Tobacco Documents Online

, . -13- JUN 8 1990 UPwe 06/07 1651 Rival alcohol tax plan clears Senate By TERESA SIMONS SACRAMENTO (UPI) -- The state Senate passed legislation backed by the wine industry Thursday that would rival a proposed alcohol tax increase on the November ballot by offering voters the chance to pass a smaller tax hike. The legislation was adopted on an overwhelming 30-4 vote, although some senators argued the industry deserved the larger tax hike. Sen. Ed Davis, R-Chatsworth, said the wine industry, which has contributed heavily to lawmakers' re-election campaigns, has been able to thwart even small tax hikes for more than 50 years because of their "good lobbyists" who "make friends with politicians." Davis called the legislation "an arrogant attempt on the part of a powerful industry who has had their way for decades around here to avoid taxation." But supporters of the smaller tax increase said the November ballot plan -- backed by law enforcement and alcohol recovery groups, and Assemblyman Lloyd Connelly, D-Sacramento -- is poorly drafted and punitive. "It's a thinly disguised attempt at prohibition," said Sen. Alfred Alquist, D-San Jose, who carried the measure on the Senate floor for its author, Assemblyman Dominic Cortese, D-San Jose. Cortese's industry backed measure, ACA38, would generate about $200 million a year for unspecified purposes by bringing the producers' tax on beer and spirits close to the national average, and leaving the tax on wine at one-third the average. The tax on wine would go from 1 cent a gallon to 20 cents; on beer, from 4 cents to 20 cents; and on hard liquor, from $2 to $3.30. The November ballot's "nickel-a-drink" initiative, meanwhile, would raise the tax on wine, beer and spirits to well above the national average, generating some $730 million a year and appropriating the money to specific related programs, such as law enforcement, mental health and alcohol prevention. The tax on wine would go to $1.29 a gallon; on beer, to 57 cents; and on hard liquor, to $8.40. Some senators balked at Cortese's measure, noting they had tried to get the alcohol industry to go along with much smaller tax hikes in the past but it refused. Alquist acknowledged that California's alcohol taxes have been "ridiculously low," but also said the state should protect its-wine industry, which supplies about 90 percent of the country's domestically produced wine. He and other legislators argued that the November ballot plan should be thwarted because it would require some alcohol prevention and health programs to continue to be . funded at prescribed levels, and because any changes in the measure would require a four-fifths vote of the Legislature. Cortese's plan already has cleared the Assembly but has to go back for concurrence with minor" Senate amendments.

THE WALLL.STREET JOURNAL FRIDAY, JUNE 8, 1990 ' Kraft's Italian Llnit To Take Major Stake .- In Holding Company i By a W Aw STngE'r JovaxAi. St4ff RePorter MILAN, Italy-The Italian subsidiary of U.S. food-company Kraft Gcnerai Foods Inc. is to take a majority stake in a new, holding company being set up to control the Pie.tro Negroni S.p.A. salami and cold meats group.. _ Kraft General Foods is a unit of Philip Morris Cos. The accord with Negroni strengthens Kraft's position in the Italian market while . giving the privately owned Negroni group, access to Kraft's financial and technologi- cal resources, top executives of'both com- panies said. Under the agreement, Kraft General Foods Italia S.p.A. will take an approxi- mately two-thirds stake in the new holding company. (Kraft already has a 25% stake in Negroni. ) The Negroni family, which has been in the prepared-meats business since 1907, will have a one-third stake in , the new company. ' The aim is to create an Italian meat concern to compete better internationally. ... It is useful to combine forces to de- velop, the company," said Negroni Chair- man Pietro Negroni, noting that exports would be targeted particularly at the Euro- pean and North American markets. The new holding company is likely to be called Negroni Holding '93. Kraft General Foods Italia Chairman Ernesto Fugazzola would give no details of the cost to Kraft of the transaction, but said that it had been calculated on the same basis as other recent transactions In the sector. Despite its minority stake, the Negroni family will have considerable in- fluence on the board of the new holding company. especially concerning strategic investments. THE NEW YORK TIMES, FRIDAY, JUNE 8, 1990 COMPANY BRIEFS • Kraft General Foods, a unit of Philip Morris Cos., said it would ac- quire majority ownership of Negroni S.p.A., Italy, a processed-meat com- _ pany. -14- JUN JUN 8 19~ Business Day 1rhcNetvJiorkMimes FRIDAY, JUNE 8, 1990 ' Conagra In Deal for Beatrice $1.34 Billion Sale Would Establish No. 2 Food Concern By ANTHONY RAMIREZ In a surprise announcement, Cona- gra Inc. said yesterday that it had agreed to buy the Beatrice Company for $1.34 billion in a combination that would create the nation's second- largest food company. For Kohlberg, Kravis, Roberts & Company, the sale will end a frustrat- ing ownership. The buyout specialist took Beatrice private in 1986 in a $6.2 billion leveraged deal that was later dwarfed by its $25 billion buyout of RJR Nabisco Inc. Aggressively selling off Beatrice assets in the first two years, Kohl- berg, Kravis has recently found few buyers for the remaining assets, partly because of sluggish earnings prospects for the food business. In- deed, the firm originally expected to get as much as $3 billion for Beatrice, but it is settling for less