Slumping sales and mounting debt are forcing Dole Food Company, the worldwide leader in fresh fruit and vegetables production, to seek $100 million in new investment from Wall Street.
The privately held company also plans to shed holdings and close some of its operations, and its 10-acre flagship headquarters property in Westlake Village is said to be on the trading block.
The pendulum at Dole is swinging back toward public ownership—which it abandoned in 2013 in a costly buyout—and away from California strawberries.
Dole told state labor officials last month it will cease its Oxnard berry-growing operation and lay off 172 employees. Company spokesperson William Goldfield said the rising cost to grow, pick, pack and deliver strawberries to retail outlets is forcing the closure of the Ventura County farm. The layoffs could occur as soon as next month.
“Reducing our workforce of dedicated employees and closing facilities are among the most difficult decisions we make, but in light of increasing production costs, for example, these actions are necessary for the future of our business,” Goldfield said.
In late April, Dole filed paperwork with the Securities and Exchange Commission to raise money by selling new shares on the stock exchange. The SEC is reviewing Dole’s application for a $100-million stock sale, known as an initial public offering or IPO. The share asking price hasn’t been announced.
Dole said in its SEC filing it will use the money from private and institutional investors to pay down some of its reported $1.4 billion in debt. Other changes are afoot, including a pending ownership change of the Westlake headquarters building.
But Dole’s spokesman said the company isn’t selling the property to a stranger or moving out of the city. A deal reportedly is in place that would transfer ownership of the corporate campus at One Dole Drive from Dole Food to Castle & Cooke, a private firm owned by Dole chairman and 94-year-old Lake Sherwood billionaire David Murdock. The non-cash deal will swap the Dole Westlake headquarters for a plantation theme park in Hawaii owned by Castle & Cooke.
Dole’s SEC filing outlines the terms of the real estate deal, and the company feels bullish about what it could get in return for One Dole Drive, such as higher visibility for the company’s brand when visitors come to see the family-friendly Hawaiian plantation.
Goldfield offered few details other than to say Castle & Cooke doesn’t plan to relocate Dole’s Westlake corporate offices.
“Unfortunately, due to the SEC restrictions on pre-IPO sharing of information, there is very little I can answer on your specific questions while we remain in this quiet period,” Goldfield told The Acorn.
“Given current zoning I think it’s safe to say that the uses of the two buildings in question, the Dole headquarters and the Four Seasons Hotel, will remain an office and a hotel, respectively, even if the ownership of those buildings changes at some point in the future,” Westlake Village City Manager Ray Taylor said.
Murdock’s latest IPO represents another phase in the company’s shifting persona.
In 2003 Murdock paid a reported $2.3 billion to take Dole private after he split the company away from Castle & Cooke, the one-time real estate development firm that purchased James Dole’s Hawaiian Pineapple Company in 1961 and turned it into an industry giant. Murdock continues to run Castle & Cooke.
Murdock took Dole private again with a $1.2-billion buyout in 2013, but since 2014 the company has posted more than $100 million in losses, according to financial data filed with the SEC.
The buyout soured due to shareholder lawsuits after the deal closed. Former investors filed two suits in which they alleged Murdock misled them to keep share prices low.
Murdock settled one lawsuit in March, agreeing to pay $78 million to Dole’s former shareholders, a Bloomberg News report said. A Delaware judge in a separate shareholder lawsuit ruled against Murdock for underpricing the shares he bought. The judge in that 2015 case awarded $148 million to the former stockholders of Dole, and the payouts continue to be a drag on company, according to the balance sheets it revealed to the SEC.
Hoping for a turnaround
Profits have eluded Murdock and his management team since the 2013 buyout. The company lost $13 million this year in the first quarter alone. That slide followed losses of $23.6 million last year, $23.6 million in 2015 and a staggering $64.3 million in Dole’s first year as a private enterprise, according to the IPO filing.
But the grower, packer and shipper of fruits and vegetables said in its SEC filing that earnings before interest, taxes, amortization and other expenses have improved. Using the EBITA measure of profitability, the company says it doubled its pre-tax earnings over a three-year span to $215.6 million.
In addition, the company is confident in its brand and that its newly streamlined operations will win over Wall Street investors.
Dole has acquired farmland, mostly in Latin America, and added three cargo vessels to its fleet. The vessels assure safer handling and delivery of Dole fruits, the company said.
“We believe our leading brand position and integrated supply chain create a reliable business model that will deliver consistent, strong financial results,” the company told SEC regulators and potential investors ahead of the hoped-for IPO.
John Loesing contributed to this story.