Castle & Cooke, Flexi-Van Announce Plans To Merge
HONOLULU (AP) _ Castle & Cooke Inc. has agreed to merge with Flexi-Van Corp., a New York- based transportation equipment leasing company.
Under terms of the merger, Flexi-Van would become a wholly owned subsidiary of Castle & Cooke, which is based in San Francisco and has interests in food products and real estate.
R.D. Cook, president and chief executive of Castle & Cooke, and David H. Murdock, chairman and chief executive of Flexi-Van, announced the agreement on Tuesday. It is subject to approval by stockholders, lenders and regulatory authorities.
Castle & Cooke stockholders would own approximately 55 percent of the new company if the deal is approved, while Flexi-Van stockholders would own about 45 percent.
But the agreement calls for Flexi-Van’s Murdock to be chairman and chief executive of the new company with Cook as president and chief operating officer.
Murdock, in a statement, said he was enthusiastic and optimistic about the future of the combined companies, despite the financial difficulties of Castle & Cooke.
Castle & Cooke has been negotiating for the past three months with 34 unsecured lenders on repayment of $250 million in debt.
It missed a $6.5 million interest payment March 1. If the company fails to pay the interest by March 31, lenders could force it into bankruptcy.
Cook said the financial strength and substantial cash flow of Flexi-Van will significantly enhance Castle & Cooke’s ability to meet its current financial obligations and reach satisfactory terms in the debt negotiation discussions.
Flexi-Van is an equipment leasing company primarily involved in containers and chassis. Castle & Cooke’s food brands include Dole citrus fruits.
Under the proposed merger agreement, shares of Flexi-Van would be converted into 2.22 shares of Castle & Cooke common stock, and 1.11 shares of a new issue of Castle & Cooke convertible preferred stock.
The preferred stock would carry an annual dividend of $.90 per share and would have a liquidation preference of $9 per share and be convertible into one share of common stock.
In addition, Flexi-Van would have the option to purchase up to 4.72 million shares of Castle & Cooke common stock at $11 per share. Flexi-Van would also receive options to acquire certain properties of Castle & Cooke for up to $300 million.
Castle & Cooke posted a net loss of $63.9 million on revenues of $784.6 million for the six months ended Dec. 29.
Flexi-Van has net income in 1984 of $21 million on revenue of $165.4 million.
In trading Tuesday on the New York Stock Exchange, Flexi-Van closed at $30.74, unchanged; Castle & Cooke closed at $11.375, down 25 cents.