than half that. Stock and Cash Deal Under the transaction, which is subject to Government approval be- cause of antitrust issues, about half the purchase price would be in cash and the rest in Conagra stock. Charles M. Harper, Conagra'ss chairman and chief executive, said in an interview that the acquisition would give Conagra the excellent sales and distribution system of Bea- trice's Hunt-Wesson subsidiary as well as first-class production plants without hurting Conagra's earnings. Analysts hailed the transaction. "There are three large sections to a supermarket," • said Stephen M. Carnes, a food-industry analyst with Piper Jaffray & Hopwood Inc. "Cona-. gra had businesses in frozen foods and refrigerated goods but not in the third, shelf-stable groceries that are not refrigerated. With Beatrice, they've got the third." Shelf-stable groceries are products like popcorn and ketchup. Omaha-based Conagra, which had revenue exceeding $15 billion in the year ended May 27, 1990, has brands like Banquet frozen dinners, Country Pride chicken and Armour bacon. Chicago-based Beatrice, which had sales in the year ended Feb. 28 of $4.3 billion, has brands like Wesson cook- ing oil and Orville Redenbacher's popcorn. Philip Morris Is No. I Only the Phili Morris Com anies which owns ra t enera Foods, would be larger than the combined Conagra and Beatrice. Phili Morris had revenue of more than 39 illion for 1989. RJR Nabscio, with annual sales of $15.2 billion, would be the No. 3 food company. The Conagra transaction is the first deal for the company's investment banker, Eric Gleacher, since he left Morgan Stanley as head of its merg- ers and acquisitions department at the beginning of the year to form his own -firm, Gleacher & Company. In January. Mr. Gleacher and Mr. Har- per discussed a possible bid for Bea- trice on a ski lift in Vail, Colo. Mr. Gleacher had worked closely with Henry Kravis, a founding part- ner of the buyout firm, on the RJR Nabisco deai. "One of the big selling points of this deal was the value of Conagra stock, which is one of the best performers in the Fortune 500," Mr. Gleacher said. "Henry was very attracted to that." On the New York Stock Exchange yesterday, Conagra shares gained 75 cents, to $32. The deal was announced after the close of trading. Under the proposed buyout, the in- vestors in Mr. Kravis's firm would become an 18 percent owner of Cona- gra and the company's largest share- holder. The purchase price would consist of $626 million in cash, $355 million in Conagra common stock and $355 mil- lion in two series of Conagra convert- ible preferred stock. Conagra said that based on antici- pated debt levels, cash flow and other factors, the transaction was not ex- pected to dilute share earnings, which the company has said will be a record. William Leach, an analyst for pon- aldson, Lufkin & Jenrette, said that Conagra's 1990 estimated earnings, before the Beatrice deal, would total about $221.7 million, or $1.80 a share, on sales of $15.53 billion. He expected 1991 earnings of $239 6 million or $1.95 a share, on sales of $16.9 billion. icont'd!

(t;ont'4 -15- best pickle in the world; ' he said. "While you're test marketing it in some small town in Minnesota, some giant food.company could come along with something similar, sell it and distribute in every supermarket in the country and just blow right by you. Hunt-Wesson's got 15 distribu- tion centers and first-rate sales peo- ple. We can get new products on trucks just like that." Mr. Harper was also attracted by Beatrice's manufacturing operations. JUN 8 1990 He said he was not tazed tnat several buyers had looked at Beatrice and de- murred. Conagra hired outside con- sultants to inspect eight big Beatrice plants and found them in surprisingly good shape. "There was some fear that under pressure of the L.B.O. they had cut back on capital spending," he said. "But the outside consultants gave me grades on those plants and they were seven A-pluses and one A-minus." THE WALL STREET JOURNAL FRIDAY, JUNE 8, 1990 What's News a. Business and Finance C ONAGRA AGREED to acquire Beatrice from HIKR for $1.34 billion in cash and stock. The price, about half what RKRR once hoped for, reflects a large amount of debt on 'ConAgraAgrees ` To Buy Beatrice ; For $1.34 Billion I Price of Cash-Stock Accord ~ Cut Back by the Seller, , Kohlberg Kravis Roberts i. ConAgra Inc. agreed to acquire Bea- trice Co. from Kohlberg Kravis Roberts & : Co. for a scaled-back $1.34 billion in cash ; and stock. The price is about half the amount some Beatrice insiders boasted the food com- :pany would fetch just before the October ,1987 crash dashed those expectations. KKR ;still will profit substantially,'with a 50% !annualized return from its four-year own- i Both the Standard & Poor's Corpo- ration and Moody Investors Service Inc. put parts of Conagra's debt under review for possible downgrad- ing. S.& P.'s review affects $285 mil- lion of rated debt; Moody's about $900 million. Mr. Harper of Conagra said the purchase gave his company Hunt- Wesson's 600 sales people as well as a large distribution network. "Let's say you've come up with the ... 