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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO) -- Ignore unavailable to you. Want to Upgrade?

To: md1derful who wrote (6131)	2/28/2001 4:07:45 PM
From: Xianming Liu	Read Replies (1) \| Respond to of 6439

Doc and MO shareholder: Here are some preliminary things about incoming Kraft IPO: Philip Morris To Control Kraft Foods With Cl B Shrs By RICHARD GIBSON Of DOW JONES NEWSWIRES DES MOINES, Iowa -- Philip Morris Cos. (MO) intends to use two classes of common stock to retain virtually complete control of its Kraft Foods Inc. unit when it makes a partial initial public offering of the food-manufacturing giant later this year, a draft prospectus shows. Copies of the preliminary offering being circulated by investment bankers on Wall Street this week indicate that while the public would be sold Class A shares, Philip Morris would retain all 1.18 billion Class B common shares. Each B share would be equal to ten A shares in voting matters. Thus, Philip Morris will control about 98% of Kraft, people familiar with the deal said. The cigarette maker also plans to retain 275 million Class A shares. Assuming that Philip Morris follows through on its intention to offer only 15% of Kraft to the public initially, that would indicate about 325 million A shares on Kraft's books. Even the small slice of Kraft is expected to constitute one of the largest public offerings in U.S. history, raising perhaps $10 billion. The initial offering price hasn't been announced. Both stocks will pay dividends, the document says. "Philip Morris will have the ability to direct the election of members of our board of directors and to determine the outcome of other matters submitted to the vote of our shareholders," the draft prospectus says. Controlling more than 80% of Kraft also would allow Philip Morris to continue to consolidate Kraft's earnings, which are substantial. The largest U.S.-based pure food manufacturer, Kraft last year posted revenue of $26.5 billion that yielded operating income of $4.7 billion - 75% of it coming from North America. Kraft also has a significant overseas presence. Overall, Kraft contributed 33% of Philip Morris' $80.4 billion revenue and 29% of its $16.2 billion in operating income in 2000. Kraft's broad array of brands ranges from Jell-O, Miracle Whip and Tombstone pizza to Post cereals, Oreos, Cool Whip and Grey Poupon mustard. The Kraft prospectus is expected to be filed with the Securities and Exchange Commission on Friday. But hundreds of potential institutional investors and securities analysts attending road shows on the much-anticipated partial IPO have already seen draft copies. A Philip Morris spokesman Wednesday declined to comment on details of the pending offering, citing "various regulations." A representative of co-lead underwriter Salomon Smith Barney also declined comment. Credit Suisse First Boston, the other lead underwriter, didn't return phone calls seeking comment. Philip Morris has said it intends to use proceeds from the IPO to pay down debt incurred when it acquired Nabisco Holdings Corp. last year for $19.2 billion, including assumed debt. People familiar with terms of the pending offering said Kraft is expected to carry about $15 billion in debt. The draft prospectus said Kraft intends to use proceeds of the offering to repay a portion of long-term notes payable to Philip Morris. Kraft will trade on the New York Stock Exchange under the symbol KFT, the draft prospectus says. -By Richard Gibson; Dow Jones Newswires; 515-282-6830; dick.gibson@dowjones.com