<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 11, 1994
AGWAY INC.
(Exact name of registrant as specified in its charter)
Delaware 2-22791 15-0277720
- - ---------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
333 Butternut Drive, DeWitt, New York 13214
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315) 449-6431
(Former name or former address, if changed since last report)
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Item 5. Other Events
One of Agway Inc.'s significant investments, Curtice Burns Foods, Inc.,
has filed a Form 8-K as of July 11, 1994, to disclose certain events
related to the proposed sale of Curtice Burns Foods, Inc., to Dean Foods
Company. A copy of that Form 8-K is attached.
Agway Inc., through its wholly owned subsidiary Agway Holdings, Inc.
("AHI"), owns approximately 34% of the outstanding common stock of Curtice
Burns Foods, Inc. AHI's ownership consists of 13% of the Class A common
stock and 99% of the Class B common stock. The Class A common stock is
publicly traded on the American Stock Exchange. Agway Inc., through its
ownership of the Class B common stock, is entitled to elect 70% of the
Board of Directors of Curtice Burns Foods, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
AGWAY INC.
(Registrant)
Date July 19, 1994 By /s/ PETER J. O'NEILL
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Peter J. O'Neill
Senior Vice President
Corporate Finance and Control
(Principal Financial Officer and
Chief Accounting Officer)
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report July 11, 1994
--------------------------------------------
(Date of earliest event reported)
CURTICE-BURNS FOODS, INC.
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(Exact name of registrant as specified in its charter)
New York 1-7605 16-0845824
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(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
90 Linden Place, P.O. Box 681
Rochester, NY 14603
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(Address of principal executive offices)
(716) 383-1850
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(Registrant's telephone number, including area code)
<PAGE>2
Item 5. Other Events.
As previously announced, the Board of Directors of
the Company authorized its management to pursue strategic
alternatives for maximizing value for its shareholders,
including the possible sale of the Company. At a special
meeting on June 8, the Board reviewed several acquisition
proposals and voted to pursue a proposal submitted by Dean
Foods Company ("Dean Foods") to acquire all the outstanding
shares of the Company at a maximum cash price of $20 per
share, subject to a number of contingencies, including an
agreement with Pro-Fac Cooperative, Inc. ("Pro-Fac")
covering the purchase of various assets owned by Pro-Fac but
used by the Company in the conduct of its business and
settling all outstanding issues between the Company and Pro-
Fac, negotiation by Dean Foods of an agreement with Hormel
Foods Corporation for the purchase of the Nalley's Fine
Foods Division of Curtice Burns, clearance of the
transaction by appropriate government agencies, negotiation
of definitive agreements and approval of any transaction by
the Company's shareholders.
To date, Pro-Fac has not indicated that it is
willing to enter into the agreement required by Dean Foods.
Accordingly, the Company today commenced arbitration
proceedings against Pro-Fac under the Integrated Agreement
dated as of June 27, 1992 (the "Integrated Agreement").
Under the terms of the Integrated Agreement, the Company and
Pro-Fac are required to settle any dispute thereunder by
arbitration. A copy of the Company's Demand for Arbitration
is attached as Exhibit 1.
In the arbitration, the Company is seeking, among
other relief, a declaration confirming its right to
terminate the Integrated Agreement and to purchase the
assets owned by Pro-Fac but used by the Company in the
conduct of its business upon tender of the book value
thereof, a declaration confirming the effect of termination
of the Integrated Agreement on the obligations of the
Company under the Integrated Agreement and a declaration
confirming that the Company does not have any obligations
under the Integrated Agreement to purchase crops except as
set forth in the fiscal 1995 profit plan. The Company is
also seeking an award of damages sustained by the Company in
an amount to be determined by the arbitrators, but in no
event less than the difference in value between the Dean
Foods $20 per share offer and the market price per share of
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the Company's stock following any public announcement that
the Dean Foods proposal has been withdrawn.
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
CURTICE-BURNS FOODS, INC.
Date: July 11, 1994 By: /s/ J. William Petty
--------------------------
J. William Petty, President
and Chief Executive Officer
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EXHIBIT INDEX
Demand for Arbitration dated July 8, 1994 . . . . . . . . 1
<PAGE>5
EXHIBIT 1
In the matter of an arbitration between
CURTICE-BURNS FOODS, INC.,
Claimant,
-against-
PRO-FAC COOPERATIVE, INC.,
Respondent.
DEMAND FOR ARBITRATION
Pursuant to a written agreement called the
"Integrated Agreement" between Curtice-Burns Foods, Inc.
