WAILUKU – AOL co-founder Steve Case has significantly expanded his stake in Maui Land & Pineapple Co., buying additional stock that increases his ownership to 62.8 percent of the company.
Case paid $15.6 million to acquire an additional 4 million shares, according to a report filed Monday with the federal Securities and Exchange Commission. The deal comes just days after Case paid $16.5 million to acquire 4.27 million shares July 28, under a rights offering by the company.
The back-to-back transactions more than triple Case’s holdings in Maui Land & Pineapple, to a total ownership of 11.8 million shares.
The company held a rights offering that gave existing shareholders a chance to buy more ML&P stock. The sale was part of an effort to raise cash and retire some $40 million in convertible notes, a portion of the company’s significant debt.
Maui Land & Pineapple filed a separate report last week saying it had completed the sale on the New York Stock Exchange.
Chief Financial Officer Tim Esaki said Wednesday that ML&P was pleased with the result of the sale.
“We’re actually very appreciative of the confidence expressed by all our shareholders in the company, but in particular we’re very fortunate to have someone like Steve Case, who not only believes in the company but also recognizes the importance of the company to the Maui community and economy,” he said.
Retiring the convertible notes “obviously is a significant step for us in our efforts to strengthen and improve our financial position,” Esaki said.
He declined to comment on what the expansion of Case’s ownership would mean for the company.
Case, who has served on the board of directors since 2008, previously held a 41.2 percent stake in Maui Land & Pineapple, giving him a controlling interest.
But with his investment this week, he edged toward two-thirds ownership of the company, a supermajority of shares that could give him significantly greater decision-making power.
Haliimaile Pineapple Co. partner and former Maui Pineapple Co. President Doug Schenk, who is still an ML&P stockholder, said he was encouraged to see Case’s investment.
“It’s good,” he said. “It shows his commitment to the company. I was thrilled to learn he did that.”
With the 7-month-old Haliimaile Pine leasing land from ML&P, Schenk said he thought the fate of the two companies was closely tied. Anything that brought Maui Land & Pineapple closer to stable financial footing would be good news, he said.
“We’re pulling for them,” he said.
ML&P has seen significant changes and challenges over the past several years. Under the management of former Chief Executive Officer David Cole, a former AOL executive brought in by Case in 2003, the already-struggling company laid off hundreds of employees and sold thousands of acres of former Upcountry pineapple fields to raise cash.
Cole also led the company through a number of costly projects, and ML&P had accumulated more than $100 million in debt by the time he stepped down in 2008.
The company subsequently saw a rapid turnover in management, shut down its pineapple operations last year and recorded its biggest loss ever, $123.3 million, at the end of 2009.
But ML&P may be heading toward more stable footing: the company reported a $4.6 million loss for the second quarter of 2010, a significant improvement on the $54.2 million loss reported for the same period last year.