Family feud drags Lykes into spotlight

© St. Petersburg Times,
published September 29, 2001

TAMPA -- As chairman of one of Tampa's most secretive and historically most powerful companies, Howell Ferguson was clearly uncomfortable under the spotlight.

He even whispered with his in-house counsel before deciding whether to make a brief comment to a reporter about the internal feud in his family-owned enterprise that made it into a Tampa courtroom Friday.

"In the last 100 years, we've always been able to work out any differences we've had in a private, constructive manner," he said finally. A public dispute, he said, is "not our history; it's not the company's preference; and it's regrettable we're here."

The setting was a Friday morning hearing before Hillsborough Circuit Chief Judge Manuel Menendez Jr. to discuss claims from 81 Lykes' family members and trusts that they were shortchanged when the company sold its mainstay juice business in 1999. The hearing, coming after months of criss-crossing motions and depositions, was triggered by Lykes Brothers' motion to dismiss the suit.

The dissenting family members are led by Tom Rankin, Lykes' former chairman and chief executive and a great-grandson of the company's founder. Rankin was replaced in 1996 by his brother-in-law, John Brabson.

Faced with dwindling cash flow and a greater debt load, Brabson quickly dismantled the Lykes empire through the sale of its meat, natural gas and shipping operations, and finally its juice-processing business. That left Lykes with a hodgepodge of secondary holdings and business interests.

The dissenters, who together own about 26 percent of the company, would receive about $23-million for their shares under valuations set by the company. They insist they are owed up to $103-million.

"For dissenters to get the type of (payout) they're trying to get would cause extreme hardship and probably end the company," said Ben Hill, an attorney representing the Lykes company. "The consequences are extreme."

Joe Varner, an attorney for the dissenting family members, said Lykes has offered no evidence to back up claims that paying them an extra $80-million or so would critically wound Lykes' remaining business.

Friday's hearing centered on two issues: whether the disgruntled family members have a right to file suit as dissenting shareholders under Florida law and what was the fair market value of Lykes' operation before and after selling its juice business.

Under state law, shareholders have a right to cash out their shares when a company sells "all or substantially all" of its operation. Dissenting shareholders can then turn to a judge to determine the valuation of the company.

Varner, the dissenters' attorney, argued that standard was clearly met. He noted that Lykes executives and promotional materials previously described the citrus operations as a core business and said its sale marked a "fundamental change" in the business.

Varner said the citrus business accounted for 83 percent of the company's revenues and 86 percent of its employees in 1999. "Lykes characterized itself and defined itself as a citrus business," he said. "This was a very different company after the sale."

But Lykes Brothers argued that the company still has substantial operations, with huge land holdings, the fourth-largest calf farm operation in the country and fertilizer and insurance businesses. That means family members would not be entitled to cash out.

Hill, the Lykes Brothers attorney, cited an expert used by the dissenters. The expert valued Lykes' citrus operation at $166-million and estimated it had more than $500-million in assets remaining after the sale.

At the close of the three-hour hearing, Judge Menendez said he was not ready to rule but indicated an "inclination" against dismissing the case as there appeared to be material issues of fact in dispute.

Short of a dismissal, settlement or unexpected delays, the case is slated to go to trial Oct. 29.

- Times files were used in this report. Jeff Harrington can be reached at

harrington@sptimes.com or (813) 226-3407.

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