("Curtice Burns") and Pro-Fac Cooperative, Inc. ("Pro-Fac")
dated June 27, 1992 (the "Integrated Agreement"), Curtice
Burns hereby demands arbitration of certain disputes arising
under the Integrated Agreement as set forth herein, in
accordance with Section 66 of the Integrated Agreement. A
copy of the Integrated Agreement is annexed hereto as
Exhibit A.
1. Curtice Burns is a corporation organized under
the laws of the State of New York, with its principal office
at 90 Linden Place, Rochester, New York. Its principal
business is the processing and sale, including marketing and
distribution, of various food products.
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2. Pro-Fac is an agricultural cooperative
corporation organized under the laws of the State of New
York. Its members are growers located in various states.
Pro-Fac's business consists of the marketing of its members'
crops.
3. Curtice Burns's business relationship with
Pro-Fac is governed by the Integrated Agreement, which sets
forth the respective rights and obligations of Curtice Burns
and Pro-Fac.
The Integrated Agreement
4. Pursuant to the Integrated Agreement, Curtice
Burns purchases from Pro-Fac agricultural crops produced and
delivered to Pro-Fac by its members. Under Section 42 of
the Integrated Agreement Curtice Burns agrees to process and
market "crops of the type and in the amount set forth by
acreage and tonnage" in the "profit plan" agreed to and
approved annually by the boards of directors of both Curtice
Burns and Pro-Fac.
5. Also under the Integrated Agreement, Pro-Fac
leases to Curtice Burns certain of the fixed and tangible
assets used in Curtice Burns's business. Such assets are
referred to in the Integrated Agreement as the "Facilities".
6. Section 36 of the Integrated Agreement gives
Curtice Burns the unconditional right "at any time at the
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option of Curtice Burns upon written notice of 60 days to
Pro-Fac . . . to purchase the Facilities at book value
thereof at the time of purchase" (the "Buyout Option").
Section 36 further provides that,
"Upon the exercise of the option to purchase the
Facilities as specified in this paragraph, this
agreement shall also automatically terminate."
7. It is currently estimated that Curtice Burns's
total indebtedness to Pro-Fac upon termination of the
Integrated Agreement pursuant to Section 36 (the
"Termination Payment") would be approximately $266 million
as of June 24, 1994.
8. The Termination Payment represents the sum of
(i) the estimated book value of the Facilities as of
June 24, 1994, determined in accordance with generally
accepted accounting principles ("GAAP") (approximately
$141.8 million); (ii) the estimated book value as of
June 24, 1994, determined in accordance with GAAP, of Pro-
Fac's interest in the intangible assets associated with the
Facilities which Curtice Burns would be required under
Section 40 of the Integrated Agreement to purchase as part
of the buyout (approximately $24.8 million); (iii) the
amount required to repay certain long-term loans due Pro-Fac
upon termination of the Integrated Agreement (approximately
$98.1 million) as of June 24, 1994; and (iv) approximately
<PAGE>8
$1.3 million of other amounts due Pro-Fac.
Curtice Burns's Restructuring
9. During 1993, Curtice Burns embarked on a major
restructuring program. As a first step, Curtice Burns
decided to eliminate two declining lines of business (potato
chips and meat snacks) that had long been losing substantial
amounts of money. In accordance with GAAP, Curtice Burns
was required to write down the book value of the fixed
assets and goodwill related to those lines of business by a
total of approximately $51.4 million. In addition to the
$51.4 million asset writedown, further charges relating to
the potato chips and meat snacks lines of business (totaling
$9.6 million) were also taken by Curtice Burns. The
$51.4 million asset writedown was allocated between Curtice
Burns and Pro-Fac, reducing the value of the potato chips
and meat snacks assets on the books of both Curtice Burns
and Pro-Fac by approximately $29.2 million. Those books
were duly audited by the independent accounting firm of
Price Waterhouse.
10. In addition to the orderly disposition of
unprofitable and declining lines of business, the Board of
Directors of Curtice Burns authorized management to pursue
the possible sale of Curtice Burns.
<PAGE>9
11. In light of its possible acquisition by a
third party, in early 1994 Curtice Burns suggested that Pro-
Fac take such actions as it believed were necessary to
eliminate any obligations Pro-Fac may have to its growers to
market future crops beyond those crops Curtice Burns had
committed to purchase from Pro-Fac pursuant to the fiscal
1995 profit plan. By written notice dated March 28, 1994,
Pro-Fac notified its members that it was terminating certain
of the relevant marketing agreements and any obligations to
market future crops thereunder.
