Magazine article Rural Cooperatives

Walnut Growers to Vote on Co-Op Conversion

Magazine article Rural Cooperatives

Walnut Growers to Vote on Co-Op Conversion

Article excerpt

For 93 years, Diamond of California has been a processing and marketing co-op owned by California walnut growers. Today, its 1,800 members account for about half the state's crop. Later this summer members will be asked to vote on a proposal to convert the co-op into a publicly traded corporation. Backers of the proposal hope it will raise $70 million to $85 million through the sale of more than 5.3 million shares of stock at $14 to $16 per share; members will be offered an additional 6.7 million shares.

Members will have to weigh the incentive of a payout in company stock, which they could sell to "cash-out" of the co-op, vs. the prospect of having outside stockholders take control of a company they have directed for nearly a century. Filings with the SEC indicate that an estimated $18.6 million will go to growers who want cash rather than stock.

A letter to members from Board Chairman John Gilbert and CEO Michael Mendes says "the conversion to a corporation will allow Diamond to build a financially stronger company and issue equity to grower owners. It will enable Diamond to improve our ability to get the financial resources we need to meet the challenges of the future, to convert the ownership interests into transferable and marketable shares of stock in the new Diamond, and to provide cash to members."

Papers filed with the Securities and Exchange Commission say proceeds from the possible stock sale would also provide funds to pay down debt, develop new products or acquire other companies. …

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