Chiquita CEO leaves door open to incentives repayment for Charlotte, Mecklenburg and NC
05/22/2014 1:44 PM
09/26/2014 7:42 AM
Charlotte-based Chiquita Brands International is discussing what to do about more than $22 million worth of state and local incentives when the company’s headquarters shifts to Ireland, CEO Ed Lonergan said Thursday.
He left open the possibility that the company might give some back.
Speaking after the annual shareholder meeting uptown, Lonergan said there’s still no consensus about what to do with the incentives.
The money was promised to Chiquita as part of the company’s 2011 agreement to move to Charlotte from Cincinnati. The incentives are tied to conditions, including a requirement Chiquita keep its 400 or so new jobs in Charlotte, along with its global headquarters.
The jobs are expected stay in Charlotte after Chiquita combines with Fyffes, an Irish banana and melon company, later this year. But the global headquarters will be located in Dublin, along with the CEO of ChiquitaFyffes, David McCann.
Lonergan said the company has met with city, state and county officials about the incentives, but declined to say whether he thinks Chiquita will have to give back some of the money.
“It’s not helpful for me to speculate on where that might end up,” he said.
But he appeared to leave the door open for such a resolution.
“What we want to do is get aligned with the people that run the community to ensure we’re upholding the commitments that we made. And if we’re not, then we should accept the consequences of that,” Lonergan said.
“We don’t want anything we don’t deserve,” he said.
Millions at stake
The city and county have paid Chiquita $510,000 each, for a total of more than $1 million. They are scheduled to pay the fruit company about $1.5 million in coming years.
The rest of the incentives money is from the state. More than $16 million, equal to an estimated 75 percent of the company’s state income tax withholding for the new jobs, is set to be paid over 11 years. The state also agreed to give Chiquita $2.5 million to match the city and county money.
Chiquita employs about 320 workers uptown and has thus far met its hiring targets to receive incentives money.
The business climate
At the annual meeting, a shareholder asked Lonergan whether the company’s turnaround strategy of focusing on the core banana and salads business was working, “How come we lost money?”
Lonergan said most of the company’s $25 million first-quarter loss could be traced to bad weather and drought in its banana-growing regions.
Lonergan said the climate is changing in Panama and Costa Rica, meaning the company has to spend money to irrigate farms it never did before in 100 years of growing. Rainfall is down for five straight years, Lonergan said – 70 percent this year.
“There’s always been enough rain to grow a banana,” Lonergan said. “I think it’s not helpful for me to get into the whole global warming debate. I don’t really care. At the end of the day, I look at what’s happening, and I deal with the consequences.”
Chiquita plans to combine with Fyffes in an all-stock deal by the end of the year, creating the world’s largest banana company. Chiquita shareholders would have just over 50 percent of the combined company, while Fyffes shareholders would get the rest. The deal gives Fyffes shareholders a 38 percent premium.
Lonergan said Chiquita expects to get shareholders’ approval for the deal by late summer. If the Fyffes deal were to fall through, Lonergan said Chiquita could complete its three-year turnaround plan solo.
“In the event that there was some reasoning why we could stand alone, we’re quite confident we could do that,” said Lonergan. “It just is a longer plan than the one that we have together.”
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