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MEMORANDUM FOR GEORGESON SHAREHOLDER COMMUNICATIONS INC. PERSONNEL FOR USE IN
RESPONDING TO INQUIRIES ABOUT DISSENTERS' RIGHTS IN CONNECTION WITH
FLEXI-VAN'S OFFER FOR CASTLE & COOKE, INC. (THE "COMPANY")
Over the last week or so, a number of questions have come from shareholders of
the Company who are asking for information about how to exercise dissenters'
rights or appraisal rights under Hawaii law. The following are guidelines you
should use in answering those questions:
1. DO NOT GIVE LEGAL ADVICE. Tell shareholders that they should be
consulting their own lawyer and that they should read the copy of the
Hawaii appraisal rights statute which is found at page II-1 of the
Offer to Purchase. Tell them that they will need to follow the
procedures specified in the statute carefully because failure to follow
the required procedures risks the loss of appraisal rights.
2. If the shareholders ask whether they are guaranteed to receive $19.25
per share and have the possibility of an increase through appraisal
rights, point out that the offering materials state that the price in
an appraisal proceeding could be less than the offer price of $19.25
per share (page 13 of the Offer to Purchase). This is because Hawaii
law defines the "fair value" of the shares to be paid in the appraisal
proceeding as the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the
corporate action, unless the exclusion would be inequitable. The
Company could take the position that most or all of the difference
between the offer price and the market prices prevailing before the
offer was announced is value attributable to the offer itself,
constituting appreciation in anticipation of the corporate action, and
therefore, the Company could take the position that "fair value" is as
low as $12.06 per share, which was the market price before the
announcement of the offer.
3. Some shareholders have indicated that they believe all shareholders
will receive an advance payment in the appraisal rights proceeding. If
this question comes up, shareholders should consider that the appraisal
rights statute only requires the Company to pay dissenting shareholders
in advance if such shareholders held their shares prior to the
announcement of the terms of the transaction. While it is not clear
what the statute means in this regard, the Company may take the
position that persons who purchased their shares after March 29, 2000,
when the transaction was announced, are not entitled to an advance
payment. Ultimately, in case of disputes, a Hawaii court may have to
decide who gets an advance payment.
4. Is it automatic that an appraiser will be appointed? The statute states
that the Company must, after the expiration of certain notice periods
that could take up to
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90 days, seek a judicially determined appraisal of the value of shares
held by people who have properly followed the dissenting shareholder
procedures. The court could appoint a professional appraiser to study
the value of the shares, but it is uncertain whether it would do so.
5. Who pays the costs of any court proceeding to determine fair value? The
expenses of the proceeding, including compensation and expenses of
appraisers appointed by the court (if appointed), and fees and expenses
of counsel and of experts for the respective parties, may be assessed
against the Company if the court so determines, and in some cases,
against some or all of the dissenters.
6. What is the likely time period for resolving any dispute over the
question of fair value? This is unclear. However, Flexi-Van anticipates
that a court process would not start until at least 60 days after the
merger (which may not occur until September), and would last a number
of months at a minimum. It is possible that the dissenting shareholders
would not receive the court's determination of fair value until after a
year or more from the closing of the tender offer.
These guidelines are furnished based on the comments or questions that have
been coming up regularly. Do not raise these issues yourself: they are
guidelines to use if a caller raises them. If issues not covered above are
raised, or if a caller wants to debate the issue, see Item 1 above and suggest
they consult an attorney. A statement in the guidelines above that the
Company "could" take a position does not mean the Company will not take a
different position in particular circumstances.