0 This article was prepared by Richard Gibson and Robert Johnson in Chicago ' and George Anders in New York. ership of Beatrice. The transaction price, ; however, apparently also was below KKR's more-recent hopes. "They kept saying our [offers ) were way too low," Charles M. (Mike ) Harper, : ConAgra chairman and chief executive of- . Beatrice's balance sheet. it approvea by regulators, the deal will give Con- Agra such brand names as Hunt's and Wesson, boosting the food processor's clout in the dry grocery business. (Story on Paoe A3) Qoing, Qoing, Gone Major Beatrice Pieces Sold by KKR uMir sALE FnIM (9uy,Q (/n bulwm) oaE aeto Aris eu notal - $.255 Aprii '86 (Westray Capital)'' Coea-Cola botfiers 1.000 June '86 (Cop-Cola). International Playte= 1.250 Aug.'86 (Investors led by manapement). Americold warehovsu unit .480 Nov '86 (Kelso) Weberaft Teshnoloqies .225 Dec. '86 (Private Investors in leveraged buy-out) Bottled water ueit .400 Juae '87 (Source Perrier SJ1.) Samsroait., SBtfel and 1.100 July'87 Culligan uaits (Went public as E-1I Holdings) Intereationalfood anits .985 Auq.'87 .(TI.C Group LP.) Tropleana Jules 1.200 March '88 (Seagram Co.) FisherNuts ,140 OcL'89 : (Procter & Gamble) Hunt-Wesson foods, 1.300 June '90 Swift-Edaieh meats and Beatriee oheeses (ConAgra) " *Also assumed about $1 billion of debt ~ ficer, said in an interview last night. But : the 'acquisition includes assumption of $987 ; million of long-term debt million, an addi- ; tional $552 million in other noncurrent lia- ; bilities plus $419 million in noncurrent and . deferred taxes. More than half of Bea- : trice's $3.5 billion in assets is goodwill, re- : flecting the premium above book value !that Beatrice has paid for various acquisi- ;tions over the years. ; Among the household name-brands Con- ' Agra would acquire are Hunt's tomato products, Wesson oil, Orville Redenbacher popcorn and Peter Pan peanut butter- strong brands that will vastly enhance ConAgra's clout in the dry grocery busi- ness. The company already is the nation's second-largest food processor, behind the Kraft General Foods unit of PhiIl Morris os. e transaction is su ject to govern- ment clearances. Last Chunk of Company . The proposed sale represents the last chunk of a much-larger Beatrice that KIQ3R swallowed for $8.2 billion in 1986. Since then, KKR has sold off 10 major pieces for a total of about 57.7 billion. Terms call for ConAgra to pay $626 mil- ~ lion in cash plus S355 million in common stock and an identical amount in two series ~ of preferred stock for Beatrice. The com- ~ pany said the proposed acquisition was not ~ expected to dilute per-share earnings, and it forecast record earnings for the year N just nnder way. For the fiscal year ended last May 28, ~ ConAgra is expected to report sales ap- IN& (Cont'di~

tCflnYo proaching $16 billion. In its latest fiscal ' year, which ended last Feb. 28, Beatrice. reported sales of $4.3 billion. Thus a com- bined concern could easily exceed $20 bii- lion in annual sales. KKR will end up, on a fully diluted ' basis, owning 15% of ConAgra. KKR found-- ing partner Henry Kravis indicated that KKR intends to hold its ConAgra stake long-term, calling the shares "@xceilent in- vestments." Favorable Reaction While announcement of the proposed deal came after the stock market had,, dosed, Wall Street analysts initially re-: acted favorably. "There's a very good flt,"' said Goldman, Sachs & Co. food analyst Nomi Ghez, who noted that ConAgra was • acquiring Beatrice at less than 60% of its annual sales. Prudential-Bache Securities: Inc. analyst John M. McMillin noted that ConAgra "has an insatiable appetite for cheap assets." : But both Moody's Investor Service Inc. 4nd Standard & Poor's Corp. debt-rating services put ConAgra under immediate re-: view for possible downgrading of some of, it debt,, although Moody's said it antici- pates "significant beneflts", to ConAgra from Beatrice's consumer food lines. , . Acknowledging that "we stretched our. balance sheet standard [of 35% long-term debt 1 on this: " Mr. Harper said the acquisi- tion would put ConAgra at nearly 50%a debt. "But we intend to get back to 35% as soon as practical," he vowed, noting that Beatrice has good cash flows. i ConAgra, which is particularly strong in. ~he red-meat business, features such brands as Armour in meats, Banquet, Healthy Choice and Morton in frozen foods, and Chun King and Patio in ethnic pre- pared foods. . There are some product overlaps. For ~xample, in Chinese foods Beatrice has La-- Choy, while ConAgra already owns a pea- nut-butter tirand. Also, because both com- panies are major forces in the prepared- meats business, government regulators may.study the proposal for antitrust impli- cations. 'Very Confident' But Mr. Harper, asked about that, said he wasn't worried. "We think we're below the threshhold of their concern level. We feel very confident about that." He said ConAgra was particularly attracted by Beatrice's sales and distribution system in the dry-grocery business, where it now is an also-ran. ConAgra, which Mr. Harper likes to say dominates "the middle of the plate," has been an aggressive food-busiriess buyer. In 1986 it bought RJR Nabisco's frozen-food unit, including the Patio and Chun King brands, for $64 million; in 1987 it acquired Monfort, a large Colorado beef and lamb concern, and in 1988 it added to its phalanx of flour mills by picking up those of Inter- national Multifoods Corp. for $76 million. Last year it added Pillsbury Co.'s grain- merchandising business, but lost out in a protracted bidding war with Tyson Foods -16- Inc. for Holly Farms Corp., a large poultry processor. The assets ConAgra seeks include 63 manufacturing or distribution facilities in 20 states and 15,900 employees at Chicago- based Beatrice. ConAgra already employs more than 55,000 people world-wide and ' has operations In 25 countries. ConAgra shares closed at $32. , up 75 cents, in composite New York Stock Ex- change trading yesterday. Volume was rel- atively light, indicating that both parties had managed to keep a lid on the pro- posal. Mr. Harper said •the first discussion