Debt-laden Chiquita Struggles

CINCINNATI (AP) â€” The nation's largest banana company is struggling to survive after enduring several of the bleakest years in its long history. <br><br>Chiquita Brands International Inc. has been

Wednesday, December 6th 2000, 12:00 am

By: News On 6

CINCINNATI (AP) â€” The nation's largest banana company is struggling to survive after enduring several of the bleakest years in its long history.

Chiquita Brands International Inc. has been cutting its work force in hopes of restoring profitability. But still, sales are down, the company has stopped paying shareholder dividends and it is depending on the goodwill of lenders to help it pay $145 million in debt due by the end of March.

``They're clearly in the hospital under intensive care. But they have some assets and, hopefully, the banks will be patient with them,'' said John McMillin of Prudential Securities, an analyst who has remained supportive of Chiquita even as its stock price fell from $50 per share in 1991 to less than $2 now.

To cover the first-quarter debt, Chiquita is looking to replace a $110 million credit line that expires in January. Even if it succeeds, the company has plenty of other problems to deal with.

The Cincinnati-based company is being hurt by soft prices created by a worldwide glut of bananas. Production in Ecuador, the world's leading banana-producing nation, more than doubled during the 1990s.

Chiquita lost nearly $54 million, or 87 cents a share, in the third quarter on sales of $466 million. In the same period last year, the loss was about $37 million, or 62 cents a share, on revenue of $567 million. For the first nine months of 2000, the company has lost $6 million, down from a profit of $19.4 million in the same nine months last year.

Along with excessive global production, Chiquita has been wounded by the euro's weakness against the dollar, which has raised prices of its products in Europe. And Hurricane Mitch devastated Chiquita's banana plantations in Honduras and Guatemala in 1998, forcing the company to spend more than $75 million to rebuild.

The U.S. government has tried to help Chiquita by pressuring the European Union to end what American officials say are barriers against imports of Latin American bananas. Chiquita's management has complained for years that EU's policies have cost the company millions by favoring Caribbean bananas grown in former European colonies.

The EU has proposed changes in its banana import policies, but Chiquita officials say Latin American access would still be limited under the revised plan.

``Uncertainties remain as to the outcome of this dispute and its effect on the company and the banana industry as a whole,'' Chiquita said in a November quarterly report to the Securities and Exchange Commission.

Edgar Wachenheim, chairman of Greenhaven Associates, a Purchase, N.Y.-based investment firm that holds a stake in Chiquita, said the company overexpanded in the early 1990s and took on too much debt for new ships.

``They're still living with that today,'' Wachenheim said.

If banks refuse to extend new credit to Chiquita, Wachenheim wants to know what Carl Lindner Jr., Chiquita's chief executive officer, would be willing to do to save the company. Lindner, a Cincinnati multimillionaire, and his family own about 40 percent of Chiquita through his American Financial Group.

Lindner has the means to guarantee loans if he chose to do so, Wachenheim said.

Neither Lindner did not respond to an interview request by The Associated Press. Steven Warshaw, Chiquita's president and chief operating officer, declined to be interviewed about the company's long-term prospects.

Greenhaven Associates held 656,000 shares of Chiquita stock as of Sept. 30, but since has sold most of it for tax reasons, Wachenheim said.

``We still have an economic interest in the company,'' he said.

Chiquita's management says it has achieved annual cost savings of $15 million to $20 million through operating consolidations and some layoffs from its worldwide workforce of about 36,000.

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On the Net:

http://www.chiquita.com