TLC Beatrice bows to shareholders, agrees to go public with stock

December 03, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- The nation's largest black-owned business is set to become a publicly traded company early next year, according to shareholders and company documents.

TLC Beatrice International Holdings Inc., a New York-based food and grocery store company, plans to register its stock with the Securities and Exchange Commission. The stock would be trading as early as February on the Nasdaq stock market.

The decision to register the stock, which was revealed in a document filed last week with the SEC, showed that TLC Beatrice has acquiesced to shareholders' demands that the company register its shares with the SEC. The company has been a closely held private business since it was bought by Baltimore native Reginald F. Lewis for $1.6 billion in 1987.

Minority shareholders have pushed the company to register its stock since it filed a registration with the SEC in September to issue $150 million in bonds. That registration revealed a deteriorating financial position and more than $25 million in compensation for Mr. Lewis, who died earlier this year of brain cancer.

Investors were also said to be upset that the struggling company had considered backing a potentially costly bid by its new chief executive, Jean S. Fugett Jr., to buy the Baltimore Orioles.

In recent months, stockholders said they had enough votes to invoke a shareholders agreement to force TLC to register, but TLC fought back by trying to dissuade investors. Its argument: Registration would force the company only to issue quarterly and annual financial statements, and this would be accomplished through the bond offering.

But in a revised registration with the SEC filed Nov. 22, TLC acknowledged that shareholders had enough votes to force the company to register with the SEC.

TLC Beatrice officials said they could not comment on company matters because they were trying to sell the bonds.

The public registration of stock would not take TLC Beatrice out of control of the Lewis family, but it would allow 4 million shares of the company's 9 million common shares to trade publicly.

The shares sell at about $45 among private investors, but the volume was considered too small to know the stock's true market price.

Fred Cavanaugh, who manages a fund for John Hancock Financial Services that owns TLC stock, said a bigger concern than the price was that many investors were unwilling to buy the stock because unregistered shares were considered too risky. A registered stock assures investors that the company's prospectus and financial statements have been reviewed by the SEC, he said.

Last week's updated bond registration also had more-current financial figures for TLC Beatrice. They showed that the company, which makes and sells food in Western Europe, was still suffering from Europe's economic recession.

Data for the first nine months of this year showed that revenues were down 1.4 percent, to $1.27 billion, from the same period last year. Another key figure, earnings before interest, income taxes, depreciation and amortization, was down 18 percent compared with a year ago. The comparisons were worse than the six-month numbers released in the original bond registration.

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