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RJR NABISCO PROPOSES CLASS OF STOCK RELATED TO FOOD BUSINESS; TO PAY DIVIDENDS ON COMMON STOCKS

 NEW YORK, March 2 /PRNewswire/ -- RJR Nabisco Holdings Corp. (NYSE: RN) today announced that it will seek shareholder approval for a plan that would result in a separate class of its common stock related to the performance of the company's worldwide food businesses.
 The company said it also intends to pay a dividend on its existing class of common stock and the food-related stock, following shareholder approval.
 "We've been hard at work building value at RJR Nabisco since our leveraged buyout in 1989 and have made significant progress reinvigorating our operating businesses and reducing debt and interest expense," said RJR Nabisco Chairman and Chief Executive Officer Louis V. Gerstner Jr.
 "Our operations now are well positioned to compete in their respective markets and are generating more than $1.5 billion annually in free cash flow," Gerstner continued. "For the last two years the most important thing we could do for shareholders was refinance high coupon debt. That process is nearly complete. We are now turning our attention to two additional steps -- paying cash dividends and issuing the new food-related stock. We believe this new structure will enhance the value of the company for our shareholders and attract new shareholders by underscoring the distinct growth characteristics of the food industry and the cash flow characteristics of the tobacco business."
 RJR Nabisco said that the new series of common stock reflecting the performance of its worldwide food business would be called RN-Nabisco Group stock. The company also plans to redesignate its existing common stock as RN-Reynolds Group stock. Upon shareholder approval and completion of regulatory review, the company will begin a public offering of 93 million shares of Nabisco Group stock, representing approximately a 25 percent interest in the equity of the food business. The selling range set forth in an initial registration statement for the Nabisco Group stock is $17 to $19 per share and the food stock would pay an initial quarterly dividend of $.13 per share in the third quarter of 1993. The anticipated net proceeds of approximately $1.5 billion to $1.7 billion would be used to retire RJR Nabisco debt.
 RJR Nabisco said that upon completion of the public offering of Nabisco Group shares, it plans to pay an initial quarterly dividend of $.08 per share on Reynolds Group stock and also to pay a "pass-through" quarterly dividend of $.03 per Reynolds Group share, representing the retained interest of 75 percent in the equity of Nabisco Group.
 The company said that about six months after completion of the public offering of Nabisco Group stock, RJR Nabisco currently intends to issue to holders of Reynolds Group stock approximately 142 million shares of Nabisco Group stock. Those shares, together with shares of Nabisco Group stock reserved for issuance on conversion of existing RJR Nabisco preferred stock and options, will represent approximately a 47 percent interest in the equity of Nabisco Group. At that time the company also will commence a one-for-three reverse stock split of shares of Reynolds Group stock. The issuance of the additional Nabisco Group stock and the reverse split will be accomplished by reclassifying each share of Reynolds Group stock into one-eighth of a share of Nabisco Group stock and one-third of a share of Reynolds Group stock.
 After the reverse split there will be 378 million shares outstanding of Reynolds Group stock, which, with additional shares reserved for future conversion of outstanding preferred stock issues, will represent 100 percent of the equity value of the company's worldwide tobacco business and a retained 28 percent interest in the equity of the food business.
 RJR Nabisco said the plan will not result in any transfer of legal title to its assets, nor will it affect the rights of any of the company's debt holders or creditors.
 A registration statement relating to the food-related class of stock has been filed with the Securities and Exchange Commission, but has not yet become effective. No securities may be sold nor offers to buy accepted until the registration statement relating to the securities has become effective under the Securities Act of 1933. This announcement does not constitute an offer to sell nor the solicitation of an offer to buy any security, nor shall there be any sale of the securities in any state where such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Sales of the securities will be made only by means of a final prospectus or other appropriate documentation, which will be distributed after the effectiveness of the registration statement.
 RJR Nabisco Holdings Corp. is the parent company of RJR Nabisco, Inc., an international consumer products company. RJR Nabisco's major operating units are R.J. Reynolds Tobacco Co., R.J. Reynolds Tobacco International, Inc., the Nabisco Foods Group and Nabisco International, Inc.
 -0- 3/2/93
 /CONTACT: Jason Wright of RJR Nabisco Holdings Corp., 212-258-5770/
 (RN)


CO: RJR Nabisco Holdings Corp. ST: New York IN: TOB SU: DIV OFR

BR-CM -- AT001 -- 1758 03/02/93 08:19 EST
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Publication:PR Newswire
Date:Mar 2, 1993
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