Source: Reuters/Nichola Groom
Published June 11, 2004
Chiquita Brands International Inc. (CQB.N: Quote, Profile, Research) , which is being probed by the U.S. government for payments its Colombian business made to right-wing gunmen, said on Friday it will sell the unit to a Colombian banana producer for about $51.5 million.
Chiquita expects to record a $5 million loss after taxes from the sale. The deal comes a month after the Cincinnati-based fruit distributor said it was being probed for making "protection" payments to Colombian groups the U.S. government calls terrorist organizations.
Chiquita spokesman Michael Mitchell said the sale would not affect the ongoing U.S. Department of Justice investigation, but added that the probe contributed to the company's decision to sell its Colombian banana-producing and port operations.
"It's a factor but it's not the only factor," Mitchell said.
Chiquita's Colombian operations made up about 9 percent of its worldwide banana volume.
The sale to Invesmar Ltd., the holding company of Colombian banana producer and exporter C.I. Banacol S.A., is expected to close within the next 30 days, Chiquita said in a statement.
Under terms of the deal, Chiquita will receive $28.5 million in cash, $15 million in notes and deferred payments, and will assume $8 million in pension liabilities.
The transaction also includes two separate eight-year agreements under which Chiquita will buy about 11 million boxes of Colombian bananas and 2.5 million boxes of Costa Rican pineapples annually from Banacol's affiliates.
Also on Friday, thousands of banana workers in Colombia, the world's largest third-largest exporter of the fruit, returned to their jobs after a 15-day strike ended with a new wage agreement, a union official said.
The strike, the Colombian sector's longest since 1989, caused about $15 million in losses.
In April 2003, Chiquita's management and audit committee voluntarily disclosed to the DOJ that its Colombian unit had been forced to make "protection" payments.
The payments went to certain Colombian groups that have been designated as foreign terrorist organizations under U.S. law, the company said.
Chiquita said the groups made threats against its workers and that it made the payments only to protect its employees.
The admission appeared unprecedented, as it is an open secret in Colombia that companies are occasionally forced to buy off illegal armed groups fighting in the country's four-decade-old war.
Chiquita ships bananas from plants in northern Colombia in areas with a heavy presence of the outlawed far-right United Self-Defense Forces of Colombia, which has been linked to some of the worst human rights abuses in recent Colombian history.
Chiquita shares closed at $19 Thursday on the New York Stock Exchange.