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Murdock says Dole Foods IPO has nothing to do with research campus

By Adam Bell

McClatchy Tribune Wire Service

Published: August 20, 2009

Billionaire Dole Food Co. owner David Murdock said his plans to take the produce giant public have nothing to do with the North Carolina Research Campus he founded in Kannapolis, despite a slowdown in the biotech project.

In an interview Wednesday, Murdock also said that he and his development company, Castle and Cooke, already have spent about $500 million at the campus, and they continue to fund it.

Only one building is under construction at the campus now. "The economy has slowed down and caused me to slow down," Murdock said. "But I'm still doing many things there ... and still spending millions on the (campus centerpiece) Core Lab."

Murdock's comments were his first on the matter since California-based Dole announced last week it intended to raise $500 million by selling stock to the public again. The company, the world's largest seller of fresh fruits and vegetables, would use the money in part to pay down debt, which stood at about $2 billion in June. Murdock took Dole private in a 2003 offer that valued the company at about $2.5 billion.

Murdock said federal rules prohibit him from discussing the IPO now. But he did say there was no connection between what was happening at the campus and Dole's decision to launch an IPO. When asked if he would use proceeds from the IPO at the Kannapolis biotech complex, Murdock said he could not comment on that.

As part of the initial public offering, Dole will sell shares of stock and Murdock will sell some of his own shares, although the company has yet to provide details on the number or price. Murdock said he has no interest in taking Castle and Cooke public.

Given the volatility that agriculture businesses experience from weather, fuel costs and other issues, Dole must feel the company will do well in the next six months or it would not have proceeded with the IPO, said Scott Mushkin, managing director at investment bank Jefferies and Co. in New York.

Kannapolis is optimistic that some money Murdock gains from the Dole offering will make its way to the city.

"We can only assume it will be beneficial to the research campus," Deputy City Manager Eddie Smith said. "This is one of his crown jewels. There's no reason to think it won't remain a high priority."

The $1.5 billion biotech complex is a collaboration among Murdock, eight N.C. colleges and universities, the community college system and private companies, including Dole. The campus opened last fall.

But in recent months, the campus has faced some setbacks. In May, Murdock said soft drink giant PepsiCo's plans to join the campus were "in flux" because of the economy.

And in late June, Wilmington contract research organization PPD said it was pulling out because the campus was developing too slowly; PPD had previously said it intended to bring up to 300 jobs over several years to Kannapolis.

"Everyone has been cutting back," Murdock said. "We're a captive of a bad economy, but we're in better shape than most."

Kannapolis may sell bonds

Financing for bonds tied to campus-area infrastructure projects also has experienced setbacks.

Last year, Kannapolis had intended to sell $168.4 million in self-financing bonds. N.C. law lets governments issue bonds without voter approval to pay for projects within a specified district, and new tax revenue generated from the district goes to paying bond debt.

But those plans dragged on as the city waited on financial data from Castle and Cooke, and the bond market became increasingly volatile.

Now, Kannapolis is exploring whether it can sell $30 million in self-financing bonds as an interim step to cover infrastructure and other costs, Smith said. The market for self-financing bonds has dried up because of high interest rates, and the city is looking to sell the bonds to a single buyer -- BB&T Bank -- rather than on the open market.

Kannapolis hopes to issue the bonds by mid-October. The city would eventually sell the rest of the self-financing bonds, about $138 million.

Half of the $30 million in initial bonds would go to a new building for the Cabarrus Health Alliance, the county public health authority, that also had met with delays.

Additional funds from the $30 million bond would cover a Village Park pedestrian tunnel, water and sewer lines, and other infrastructure projects. Another $6 million would repay Castle and Cooke for money it fronted to cover infrastructure projects related to the bonds; the city would be repaid $1.3 million.