U.S.

Yes, We Have Bananas  But No Cash

November 28, 2001 / 10:50 AM EST / AP

Chiquita Brands International Inc. filed Wednesday for Chapter 11 bankruptcy protection under an agreement reached earlier to reduce the company's debt by about $700 million.

The company had announced earlier this month that it expected that the deal with bondholders would shorten Chiquita's time under court-supervised reorganization.

The filing will not affect Chiquita's subsidiaries — including its famous banana exporter — or their $413 million debt.

"It is our plan to emerge from Chapter 11 in the first quarter of 2002 with a solid balance sheet and a bright future," Steven G. Warshaw, president and chief executive, said in a news release. "With the recent settlement of the U.S.-EU banana trade dispute, we will have even stronger prospects for revenue and earnings growth."

Cincinnati-based Chiquita has struggled financially in recent years because of a worldwide glut of bananas and a drop in their prices, and a long battle over European banana import quotas that Chiquita regarded as unfair. The European Union's quotas cost Chiquita millions of dollars, the company said.

In addition to reducing debt and accrued interest from about $950 million to $250 million, the agreement with bondholders announced earlier this month will cut Chiquita's future annual debt interest by about $60 million, the company said.

The plan would involve issuing new common stock and debt notes, plus reconfiguring Chiquita's board of directors after the Chapter 11 process is completed. The new board would consist of the company's chairman and major stockholder, Carl H. Lindner, and Warshaw, who now serve as directors, plus five members nominated by the bondholder committees.

Lindner and his family collectively own about 37 percent of Chiquita through Lindner's American Financial Group.

The plan must be approved by the U.S. Bankruptcy Court.

Chiquita products, besides its blue-labeled bananas, include other fresh fruits and vegetables and processed foods.