came while he was riding a chairlift with investment•banker Eric Gleacher in Colo- rado, while skiing last January. Yester- day's acquisition accord caps at least four months of talks between KKIiR and Con- Agra, following a get-acquainted meeting between Messrs. Kravis and Harper. Mr. Kravis came away from those talks "impressed, talking about how he would love to do something with Mike Harper,"-a witness recalled. Beatrice in its current form has been shrunk almost two-thirds from its sprawl- ing size when KKR acquired the company in 1986, as units such as Avis, Tropicana and Playtex have been sold off. Nonethe- less, the remaining core of the business has proved tough for KKR to sell, mainly because of possible tax liabilities and $1.8 billion of goodwill, an accounting item that penalizes reported earnings. To finally sell Beatrice this spring, KKR asked that ConAgra "get comfortable with the contingent liabilities" before visit- ing Beatrice's operating units, said a KKR adviser. That strategy was designed to avoid jitters that had affected previous po- tential buyers, who liked Beatrice's operat- ing businesses but pulled back when they examined its books more closely. On May 15, top ConAgra officials visited KKR's offices and worked out the outlines . of an acquisition agreement. ConAgra then • visited Beatrice sites in detail, and checked with rating agencies to ensure that the debt involved in the Beatrice ac- quisition wouldn't hurt its credii rating too severely. Yesterday at 7:30 a.m., the Beatrice board held a three-hour meeting at KKR's New York offices to approve the proposed acquisition, while ConAgra did the same in Omaha. A witness said that while the Beatrice board's vote was unanimous, it was a "difficult" moment for Donald Kelly, the former Beatrice chairman who had played a major role in reshaping Bea- trice in th@_first two years after the 1986 5uy-out. In recent months, KKR-w'hich was by far the most active takeover player of the 1980s-has become noticeably less active in seeking to take over entire companies. Instead. KKR has been selling some of its portfolio companies and taking minority stakes in publicly quoted companies. -Dai'id B. Hilder in New York contrib- uted to this article. (Ottier covera.,7e c^vi7t!:nbt3 mcn requestl JUN 8 1g9p' ' THE WALL STREET JOURNA4 FRIDAY, JLTNFr 8, 1990 P&G to Stress Health Items In Food Line Lower-Calorie Goods Slated For Baked Goods Unit In Bid for Turnaround By AtEcrA SwASY Staff Reporter of THE Wwu.STa€ErJovsxAL Procter & Gamble Co., hoping to turn around some troubled brands in its food di- vision, is expected to unveil soon several new health-oriented products. The trend toward healthier, lighter eat- ing will result in new product initiatives in its lagging Duncan Hines baking mixes, said Edwin L Artzt, chairman and chief executive officer. "We're not putting Band Aids on the business," he asserted. Instead, Mr. Artzt suggested P&G will introduce a line of lower calorie, basic mixes, such as brownies and muffins. "We want to get back to the basics," he said. Consumers have wanted "better rfasons to keep baking." - P&G has been a"littie heavy footed" in developing healthier formulas for its Cri- sco brands of shortening and oil and the baking mixes, "which is unfortunate when you consider that we're the company that invented olestra," he said. Olestra, a fat substitute, awaits approval by the Food and Drug Administration. Building Food Business Cincinnati-based P&G is taking these steps to help build up its food and beverage business, which had a S14 million pretax loss in the fiscal year ended June 30, 1989. Although P&G's Folger's coffee and Jif peanut butter are profitable, the company lost money on its Citrus Hill orange juice last year. The company recently changed the brand's name, formula and packaging. Mr. Artzt expects sales of the brand's calcium- added added juices to pick up as more clinical studies confirm the product's effect on N building bones. Citrus Hill ranks third behind industry leaders Tropicana and Minute Maid. If it~ can:t be salvaged, Mr. Artzt said he hasn't` ruled out the option of selling it and focus- ~' ing only on the fruit drink segment with~ brands such as its Sunny Delight and Ha-NQ waiian Punch. "That's an option for the fu-N ture," he added. (ConYd)

(conYdi It's unclear how fast P&G will make. that decision, although Mr. Artzt said he has given the unit a "reasonable time frame" to fix the problems. But he quickly added: "I'm not a patient fellow." Mr. Artzt said P&G's sharpest growth is coming from hair care and skft care prod- ucts, such as Pert Plus, a shampoo and conditioner, and Oil of Olay, a line of skin lotions. "Most parts of our business are in some stage of growth with good global po- tential," he said. "We don't expect any part of our business to stagnate in the next decade." That-growth won't stem from hefty iir creases in marketing spending, however. "I have no particular interest in seeing us increase our investment in marketing," he said. Instead, he wants to shift current spend- ing more toward advertising and less on promotions. While promotions give short- term volume gains, they can erode con- sumer loyalty, he believes. "Sometimes our people are even tempted to believe that if they don't have particularly strong advertising copy, it's better not to spend -17- money in advertising," he said. "I preach . the doctrine that halitosis is better than no breath at all." Promise in Test In detergents, P&G sees promise in re- sults of its Phoenix, Ariz., test market of its superconcentrated detergents, sold un- ' der the "Ultra" Cheer, Tide, Gain and