Wilson to Issue Shares; Expand with Purchases

Article excerpt

A new issue of 1.6 million shares of convertible exchangeable preferred stock was proposed Monday by Wilson Foods Corp. in a registration statement and prospectus filed with the Securities and Exchange Commission.

The proposed offering is expected to recoup $40 million in new equity for the Oklahoma City-based food processor - with a subsequent boost in credit line - both to be used to broaden Wilson's product lines through acquisitions, said Vincent P. Cotter, executive vice president and chief financial officer.

Wilson itself has been a takeover target of Doskocil Companies Inc. of Hutchinson, Kan., another food processing company. Doskocil announced in late March that it had acquired 9.2 percent, or 932,031 shares, of outstanding Wilson Foods stock.

The shares have no voting rights, and theoretically, there is no limitation on the amount of shares an individual could hold, Cotter said.

The proposed shares are expected to have an initial price of $25 each, he said, though that price, and the formula for determining the shares' conversion to common stock, would be determined after the SEC approves the proposal.

The "road show," marketing and transactions are expected to be completed by Aug. 1, Cotter said.

After Aug. 1, 1990, the company has the option of exchanging the shares to subordinated debt, Cotter said, and to treat the interest on that debt as a pre-tax expense. Leaving the shares as preferred shares after that 2-year deadline means the company would continue to pay dividends on those shares as a post-tax expense, he said.

Due to an operating loss carryforward in effect, the company's current position on the issue of whether to exchange is neutral, Cotter said.

The preferred stock could not be redeemed prior to Aug. 1, 1991, according to the prospectus. Between that date and Aug. 1, 1998, the redemption would be accomplished by Wilson Foods' payment of any back dividends owed and a declining percent of the principle, starting at 105 percent and falling to 100 percent by the 1998 anniversary date.

The holders of either the preferred shares or, in two years, the subordinated debt could convert then to common shares, he said.

Not only is the proposed offering expected to generate $40 million in additional equity for Wilson Foods, it is also expected to increase the company's credit lines with its creditor banks, Cotter said. …