth with regard to the particular
Securities, without limitation, the following: (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, ranking as
senior debt or subordinated debt, authorized denominations, maturity, rate (or
method of calculation thereof) of interest and dates (or method of determination
thereof) for payment thereof, and any exchangeability, conversion, redemption,
prepayment or sinking fund provisions, (ii) in the case of Preferred Stock, the
designation, including whether Non-Voting Preferred Stock or Preference Stock,
number of shares, voting rights (for Preference Stock), liquidation preference
per share, initial public offering price, dividend rate (or method of
calculation thereof), dates on which dividends shall be payable and dates from
which dividends shall accrue, any redemption or sinking fund provisions, any
conversion or exchange rights and any special voting or other special rights,
(iii) in the case of Common Stock, the number of shares of Common Stock and the
terms of the offering and sale thereof and (iv) in the case of Securities
Warrants, the number and terms thereof, the designation and number or amount of
Securities issuable upon their exercise, the exercise price, the terms of the
offering and sale thereof and, where applicable, the duration and detachability
thereof. The Prospectus Supplement will also contain information, where
applicable, about certain Federal income tax considerations relating to, and any
listing on a securities exchange of, the Securities covered by the Prospectus
Supplement.
The Securities may be offered for sale directly, through agents, to or
through underwriters or dealers designated from time to time or through a
combination of such methods. If agents of Chiquita or any underwriters or
dealers are involved in the sale of the Securities, the names of such agents,
underwriters or dealers and any applicable commission or discounts will be set
forth in the Prospectus Supplement. See "Plan of Distribution."
SEE "RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS MAY 1, 1996.
LOGO
<PAGE> 20
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY AGENT, UNDERWRITER OR DEALER.
THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER
OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Chiquita is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Chiquita has
filed with the Commission a Registration Statement on Form S-3 (together with
all amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Securities
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement and exhibits thereto, or amendments thereto, to
which reference is hereby made. Such reports, proxy and information statements,
Registration Statement and exhibits and other information filed by Chiquita may
be inspected and, upon payment of the Commission's customary charges, copied at
the public reference facilities of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C., and at the Regional Offices of the
Commission at Suite 1300, 7 World Trade Center, New York, New York, and Suite
1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois.
Chiquita's Common Stock is listed on the New York, Boston and Pacific Stock
Exchanges. Reports, proxy and information statements and other information
concerning Chiquita may be inspected and copied at the Library of the New York
Stock Exchange at 20 Broad Street, New York, New York; at the Secretary's Office
of the Boston Stock Exchange at 1 Boston Place, Boston, Massachusetts; and at
the Listing Department of the Pacific Stock Exchange at 301 Pine Street, San
Francisco, California.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Chiquita will furnish, without charge, to any person to whom this
Prospectus is delivered, upon such person's written or oral request, a copy of
any and all of the information that has been incorporated by reference in the
Registration Statement of which this Prospectus is a part (not including
exhibits to such information unless such exhibits are specifically incorporated
by reference into such information). Any such request should be directed to the
Vice President, Corporate Affairs of Chiquita, 250 East Fifth Street,
Cincinnati, Ohio 45202; telephone: (513) 784-6366.
The Annual Report on Form 10-K for the year ended December 31, 1995 (which
incorporates by reference certain information contained in the Company's 1995
Annual Report to Shareholders) (the "1995 10-K") filed by Chiquita with the
Commission (Commission file number 1-1550) is incorporated herein by reference
and made a part hereof.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
2
<PAGE> 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
<PAGE> 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
<PAGE> 23
ADVERSE WEATHER CONDITIONS AND CROP DISEASE
Bananas are vulnerable to adverse local weather conditions, which are quite
common but difficult to predict, and to crop disease. These factors, which may
result in lower sales volume and increased costs, may also restrict worldwide
supplies and result in increased prices for bananas. However, competitors may be
affected differently, depending upon their ability to obtain adequate supplies
from sources in other geographic areas. Chiquita has a greater number and
geographic diversity of sources of bananas than any of its competitors. During
1995, approximately one-third of all bananas sold by Chiquita were sourced from
Panama. Bananas are sourced from numerous other countries, including Colombia,
Costa Rica, Ecuador, Guatemala and Honduras which comprised 6% to 23% (depending
on the country) of bananas sold by Chiquita during 1995.
LABOR RELATIONS
The Company employs a total of approximately 36,000 associates.
Approximately 32,000 of these associates are employed in Central and South
America, including 28,000 workers covered by approximately 85 labor contracts
with terms expiring from 1996 to 1999. Strikes or other labor-related actions
are often encountered upon expiration of labor contracts and also frequently
occur during the term of the contracts.
