Fyffes wants to issue €150m in stock

Fyffes will seek shareholder permission to issue stock worth up to €150 million at current prices in a rights issue at any time over the next 18 months.

The board says it has no current intention to use this option. Nonetheless, it will ask investors attending its annual general meeting (a.g.m.) at the end of May to allow the issue of up to one third of the company's current share capital.

Companies like Fyffes, which are active on the acquisition front, often seek shareholder sanction ahead of time to issue shares in any deal. However, the size of the rights issue envisaged in this case has surprised some analysts.

"It's not unusual for a company to get approval to issue shares in this manner but it would usually be for around 5 or 10 per cent of the company's current value," said one. "But signing off on a one-third enlargement by future rights issue at an a.g.m. seems strange."

A Fyffes spokeswoman said there was nothing unusual in in the plan, adding that such authority was the norm sought by public companies.

Goodbody analyst Mr Liam Igoe said Fyffes had previously sought and secured approval for issues of a similar scale.

However, it appears that Fyffes would be obliged under Irish Stock exchange rules to issue a prospectus, regardless of any permission granted by shareholders at the May a.g.m., if it issued shares amounting to more than 10 per cent of the current share capital within any given year.

The possible rights issue is just one of four special motions being put to the annual general meeting.

A second motion will allow Fyffes to offer rights to shares to people other than existing shareholders.

A third motion would renew Fyffes' authority to buy back up to 10 per cent of its own shares while the last permits the re-issue of any shares bought back and delisted by the company.

Analysts said this was just a technical measure commonly used by Irish listed companies. Reissued shares do not attract stamp duty whereas other shares in a rights issue are liable.

Fyffes already holds more than nine million of its shares that were bought back and delisted in 1999. This amounts to 2.5 per cent of the issued share capital.

Fyffes annual report also shows that the directors' remuneration fell marginally in 2002. However, two directors left the board during this period.

On a like for like basis, executive remuneration rose 11 per cent.

Chairman Mr Neil McCann saw his package rise from €330,000 to €338,000 with his sons David and Carl - who are respectively chief executive and vice-chairman - earning €667,000 in 2002 compared with €592,000 a year earlier.

The annual report also shows that Fyffes' pension fund is among those suffering in the current environment.

Under FRS17, the accountancy rules coming in this year which will change the treatment of pension assets and liabilities, Fyffes recorded a deficit of €12.15 million last year compared to a surplus of €16.97 million in 2001.

The company employs about 2,500 people in Ireland, Britain and Europe. Its UK pension fund suffered more than those elsewhere.