Fresh fruit distributor Fyffes and a joint venture partner have confirmed that they are suing British company Geest for a figure approaching £50 million sterling. The case arises over Fyffes purchase of Geest's Caribbean banana operations.
Geest has pledged to resist the claims "vigorously" and has said the claims, in the form of two writs, are "mischievous at best" and "ill-conceived at worst".
Fyffes deputy chairman Mr Carl McCann and Mr Bernard Cornibert, managing director of WIBDECO UK, who were the joint venture partners in the deal said issuing the writs had been "a considered decision". It followed "a detailed review of information which was not available to us at the time of the acquisition and which revealed a couple of material issues".
The Geest deal was a complex one and was valued at £147 million sterling, but the cash cost to Fyffes was only £20 million. At the time Mr McCann warned that the Geest business "had a lot of problems, otherwise it wouldn't be for sale".
It is understood that one of the writs which is seeking damages of £33.7 million alleged that Geest did not give a true and fair view of the value of banana plantation assets in Costa Rica. The second writ claims damages of £14.5 million and alleges Geest misrepresented an aspect of negotiations with another interested party at the time of the deal.
In its statement Geest expresses surprise that almost two and a half years have passed and the writs have only been served recently. Geest says that the audited accounts for the banana business were approved and signed off by the directors of the joint venture in April 1997 "including the now disputed values for the plantation assets".
Geest also suggests that the timing of the writs may be linked to its own $27 million claim against the joint venture regarding an escrow account which relates to two leased ships. The ships were part of the complex deal which involved ongoing payments.
It is understood that the legal action will have no affect on Fyffes' profit and loss account, unless it wins its case.