OTHER RISKS OF INTERNATIONAL OPERATIONS
The Company's operations are conducted in many areas of the world, and are
subject to risks that are inherent in operating in foreign countries, including
government regulation, currency restrictions and other restraints, risks of
expropriation, burdensome taxes, quotas and tariffs. There is also a risk that
legal or regulatory requirements will be changed or that administration and
enforcement policies will change. Certain of the Company's operations are
dependent upon leases and other agreements with the governments of the
countries. Although the Company's operations are a significant factor in the
economies of many of the countries in Central and South America where the
Company produces and purchases bananas and other agricultural and consumer
products, the Company believes its overall risk from these factors, as well as
from political changes, is reduced by the large number and geographic diversity
of its sources of bananas. The Company's operations worldwide and the products
it sells are subject to numerous governmental regulations and inspections by
environmental, food safety and health authorities. Although the Company believes
it is substantially in compliance with such regulations, actions by regulators
have in the past required, and in the future may require, operational
modifications or capital improvements at various locations or the payment of
fines and penalties, or both.
SHARES AVAILABLE FOR FUTURE SALE
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock or Preferred Stock, or the availability of such shares
for future sales, will have on the market price of Common Stock or any then
outstanding Preferred Stock prevailing from time to time. Sales of substantial
amounts of Common Stock or Preferred Stock, or the perception that such sales
could occur, could adversely affect prevailing market prices for the Common
Stock or, in certain instances, the Preferred Stock. At April 1, 1996, the
Company had outstanding 55,234,823 shares of Common Stock, including 23,996,295
shares held, directly or indirectly, by AFG, and 2,875,000 shares of $2.875
Non-Voting Cumulative Preferred Stock, Series A.
ABSENCE OF PUBLIC MARKET FOR SECURITIES (OTHER THAN COMMON STOCK)
Since the Debt Securities, the Preferred Stock and the Securities Warrants
will be newly issued, there is no current market for such Securities. The
Company may, but has no obligation to, apply for listing of such Securities on
the New York Stock Exchange or another stock exchange, and there can be no
assurance that the applicable listing requirements of any such exchange will be
met. There can be no assurance that there will be an active trading market for
such Securities.
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<PAGE> 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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- ---------------
(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.
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<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
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<PAGE> 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.
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<PAGE> 30
DESCRIPTION OF EQUITY SECURITIES
Chiquita has 150,000,000 authorized shares of Capital Stock, par value $.33
per share (the "Common Stock"), of which 55,234,823 shares were outstanding on
April 1, 1996. Chiquita has authorized 10,000,000 shares of Non-Voting
Cumulative Preferred Stock, $1.00 par value per share (the "Non-Voting Preferred
Stock"), of which 2,875,000 shares were outstanding on April 1, 1996 designated
as $2.875 Non-Voting Cumulative Preferred Stock, Series A; and 4,000,000 shares
of Cumulative Preference Stock, without par value (the "Preference Stock"), no
shares of which were outstanding on April 1, 1996. Each of the Non-Voting
Preferred Stock and the Preference Stock may be issued in one or more series
having such designated preferences and rights, qualifications and limitations as
the Board of Directors may from time to time determine without requiring any
vote of the shareholders.
The issuance of preferred or preference stock by the Board of Directors
could be utilized, under certain circumstances, as a method of preventing a
takeover of Chiquita. There are no other provisions in the Company's Second
Restated Certificate of Incorporation or By-Laws that would have an effect of
delaying, deferring or preventing a change in control of Chiquita.
Various debt instruments of the Company restrict, among other things,
dividends and other distributions on, and repurchases or redemptions of, the
Company's capital stock. At December 31, 1995, these restrictions would have
allowed the payment of approximately $160 million for dividends and other
corporate distributions, redemptions or repurchases. The ability of the Company
to pay dividends when, as and if declared by the Board of Directors, may be
subject to restrictions contained in any future debt agreements and to
limitations contained in future series or classes of preferred or preference
shares and is subject to the legal availability of funds.
DESCRIPTION OF COMMON STOCK
Chiquita has 150,000,000 authorized shares of Common Stock, of which
55,234,823 shares were outstanding on April 1, 1996.
Holders of Common Stock are entitled to one vote per share on the election
of directors and all other matters submitted to a vote of shareholders. Shares
of Common Stock do not have cumulative voting rights.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors, out of funds legally available therefor;
provided, however, that all dividends on any preferred stock and preference
stock which may be issued in the future must be fully paid or declared and set
apart before any dividends can be paid or declared and set apart with respect to
the Common Stock.
Upon liquidation, dissolution or winding-up of Chiquita, the holders of the
Common Stock are entitled to share ratably in the assets of Chiquita remaining
after the payment of its obligations and liabilities and after payment due the
holders of Chiquita's preferred stock and preference stock.
