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
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
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,
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
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. …