Ox- ydol brand names. P&G has expanded the test market to Texas and New Mexico. In Japan, those products now account for 80% of the detergent market, he said.. While U.S. consumers say they want the environmental and convenience advan- tages of the products, he doesn't expect do- mestic sales to go. "as far and fast as in Japan." P&G wants to expand its drug and health care business, but "it's a slower burn deal" because of regulatory clear- ances needed. When asked about how P&G will achieve that goal, Mr: Artzt said "we'll either get there on our own or with the help of an acquisition." ,lUN 8 199Q - Mr. Artzt declined to comment specifl- cally on analysts' projections for fis cal 1990 earnings, which average about $4.50 a share. For the fiscal year ended June 30, 1989; P&G reported net income of $1.21 bil- lion, or $7.12 a share, on sales of $21.4 bil- lion. The year-earlier per-share figure is before P&G's 2-for-1 stock split in Novem- ber 1989. Mr. Artzt did say P&G's rates of growth "are a little inflated" because of some non- recurring items in last year's fourth quar- ter. The company took a $78 million re- structuring charge and had a higher tax rate in the year-ago fourth quarter. "Any comparison you want to look at shows our earnings growth is solid," he said. P&G expects to increase its capital spending slightly in fiscal 1991 and 1992 as it expands capacity at existing plants and adds facilities. For fiscal 1989, P&G spent S1.03 billion. For 1990, it should continue to be about 5% of sales, he said. OTC 06/07 1217 TYSON FOODS FILES PROPOSED UNDERWRITTEN PUBLIC ... any such State. CONTACT: Tyson Foods Inc., Springdale Wayne Britt, 501/756-4000 SPRINGDALE, AK (JUNE 7) BUSINESS WIRE - Tyson Foods Inc. (NASDAQ:TYSNA) announced that it has filed with the Securities and Exchange Commission a registration statement covering a proposed underwritten public offering of approximately 2.6 million shares of its Class A common stock, $.10 par value. The managing underwriters for the proposed offering will be Stephens Inc. and A.G. Edwards & Sons Inc. Tyson is the largest producer, processor and marketer of poultry and poultry-based food products in the United States. It is the largest provider of further processed poultry products to the foodservice industry and is a major supplier of those items to the retail food industry. In addition, Tyson is the leading supplier of branded, prepackaged poultry to retail markets. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of a

-18- DOW WIRE SERVICE RJR HOLDINGS WARRANTS TO BEGIN TRADING ON NYSE TODAY BY CRAIG S. SMITH DOW JONES STAFF REPORTER Jllm 8 1QQR• ~ NEW YORK -DJ- RJR HOLDINGS CORP. EQUITY WARRANTS WILL BEGIN TRADING THIS MORNING ON THE NEW YORK STOCK EXCHANGE, GIVING INVESTORS A NEW OPPORTUNITY TO PARTICIPATE IN THE LARGEST LEVERAGED BUYOUT EVER. RJR HOLDINGS IS THE PARENT OF RJR NABISCO INC., WHICH W?,S TAKEN PRIVATE LAST YEAR IN A $25 BILLION LBO LED BY KOHLBERG KRAVIS ROBERTS & CO. SINCE THAT TIME, THE ONLY WAY TO PUBLICLY INVEST IN RJR'S EQUITY HAS BEEN THROUGH SENIOR CONVERTING DEBENTURES, WHICH WILL GIVE HOLDERS THE OPTION TO CONVERT THEIR DEBENTURES INTO EQUITY IN 1993. THE NEW WARRANTS, WHICH ARE EXERCISABLE AFTER MAY 22, 1998, ENTITLE THE HOLDER TO BUY ONE RJR HOLDINGS COMMON SHARE FOR EACH WARRANT HELD AT AN EXCERSISE PRICE OF 7 CENTS. THERE ARE 45,529,024 WARRANTS CURRENTLY OUTSTANDING, EXERCISABLE INTO AS MANY COMMON SHARES. THE WARRANTS WERE ISSUED LAST YEAR AS AN "EQUITY KICKER'' IN CONJUNCTION WITH THE SALE OF $1 BILLION 15 PC PAY-IN-KIND SUBORDINATED DEBENTURES DUE 2001 AND $4.1 BILLION SUBORDINATED DISCOUNT DEBENTURES DUE 2001. SINCE THE WARRANTS BECAME TRANSFERa$LE ON MAY 22, 1990, THEY HAVE BEEN TRADING OVER-THE-COUNTER FOR A LITTLE MORE THAN ST EACH, CLOSING LATE YESTERDAY AT ABOUT $7.35, ACCORDING TO TRADERS. TRADERS SAY THEY EXPECT THAT PRICE TO INCREASE SOMEWHAT BECAUSE OF THE INCREASED LIQUIDITY EXPECTED FROM BIG BOARD TRADING. WITH ABOUT 540 MILLION RJR HOLDINGS SHARES OUSTANDING, THE WARRANTS ARE PUTTING A VALUE OF ABOUT $3.8 BILLION ON RJR'S EQUITY. BUT BOTH RJR OFFICIALS AND WALL STREET ANALYSTS CAUTION THAT PUTTING A FAIR VALUE ON RJR AT THIS STAGE OF THE LBO IS A MORE COMPLEX MATTER. •.HOWEVER, THE WARRANTS DO GIVE EQUITY INVESTORS IN THE RJR LBO SOME INDICATION OF HOW THEIR INVESTMENT HAS PROGRESSED. RJR INSIDERS PAID ABOUT $5 A: SHARE FOR THEIR SHARES IN THE LBO, GIVING THEM ABOUT A4o PC RETURN ON THEIR INVESTMENT IN A LITTLE MORE THAN ONE YEAR. -0- 9 18 AM EDT Oti-08-90

e -19- JUN 8 1990 UPce 06/07 1205 McHale interested in Minnesota beer ST. PAUL, Minn. (UPI) -- Boston Celtics forward Kevin McHale, a native of Hibbing, apparently is interested in the St. Paul Schmidt brewery. Pat Forceia, a boyhood friend of McHale's and a partner in the bid, said McHale wants to buy the brewery, which is scheduled to be closed next month after another bid for it fell through this week. A"He is interested-in developing a Minnesota beer," said Forceia, who is an assistant vice president at Miller & Schroeder, a Bloomington-based bond firm. McHale, who is on a camping trip, could not be reached for comment. But Forceia said Wednesday that McHale will be returning to Minnesota this weekend, and wants to meet with St. Paul Mayor Jim Scheibel and Gov. Rudy Perpich to talk about the possibility of a purchase. "He is close to retirement," Forceia said. "He is definitely moving home to Minnesota once he does, and he is interested in getting involved in the community. He feels this may be an interesting opportunity." McHale also wants to talk to union officials representing brewery workers. "His father