Dole Food Co.âs high level of debt may hamper the companyâs ability to repay it or borrow more money once the company goes public Oct. 23.
In its updated filings with the U.S. Securities and Exchange Commission, Westlake Village, Calif.-based Dole also disclosed:
it has about $1.2 billion in senior secured indebtedness,
it has $738 million in senior unsecured indebtedness,
it has $66 million in capital leases and $53 million in unsecured notes payable, and
it will assume $85 million more in debt from chief executive officer David Murdock to be repaid from proceeds of its initial public offering on Oct. 23.
The company said it wonât pay dividends on its stock for the âforeseeable future.â
Dole said in its filing that Murdockâs interest may not be those of potential shareholders, with Murdock holding onto 56% of the company once itâs public.
He will maintain âsignificant influence over our management and affairs, and will be able to control virtually all matters requiring stockholder approval, including the election of directors and significant corporate transactions such as mergers or other sales of our company or assets,â Dole said in the filing.
Proceeds of the sale also will be used to pay down more than $200 million of Murdockâs debt accrued when he purchased the company in 2003.
Dick Spezzano, president Spezzano Consulting Services, Monrovia, Calif., said Murdock maintaining a controlling interest in the company may not serve the interest of other shareholders, especially given Murdockâs decision to build a hotel and wellness center near companyâs California headquarters.
Additionally, with the growth of private labels in retail produce departments, Spezzano said thatâs not something branded companies like Dole will benefit from in the future.
âI just donât know that branding gets you any more,â Spezzano said.
The financial climate is of more concern, one analyst said.
âDole is coming â even though it has phenomenal brand awareness â on an IPO market that is not particularly considered by experts as tremendously healthyâ because several recent IPOs have not garnered the initial value the companies were anticipating, said Scott Sweet, senior managing partner at advisory firm IPO Boutique, Pittsburgh.
In an amended filing with the SEC, Dole said it plans to offer more than 35 million common stock shares valued between $13 and $15.
According to the Oct. 9 SEC filing, Dole estimated the IPO will raise between $468 million and $538 million to be used for debt payments, an increase from the companyâs initial estimate of $500 million.
According to the SEC filing, for the 12 months ending June 20, Dole reported revenues of $7.2 billion, with $92 million in net income. The companyâs fresh vegetable segment reported $1.1 billion in revenue for the same period, with $5 billion reported for its fruit division.
The company will be listed on The New York Stock Exchange under the symbol âDOLE.â