AOL founder could have majority stake after stock sale done
By ILIMA LOOMIS, Staff Writer
WAILUKU – AOL co-founder Steve Case added to his investment in Maui Land & Pineapple Co. this week by purchasing an additional 4.27 million shares under a rights offering by the company.
Case acquired the stock at a price of $3.85 per share, to invest another $16.5 million into the struggling company, according to a report filed with the federal Securities and Exchange Commission on Wednesday.
The sale was made under a plan by ML&P to raise cash by selling 10.4 million new shares to existing stockholders.
The company made a separate announcement this week that it had completed the sale on the New York Stock Exchange.
The proceeds will be used to retire $40 million in convertible notes, giving the company some relief from its significant debt.
Under the offering, each stockholder was offered the right to purchase a limited number of the new shares, in proportion to the size of their previous stake in the company. Case purchased all of the shares that were offered to him.
But he could have access to as many as 6.1 million additional shares if the company’s other stockholders don’t sign up for the rights offering and shares set aside for them are left unsold. The company reported that Case indicated his interest in potentially acquiring all those shares if they were available.
In its report filed with the SEC, the company said Wednesday that it had not yet determined how the unsold stock would be allocated among the investors who wished to purchase it.
With the 7.75 million shares he now owns, Case currently holds a 41.2 percent stake in ML&P, a controlling interest in the company.
But the company said that, depending on how many of the additional shares are allocated to Case, an additional purchase could increase his stake in the company to more than 50 percent.
That could give him even more decision-making power than he already has.
The report also notes that the 3.47 million shares Case previously owned and the 4.27 he purchased this week are pledged by Case’s trust to Bank of Hawaii as collateral for unspecified debts to the bank.
If Case’s trust defaulted on its debts for some reason, that would mean the bank would control the voting power of his shares, the report notes.
Maui Land & Pineapple lost $123.3 million in 2009 and $79.4 million the year before, and previously reported to the SEC that its debt burdens and other woes “raise substantial doubt about the company’s ability to continue as a going concern.”
But the pared-down company appeared to be stanching some of the bleeding in 2010.
After shutting down agriculture operations at the end of last year, the company reported a $2.7 million loss for the first quarter of 2010, compared to losing $13.2 million in the same period in 2009.