The case for 2nd preferred stockholders of Ocean Spray by Linda Rinta |
| There has been a lot of conjecture out there about what the
X-Ocean Spray Growers, 2nd preferred stock holders, are doing to ruin the
company. I’d like to take this opportunity to set the record straight, tell you
exactly what we have done and what we are trying to do. You are intelligent people. You
decide: At the time a grower leaves Ocean Spray, for whatever reason, all their common stock is converted to 2nd preferred. That stock pays a 4% dividend and becomes a debt instrument. At the time that growers left the Co-op they received a detailed schedule of redemption (debt repayment) that is individualized according to stock ownership. This is all outlined on the back of your individual equity statements. Growers and retired growers made critical business and life decisions based on that agreement and on the par value of the stock they had accumulated. According to the schedule, a redemption installment is paid in February. On the last day of February, second preferred stock holders received a letter from Ocean Spray that stated that the board had voted NOT to redeem stock this year or repay any AREs and that they would take it under advisement for next year. What happens next year? The question was asked on numerous occasions about Ocean Spray’s intent with regards to redemption and the answer, on several occasions was the same, "Ocean Spray is under no legal obligation to redeem stock, EVER!" For many of us, as for many of you, our Ocean Spray stock represents our entire investment portfolio and represented a sizable financial sacrifice over the years. We had every expectation to realize the value of that stock. Now we are told that Ocean Spray is under no legal obligation to redeem…ever. To add insult to injury, we learned that First Pioneer Credit could redeem our stock on demand should we default on our loans. In other words, as stockholders we do not even have the same rights as lien holders on the same stock. This represents a legal question that must be answered, and it should be as important to current members as it is to us. The value of this year’s redemption is 4million dollars. To put that in perspective, Ocean Spray paid Fergie 8 million, Ocean Spray is investing over 5 million in the Tall Ships, and the computer system that apparently doesn’t work right, cost 30 million. We held a meeting to explore our options. The idea of causing harm to Ocean Spray was unthinkable. We decided to seek a legal opinion as to the value of our stock and at the same time to use all of our resources to convince the board members to change their vote on redemption. Many people contacted Directors, visited with them and sent letters. The lawyer we hired to represent us reviewed all of the various equity statements, brochures, by-laws and interviewed growers from different growing areas. He sent a letter to Ocean Spray prior to the April Board meeting imploring them on our behalf to change their vote. The response from Ocean Spray through in-house attorney James Shaughnessy, stated that Ocean Spray has been forthcoming in communicating to all growers that redemption was according to board policy which could change from time to time. And again, Ocean Spray is under no obligation to redeem, ever, and we all should have known that. We take great exception to this. Our attorney, whose firm retains a specialist on Co-op law, is confident that we would prevail in court. We can provide testimony as to the ethical behavior of board members and management with regards to this redemption that would be very damaging to Ocean Spray. But damaging Ocean Spray is not our intent. Protecting the value of our investment is our intent. A court case would be prolonged and publicly painful. Our industry is already a house divided. We have urged our attorney to go back and negotiate with Ocean Spray. If they cannot afford to pay, then negotiate repayment terms. We do not want to go to court and we do not want to cause further harm to Ocean Spray or this industry. However, the position that the stocks’ value is at the pleasure of the Board of Directors is not acceptable. And we will go to court if we must to protect the value of our investment. That’s it, plain and simple McCarthy, Rinta, and over 46 other stockholders, so far. If you want more information you can contact [email protected] or [email protected] |