worked 40 years at the Minntac taconite plant in Mountain Iron," Foreceia said. "He is a very strong union supporter." Mike Goldman, secretary of the bottlers at the Schmidt plant, at first was skeptical when•told of McHale's interest. "Is this true, or are you jerking my chain?" Goldman said. "This is really from out in left field." But once convinced, Goldman was happy to hear McHale wanted to talk to union officials. Goldman hoped McHale might convince Heileman to allow him to lease the Schmidt brand, so the beer could be brewed and bottled in St. Paul. THE NEW YORK TIMES, FRIDAY, JUNE 8, 1990 THE MEDIA BUSINESS . t.lVel l1SinQ"Randall Rothenberg . a Anti-Drinking Effort . Aimed at Teen-Agqrs The Advertising Council and the Harvard Center for Health Communi- cation have announced a project to combat alcoholism' among .teen- agers. The effort will build on the campaign of public-service ads the council announced two weeks ago. The center, part of Harvard's School of Public Health, will build a communications program around the ads that encourage television pro- ducers to place anti-drinking mes- sages in entertainment shows aimed at young people. The center will also work on encouraging news coverage of these efforts and will produce a handbook with the Ad Council that will teach local public-service organi-' zations' how to create media cam- paigns around the issue.

Gannett Westchester Newspapers/Tuesday, June 5,1990 Greenburgh third-graders correct 'the king of beers'• Students find error in educational poster By Ernie Suggs Staif Writer "He didn't look like he was 10." That's how third-grader Jesse Mann and two classmates at Greenburgh Cen- tral 7's Highview School discovered that beer giant Anheuser-Busch Inc. had incorrect dates for one of the kings in its Great Kings and Queens of Africa educational ppsters. During a class •project on African kings, Jesse, along with 8-year-olds Paul Jackson and Kenny Teveleowitz, discovered that on the poster of Shaka, a king of the Zulu tribe in southern Africa, the dates that he lived were Incorrect. The poster, which was hang- ing in their classroom, said he lived from 1818 to 1828, making him age 10 A MonYdl s4T9ztsZ0z when he dted. "Iie looked like he was in his late '30s or early '40s," Jesse said of the poster. Shaka actually lived from 1787 to 1828, dying at the hands of his brother, Dingane, who assassinased him at, age 41. "We found a book with the right dates in it, and we told our teacher about the mistake," Paul said. "Then we decided to write them a letter." "We kept having to type the letter over because we made so many mis- takes," Kenny said. "I was glad when J. Gregory Raymond we finished it." Highvlew School third-graders Kenny Teveleowltz, left, Paul Jackson and Jessa Please see POSTER, A22 M ann noticed an Incorred birth date of an African king on an educational pos/er. 1Cortr4 PV S TER/From page A17 , ,Part of the letter said: "Our research shows that you made a big: mistake on one of your 'Great Kings of Africa' posters. You said that Shaka Zulu lived from 1818 to 1828. The real date was from 1787 to 1828." Anheuser-Busch forwarded the letter to John H. Clarke, history professor emeritus at Hunter Col- lege, who serves as the historical consultant to the Great Kings and Queens of Africa series. Clarke responded with a letter. "Every effort is made to make sure -that the information bn the posters is as accurate as possible," Clarke wrote. "This poster has been on display for quite a while, it was checked and re-checked before distribution and no one saw the error. You and your classmates should be commended for your alertness in spotting what is ob- viously a typographical or printer's error. I apologize for any inconve- nience it might have caused you." Surprisingly, to them, the trio has not been receiving much atten- tion around school for their discov- ery. Principal Rena Hersh said that what the boys did was com- mon at Highview. Teachers regu- larly encourage pupils to point out errors and mistakes. "We have students writing toy manufacturers and book publishers all the time complaining about er- rors," Hersh said. "It is always nice when they write the children back." The boys had a hard time find- ing sympathy for Anheuser-Busch. "They ~should keep checking on . things that they put out," Kenny said. "What they need to do Is pay more attention to what they are doing," Jesse said. Paul took it a step fhrther.. "I hope that they learn their lesson from this," he said. "We can't keep finding their mistakes for them." 00

. -21- -..- "'FINANCIAL.TIMES FRIDAY JUNE 8 1990 '. - Saunders . . ,~. denies any ~ knowledge ot, ~ Guinness share support' By Rayatond Hugh.s, Law . Courts Correspondent, in London MR , ERNEST SAUNDERS yesterday emphatically denied having had. any knowledge of the Guinness share support operation that has led to his appearance in the dock at Southwark Crown Court, in London, on criminal charges. He was asked by his counsel, Mr Richard Ferguson, QC: "Did you have any discussions with anyone about share support ia the sense in which it has been used by the prosecution - ie, illegal share support?". Mr Saunders replied firmly: "No, no, no, no." At the heart of the case are £25m (E42m) of payments made by Guiariess during'it's bitteriyfought takeover battle with Argyll for the Distillers drinks group in 1986. The prosecution alleges the payments were unlawfully made to compen- sate supporters for losses made through buying Guinness shares, and as success fees.. . Mr Ferguson asked Mr Saun- ders: "Did you have anything to do with the organisation of share support. for Guinness shares.r