Smithfield director resigns after stock offering announcement
September 15, 2009
by Bryan Salvage
SMITHFIELD, VA. — Smithfield Foods Inc. has begun an underwritten registered public offering of $250 million worth of shares of its common stock. The company intends to grant the underwriters a 30-day option to purchase up to an additional 15% of the offered amount of common stock to cover over-allotments, if any, in connection with this offering.
After the announcement of the offering, Paul Fribourg informed Smithfield he is resigning as a member of the company's board of directors because he does not support the company's $250 million equity offering. In a news release, Smithfield said Mr. Fribourg "advised the company that he did not believe that an offering of this magnitude was necessary at this time, given his confidence in the future performance of the company and the attendant dilution to all shareholders."
Mr. Fribourg is the chairman, president and chief executive officer of Continental Grain Company, the beneficial owner of 8.8% of the company's common stock. Morgan Stanley; Goldman, Sachs & Co.; Barclays Capital; and J.P. Morgan are the joint bookrunning managers of the offering, the company said.
Net proceeds from the offering will be used for working capital and general corporate purposes, the company said, with a goal of continuing to strengthen its balance sheet, which may include the retirement of debt. The offering is being made pursuant to an automatic shelf registration statement filed with the Securities and Exchange Commission on June 14, 2007. A prospectus supplement relating to the offering has been filed with the Securities and Exchange Commission.
Michael Zimmerman, executive vice-president and chief financial officer of Continental Grain Company, also submitted his resignation as an advisory director.