Chiquita Brands International, the Cincinnati-based marketer and distributor of fresh and value-added food products, has announced two initiatives designed to enhance financial flexibility and reduce debt.
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The company intends to explore strategic alternatives for the sale and long-term management of its shipping assets and shipping-related logistics activities and suspend its quarterly dividend. The company said the two initiatives were designed to help to create long-term shareholder value.
After several months of evaluation, the company is considering strategic alternatives regarding the sale and long-term management of its overseas shipping assets and shipping-related logistics operations. The company said it would consider various structures, including the sale and lease-back of company-owned ocean-going shipping fleet, the sale and/or outsourcing of related ocean-shipping assets and container operations, and entry into a long-term strategic partnership to meet all of Chiquita’s international cargo transportation needs.
The Chiquita board has also voted to discontinue the company’s quarterly cash dividend of US$0.10 per share. Chiquita intends to redirect the approximately $17m in annual funds that otherwise would have been allocated for dividends to reduce debt and enhance financial flexibility.
In addition, Chiquita provided an update on the challenging current market environment and its expected third-quarter results.
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By GlobalDataThe company said it had been and will continue to be negatively impacted by changes in the rules regarding banana imports into the EU.
In the third quarter, Chiquita said it had continued to experience markedly lower banana prices in both core European and trading markets, as well as excess fruit supply. In addition, due to the current industry concerns regarding the safety of fresh spinach in the US, the company’s Fresh Express operations are experiencing lower sales and unforeseen costs.
The company said it would be investing additional funds to reinforce consumer confidence in the quality of Fresh Express products and food safety standards. As a result of these difficult market conditions and continuing uncertainties, the company’s third-quarter 2006 financial results are expected to be significantly impacted, the company said.