Holders of Common Stock have no preemptive or other rights to subscribe for
or purchase additional securities of Chiquita. All outstanding shares of Common
Stock are fully paid and nonassessable.
DESCRIPTION OF PREFERENCE STOCK
The Board of Directors of the Company may provide for the issuance of up to
4,000,000 shares of Preference Stock in one or more series. The rights,
preferences, privileges and restrictions, including dividend rights, voting
rights, conversion rights, terms of redemption and liquidation preferences of
each series may be fixed or designated by the Board of Directors without any
further vote or action by the Company's shareholders. Upon issuance after full
payment of the purchase price therefor, shares of Preference Stock offered
hereby will be fully paid and nonassessable.
12
<PAGE> 31
The specific terms of a particular series of Preference Stock offered
hereby will be described in a Prospectus Supplement relating to such series and
will include, without limitation, the following:
(i) the maximum number of shares to constitute the series and the
distinctive designation thereof;
(ii) the annual dividend rate, if any, on shares of the series,
whether such rate is fixed or variable or both, the date or dates from
which dividends will begin to accrue or accumulate and whether dividends
will be cumulative;
(iii) whether the shares of the series will be redeemable and, if so,
the price at and the terms and conditions on which the shares of the series
may be redeemed, including the time during which shares of the series may
be redeemed and any accumulated dividends thereon that the holders of the
series shall be entitled to receive upon the redemption thereof;
(iv) the liquidation preference, if any, applicable to shares of the
series;
(v) whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the shares of
the series for retirement or for other corporate purposes, and the terms
and provisions relating to the operation of such fund;
(vi) the terms and conditions, if any, on which the shares of the
series shall be convertible into, or exchangeable for, any other debt or
equity securities;
(vii) the voting power, if any, of any series; and
(viii) any other preferences and relative, participating, optional or
other special rights or qualifications, limitations or restrictions
thereof.
DESCRIPTION OF NON-VOTING PREFERRED STOCK
Chiquita has 10,000,000 authorized shares of Non-Voting Preferred Stock, of
which 2,875,000 shares, designated as $2.875 Non-Voting Cumulative Preferred
Stock, Series A, par value $1.00 per share (the "Series A Preferred Stock"),
were outstanding on April 1, 1996. The Non-Voting Preferred Stock may be issued
in one or more series and the rights, preferences, privileges and restrictions,
including dividend rights, conversion rights, terms of redemption and
liquidation preferences of each series may be fixed or designated by the Board
of Directors of the Company without any further vote or action by the Company's
shareholders; provided however, that no series of Preferred Stock shall have the
right to vote unconditionally in the election of directors of the Company. Upon
issuance after full payment of the purchase price therefor, shares of Non-Voting
Preferred Stock offered hereby will be fully paid and nonassessable.
The specific terms of a particular series of Non-Voting Preferred Stock
offered hereby will be described in a Prospectus Supplement relating to such
series and will include, without limitation, the following:
(i) the maximum number of shares to constitute the series and the
distinctive designation thereof;
(ii) the annual dividend rate, if any, on shares of the series,
whether such rate is fixed or variable or both, the date or dates from
which dividends will begin to accrue or accumulate and whether dividends
will be cumulative;
(iii) whether the shares of the series will be redeemable and, if so,
the price at and the terms and conditions on which the shares of the series
may be redeemed, including the time during which shares of the series may
be redeemed and any accumulated dividends thereon that the holders of
shares of the series shall be entitled to receive upon the redemption
thereof;
(iv) the liquidation preference, if any, applicable to shares of the
series;
(v) whether the shares of the series will be subject to operation of a
retirement or sinking fund and, if so, the extent and manner in which any
such fund shall be applied to the purchase or redemption of the
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<PAGE> 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
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<PAGE> 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
<PAGE> 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
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<PAGE> 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
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<PAGE> 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.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, BY THE UNDERWRITERS OR BY ANY OTHER PERSON. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION MAY NOT
LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary......... S-2
Selected Consolidated Financial
Data................................ S-4
Recent Developments................... S-5
Use of Proceeds....................... S-6
Capitalization........................ S-7
Description of Senior Notes........... S-8
Underwriting.......................... S-18
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 3
Use of Proceeds....................... 6
Ratios of Earnings to Fixed Charges
and Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................... 6
Description of Debt Securities........ 7
Description of Equity Securities...... 12
Description of Securities Warrants.... 16
Plan of Distribution.................. 17
Legal Matters......................... 18
Experts............................... 18
</TABLE>
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$125,000,000
[LOGO]
CHIQUITA BRANDS INTERNATIONAL
% SENIOR NOTES DUE 2006
---------------------------
PROSPECTUS SUPPLEMENT
JULY , 1996
---------------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
FURMAN SELZ
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