12. On May 31, 1994, Dean Foods Company ("Dean")
submitted a bid to purchase all of the issued and
outstanding common stock of Curtice Burns for $20.00 cash
per share.
13. Dean has represented that its offer has been
approved by its Board of Directors and is not subject to any
financing contingency. However, as a direct result of the
claims asserted by Pro-Fac, which are described below, Dean
has conditioned its offer on the execution of a binding
agreement between Pro-Fac and Curtice Burns settling the
issues between them, which agreement would clearly define
the amounts owed Pro-Fac upon exercise of the Buyout Option
and termination of the Integrated Agreement.
<PAGE>10
Pro-Fac's Response to Curtice Burns's Restructuring
14. Pro-Fac was fully advised of Curtice Burns's
plans and of the probability that any sale of Curtice Burns
to a third party would entail the exercise of the Buyout
Option and termination of the Integrated Agreement pursuant
to Section 36. Notwithstanding the plain language of
Section 36 ("at any time at the option of Curtice Burns [it
may] purchase the facilities at book value"), Pro-Fac has
taken the position that Curtice Burns does not have the
right to buy out Pro-Fac at book value or at all.
Specifically, in a letter to the directors of Curtice Burns,
dated November 4, 1993, Pro-Fac stated that it was prepared
to acquire Curtice Burns for itself but threatened to
"embroil" Curtice Burns in dilatory, burdensome,
"acrimonious", "long and costly litigation" if Curtice Burns
should attempt to exercise its rights under Section 36.
15. Furthermore, notwithstanding the plain
language of Section 42 (obligating Curtice Burns to process
only "crops of the type and in the amounts set forth [in]
the profit plan as approved each year"), Pro-Fac has taken
the position that Curtice Burns is liable for the "wrongful
termination" of an alleged obligation to purchase crops
beyond those already agreed to in the 1995 profit plan.
16. On June 7, 1994, Pro-Fac submitted a proposal
to buy Curtice Burns for $16.87 per share of Curtice-Burns's
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Class A and Class B common stock. In making its proposal
Pro-Fac reiterated its spurious claims under the Integrated
Agreement and suggested that Curtice Burns should accept the
Pro-Fac proposal--although the offer was at a lower price
than that Curtice Burns could obtain from a third party--
because Pro-Fac would "relinquish" its claims after it had
acquired Curtice Burns.
17. On June 8, 1994, the Board of Directors of
Curtice Burns (the "Board") rejected Pro-Fac's offer and
directed management to pursue the Dean proposal and
negotiate with Dean the terms of a definitive agreement.
The Board also instructed Curtice Burns's management to
negotiate the terms of an agreement with Pro-Fac settling
all disputes between Curtice Burns and Pro-Fac, as required
by Dean.
18. Following the June 8, 1994, Curtice Burns
board meeting, Pro-Fac issued public statements, including
statements disseminated over the news wires, publicly
asserting for the first time its position that in the event
of the sale of Curtice Burns to any third party Pro-Fac
would be entitled to half of the net proceeds of such a
sale. That position finds no support in any provision of
the Integrated Agreement and is contrary to its express
terms.
<PAGE>12
19. Since the determination by the Board of
Curtice Burns on June 8, 1994, Curtice Burns has repeatedly
requested that Pro-Fac enter into discussions to settle all
issues between Curtice Burns and Pro-Fac as required by
Dean, including at presentations to the Pro-Fac Special
Committee and Board of Directors on June 28, 1994. Pro-Fac
has refused to enter into any such discussions and has
thereby utterly frustrated Curtice Burns's efforts to
consummate the deal with Dean.
The Present Controversy
20. A present controversy exists between Curtice
Burns and Pro-Fac regarding Curtice Burns's rights and
obligations under the Integrated Agreement.
a. First, notwithstanding the plain language
of Section 36 of the Integrated Agreement, Pro-Fac has
unequivocally manifested its intention not to perform
its obligation to transfer title to the Facilities and
its interest in the associated intangibles to Curtice
Burns upon 60 days' written notice and tender of the
book value thereof.
b. Second, notwithstanding that under
Section 42 of the Integrated Agreement Curtice Burns is
obligated to process and market only "crops of the type
and in the amounts set forth by acreage and tonnage in
<PAGE>13
the raw product section of the profit plan as approved
each year by the boards of directors of [Curtice Burns
and Pro-Fac]" (emphasis added), Pro-Fac has asserted,
and advised potential acquirors of Curtice Burns, that
Curtice Burns is liable to Pro-Fac for Curtice Burns's
"wrongful termination" of its obligation to purchase
crops from Pro-Fac beyond those crops specified in the
fiscal 1995 profit plan.
c. Third, notwithstanding the lack of any
support in the Integrated Agreement or otherwise, Pro-
Fac has asserted, and advised potential acquirors of
Curtice Burns, that Pro-Fac is entitled to one-half the
proceeds of any sale of Curtice Burns to any third
party.
