Swift Board Approves Buyout Letter Of IntentAP , Associated Press
Oct. 25, 1985 1:21 PM ET
CHICAGO (AP) _ The board of directors of Swift Independent Corp., the nation's largest pork packer, has approved a letter of intent for a $135 million leveraged buyout from a partnership led by a Texas investor, the company said Friday.
The interested buyer consists of trusts of the Edwin L. Cox Jr. family of Dallas. The proposal calls for each share of Swift to be converted into $21 cash and $7 face value of a cumulative exchangeable preferred stock.
The annual dividend rate for the preferred stock will be 15 percent until the fifth anniversary of the closing of the transaction and will be 161/2 percent thereafter.
Dividends for the first three years would be payable in additional shares of preferred stock. The preferred is subject to mandatory redemption of 20 percent a year beginning in the eleventh year.
A leveraged buyout is the purchase of a company with mostly borrowed money. The debt is secured by - and repaid with - cash generated by the target company's operations or the sale of its assets. In this case it involves the Cox interests, rather than management as is frequently the case in such transactions.
Swift now is waiting for the Cox group to present a definitive merger agreement, said Swift spokesman Bill Dillman.
The proposed buyout then will need regulatory approval, he said. The transaction is expected to be completed in January 1986, when the deal will be submitted to stockholders for final approval, Dillman said.
Cox is engaged in various interests in livestock production operations and other activities related to agriculture and food production.