Mr Saunders: "If youl mesn did'I have anTthing to do with, or know anything about, pay- 'ing indemnities and success fees for people buying Guin- ness shares, the answer is absolutely no. "If you say did I encourage yeople, institutions, anyone I met, to assent any Distillers shares they might have to Guinness rather than Argyll and to take the opportunity to invest in Guinness shares, because I thought they were a damn good buy, the answer is yes. It was my job." Later Mr Saunders flatly dis- puted evidence given earlier by Mr Howard Hughes, a senior partner of Price Waterhouse; Guinness's auditor. Mr Hughes had said that on November 25 1986, he had asked Mr Saunders for infor- mation on four matters: Guin- ness's Si00m investment with a partnership controlled by Mr Ivan Boesky, the US arbitra geur, a£50m deposit with Bank Leu, a Swiss • bank, a£7.6m 4nterest-free deposit with the Henry Ansbacher merchant bank and the £25m of pay- ments. Mr Hughes had men- tioned none of those matters, Mr Saunders declared. Asked by Mr Ferguson what Ansbachers would have meant to him had• it been mentioned, Mr Saunders replied: "At that time Ansbacheri would have meant Lord Spens; who had been the most vitri- olic opponent I had ever had iri merchant banking circles." - ~' Mr Ferguson said Mr Hughes had also told the court that Mr Saunders had told him he• was aware of the four matters and would provide whatever infor= mation was required. . . I heard him say that," replied Mr Saunders. "I will tell you and the jury, abso- lutely unequivocally, it's not FINANCIAL TIMES FRIDAY JUNE 8 1990 THE GUINNESS TRIAL JUN 8 1990 Ernest Saunders: denies knowledge of share support trlle." Mr Justice Heary, said Mr Hughes had thought, but had' not been sure, that he had attached a label of £25m to the he~ is e llqft well not sure, because he didn't." Trial background, Page 10 Saunders `devastated' by decision to send in inspector's By Raymond Huqhaa, Law Courts Corraapondant MR ERNEST Saunders said yesterday he had been "absolutely devastated" when he heard on December 1, 1986, that the Department of Trade and Industry had appointed inspectors to investigate Guinness. The news had been broken to him by Mr Olivier Roux, Guinness's direc- tor of finance, Mr Saunders told the jury at Southwark Crown Court. The events of that day were "really quite a haze" in his mind, he said. "I was in a state of shock." As a result of concern in the DTI and in the City, new non-executive directors had been appointed to the Guinness board. Mr Saunders said the only other thing he had thought might have prompted the investigation had been the fail from grace of Mr Ivan Boesky, the US arbitrageur, about which there had been enormous publicity. Guin- ness had invested S10om in a pertner- ship controlled by Mr Boesky. Mr Saunders agreed that he had mentioned neither of those matters at a Guinness board meeting the fol- loiwng day at which he had been asked if he knew any reason for the DTT's action. He had said he did not - because that had been the case - and it had not been a time to indulge in wild speculation. The Boesky investment had been raised at the meeting by Sir Norman Macfarlane. leader of the new nonex- ecutives, Mr Saunders said. "I was shocked by the aggressive way Sir Norman attacked me for making the investment." Mr Saunders said that he, and the investment, had been defended by Mr Thomas Ward, another director, and, extremely eloquently, by Mr Roux. Mr Saunders, former Guinness chairman and chief executive, was giving evidence for the third day in the trial in which he and Mr Gerald Ronson. chairman of the Heron group, Mr Anthony Parnes, a City stockbroo- ker, and Sir Jack Lyons, the million- aire financier, deny charges arising from an allegedly unlawful share sup• port operation mounted by Guinness during its battle with Argyll for DLs- tllle[s in 1988. Mr Saunders recalled how on Feb- ruary 19 1986, Guinness had heard from the DTI that it was going to be allowed to withdraw its original bid, which had faced a monopolies refer- ence, and make a new offer. At once "mysteriously from out of the woodwork crawled all these advis- ers who had disappeared when we were referred and suddenly everybody was waiting for a meeting to discuss what we should do." Mr Saunders said that Mr Ward had been extremely aggressive, saying they had to go ahead. Mr Roux, an inscrutabie person, had been "on the fence." Mr Saunders had telephoned Lord Iveagh. Guinness's chairman, who had urged him to push ahead. Mr Saunders said: "One of the wor- ries I had was that the problem of coping with Distillers, who were sup• posed to be our partner in this ven- ture, was becoming a major headache. "it was like dragging a tranquiilised rhinoceros along behind us. They were reluctant." Mr Saunders said he had told Mr Ward, who had been commuting between Britain and the US, that if they were to go ahead Mr Ward would have to spend more time in the UK and take hold of the Distillers situ- ation as well as the inevitable legal wrangles with ArgylL Mr Saunders said that a new t2.35bn bid had been launched on February 20 1986, and he had resumed a round of intensive political lobby- ing. He added that Guinness had been engaged in a war with Atgy1(. Mr Saunders said the Boesky investment had been suggested by Mr Ward. Guinness had had difficulties in the US and it was felt an invest- ment with Boesky would help It get into the American investment scene. He said he met Mr Boesky. "He impressed me," Mr Saunders said, adding "if I had known then what I now know it's the last investment I would have wanted to make." The trial continues today.