21. Since Curtice Burns first announced its
restructuring plan, Pro-Fac has wrongfully and willfully
pursued a campaign to frustrate and disrupt Curtice Burns's
legitimate efforts to enhance its shareholder value,
including by raising the foregoing meritless claims. Pro-
Fac's objective in pursuing this strategy is to acquire
Curtice Burns for less than full value by eliminating
potential third-party bidders.
22. The foregoing actions constitute an
anticipatory breach of Pro-Fac's obligations under the
<PAGE>14
Integrated Agreement and intentional interference with
advantageous business opportunities of Curtice Burns.
23. Pro-Fac's actions have caused and threaten to
continue to cause Curtice Burns and its shareholders to
sustain substantial losses. As a direct result of Pro-Fac's
anticipatory breach of, and wrongful refusal to abide by,
the terms of Section 36 of the Integrated Agreement and its
continued assertion of meritless claims against Curtice
Burns, Curtice Burns and its shareholders will lose the
opportunity to sell shares pursuant to the terms of Dean's
substantially superior May 31, 1994 proposal. Furthermore,
the business of Curtice Burns has been and continues to be
damaged by the uncertainty created by Pro-Fac's assertions
of baseless claims against Curtice Burns, uncertainty which
has adversely affected Curtice Burns's relations with its
customers, suppliers and employees. Unless a swift
resolution of the parties' dispute under the Integrated
Agreement is reached, Curtice Burns will sustain further
losses and lose other valuable opportunities.
WHEREFORE, Curtice Burns prays for:
(a) a declaration that, on the sixtieth day after
Curtice Burns gives written notice to Pro-Fac of its
intention to exercise its rights under Section 36, and
upon tender by Curtice Burns of the book value of the
Facilities and associated intangibles as of the time of
purchase, as determined by Curtice Burns's independent
<PAGE>14
certified public accountants, Pro-Fac shall transfer,
and shall be deemed to have transferred, title to and
all interest in the Facilities and associated
intangibles to Curtice Burns;
(b) a declaration that the Integrated Agreement
and all of Curtice Burns's obligations to Pro-Fac
thereunder (other than its obligation to complete the
processing of crops for the year that includes the date
of termination if on such date Pro-Fac is obligated to
process crops for its members) are terminated as of the
date Pro-Fac shall be deemed to have transferred title
to and all interest in the Facilities and the
associated intangibles to Curtice Burns;
(c) a declaration that Curtice Burns is not
obligated under the Integrated Agreement to purchase
any crops from Pro-Fac except such crops as are of the
types and in the amounts set forth in the raw product
section of the fiscal 1995 profit plan as approved by
the Boards of Directors of Pro-Fac and Curtice Burns;
(d) an award of damages sustained by Curtice Burns
as the result of Pro-Fac's wrongful conduct, in an
amount to be determined by the arbitrators, but in no
event less than the difference in value between Dean's
$20 per share offer and the market price per share of
Curtice Burns's stock following any public announcement
that the Dean proposal has been withdrawn, together
with interest thereon;
(e) all costs, including reasonable attorneys'
fees, that Curtice Burns shall incur herein; and
<PAGE>15
(f) such other and further relief as the
arbitrators deem just and proper.
Unless within twenty days after service of this
notice, Pro-Fac applies for a stay of arbitration, Pro-Fac
will thereafter be precluded from objecting that a valid
agreement was not made or has not been complied with and
from asserting in court the bar of a limitation of time.
July 8, 1994
/S/ Robert S. Rifkind
------------------------------
Robert S. Rifkind
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY
10019-7475
(212) 474-1000
- and -
/S/ Harry P. Trueheart
------------------------------
Harry P. Trueheart, III
NIXON, HARGRAVE, DEVANS &
DOYLE
Clinton Square
P.O. Box 1051
Rochester, NY 14603
(716) 263-1000
Attorneys for Curtice-Burns
Foods, Inc.
<PAGE>16
EXHIBIT A TO DEMAND FOR ARBITRATION
[Not filed with Securities and Exchange
Commission; incorporated by reference to Curtice-Burns
Foods, Inc. Form 10-K for the fiscal year ended June 26,
1992.]
