Newspaper article The Florida Times Union

Florida East Coast Industries on Its Own Now

Newspaper article The Florida Times Union

Florida East Coast Industries on Its Own Now

Article excerpt

For the first time in almost 70 years, Florida East Coast Industries Inc. will be on its own today.

The St. Joe Co., which has controlled Florida East Coast by owning about 54 percent of Florida East Coast's stock, is getting rid of its shares by distributing them today to St. Joe shareholders, making Florida East Coast an independent company.

For current Florida East Coast shareholders, the spin-off will mean increased liquidity and possibly increased interest in the stock as St. Joe releases 19.6 million Florida East Coast shares into the market. St. Augustine-based Florida East Coast had no analyst coverage but two weeks ago, Credit Suisse First Boston transportation analyst Gary H. Yablon initiated coverage of the company with a "buy" rating.

Yablon said the sum of Florida East Coast's parts, which includes railroad, commercial real estate and fiber optic communications interests, is much greater than its current share price of $40.50. Yablon estimates the value at $58 a share.

Under the spin-off plan, current Florida East Coast shares will be designated as Class A and will continue to trade under the current "FLA" ticker symbol. The shares distributed by St. Joe will be designated Class B and trade under the "FLA.B" symbol. Class B shares will have the right to elect 80 percent of Florida East Coast's board of directors but otherwise, the two classes will be the same.

St. Joe shareholders will get 0.23 shares of Florida East Coast for each St. Joe share they have. The Alfred I. duPont Testamentary Trust, which controls St. Joe, will end up with 59 percent of Florida East Coast's Class B shares but through a complicated voting formula, the duPont trust will only be able to elect 30 percent of Florida East Coast's directors.

The trust, through its majority ownership of Jacksonville-based St. Joe, has controlled Florida East Coast since the railroad company emerged from bankruptcy in 1961. St. Joe acquired its ownership stake in Florida East Coast by buying up railroad bonds while the company was in bankruptcy. Florida East Coast went into receivership in 1931 and then into bankruptcy in 1941. …

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