-22- , 6 CHICAGO WEEKEND. Week of May 31-June 3.1990 C , BILL'S BUSINESS Mota & Pop Winans, Aiber- dna Walker and many others. Kraft USA is part of Kraft General Foods, Inc. Kraft Black Achievers Featured In Videos From Miller Brewing Company loan basis - sort of a lending MILWAUKEE - Two library approach:' ' educational videos highlight- Interested organizations ing the achievetttents of may obtain mote information by writing: Gallery of Greats African Americana attt now, available for c •anik Videos 512 Ilth Street SE. non-proGtorganiza from Washington. D.C. 20003. O D ld' the Miller Brewing Company. , ture antique home fur- Both grew out of Millet°s IJ- MeDontdd s ~, nishings and cooking utensils wners o s Me ona ear old role-modd program ,. y Chicagoland and Northwest Gallery of Greats . -Voicea," a 56-rairt0e~c.,Itaeiana (MOCNI) have features tfie Nesto (Ekaaa~t: andounced tttst tLe ' fourQt d J Company (NEC) petfoe+eittg' a sampler of the werki at: black authors. lhe perfor- mance was created for the unveiling ofthe 12porttaitsin the 190 Gallery collection which salutes black writers. The event was held Feb. 7 at the Duke Ellington School of the Arts in Washington. D.C. "Voices." consists of three poems and excerpts.from two plays and three novels written hv Maya Angelou, Ernest 1. Gaines. August Wilson. David Bradley. John A. Williams. Rita Dove, Charles Fuller Jr" and Amiri Baraka. The second:vidco, "Coun- sels for the Cause," presents "It will be a grcat tion in MOCN( v rs t I 1- i . nu e con e a an m WHEN: Saturday. June t eat cause " event for a bl k i ii i h . g v ts ac c r g whichi three attorneys rctlect on some of or an/ annual Mtchad• McDonald's Charity Golf Classic - a celebrity golf Your- nament featuring Michael Jordan and more than 100 other sports and media cele- brities - will be held Tuesday. June 26 at Cog Hill Country Club in Lemont. [ll. All pro- ceeds from the fun-filled charity golfouting will benefit Ronald McDonald Chil- dren's Charities (RMCC). "We'rc expecting the 1990 Classic to he even more excit- ing than last years tourna- Knft General Foods At the htti Annual Chicago Gospel Festival. Kraft USA presents a showcase of "The HetftageofAfrican-American ; Cooking.- The sponsorship booth of Kraft USA will fea- to give Chicagoans a glimpse of traditional kitchens of Jesteryear. In additiow b this exhibit Kraft will give away speciaYy = researched and compiled African-American cook books, gift baskets chock full of Kraft products and pre- mium items. All-day drawings offer continuous photo and interview opportunities: All media are invited to attend. WHO: City of Chicago/ Kraft USA WHAT: Chicaso Gos- pelfest -Sing Chicago Sing! ment, which drew over 550 WHERE: Grant Park- players and raised more than Jackson Boulevard Between S242.000 for RMCC." said Lakeshore Drive Terry Solon, president of and Columbus Drive A .- maximum of l80 4nu. Sunday. June 3rd their best-known cases. The fivesomes-withonecelebrity attorneys are: joining each foursome - will Fred D. Gray who. fresh out participate in this year s of law school, obtained the "Classic." Top sports and release of Rosa Parks when mediacelebritieswhowilljoin she was jailed for refusing to NBA superstar Michael Jor- move to the back of the bus. dan include Neal Anderson. touching off the Montgomery Dave Duerson.Jim Thornton. (Ala.) bus hoycott. Gray also Jim McMahon. Gary -Sarge" has the distinction of being Matthews. Stan Mikita and - the tirst attorney to get Martin Ernie Banks. among others. Luther King Jr. out of jail. Ticketsare5-t50perperson. Al+o. a suit Gray filed in 1963 which inc!udes the continen- led to the desegregation of all tal breakfast. celebrity driving public +chools in Alabama. contest, round of golf, cock- Frankie M. Freeman, who tails, dinner- and the -cports built her reputation cham- mentorahilia" auction. For pioningcivil rightscases in St• persons interested in attend- Louis and was named to the ing the event. hut not wishing U.S.Ci.ilRit;htsCommission to play golf. dinnerisports by President Lyndon B.-memorahiliu" auction tickets Johnson. the first woman to are available forS100. Reser- hold the post. vations and payments are due Louis A. Bedford Jr., who by June 1. ' was involved in almost every A speeial charity bid is also civil rights case brought open to any foursomc wishing hefore the Dallas courts in the to play with Michael Jordan. 195t)s and '60s. In 1966. on Silent hids are due hy June 15: heingnamedtotheMunieipal starting bid is S5.000. (Bidding Court. he became the first amount is in addition to S450 black judge to serve in player fee.) Dallas County. For more information "We anticipate an enor- about the Michael Jordan/ mous demand for the videos," McDonald's Charity Golf said Noel Hankin. director of Classic, phone 312/751-212t marketing relations for Miller orwrite: Michael Jordan Golf Brewing Company. "so we are Classic. c% Suite 600. 211 E. making them available ott a pntario.Chieago.IL60611. WHY: Kraft USA. makers of fine family foods for more than 75 years, considers par- ticipation in 'Sing Chicago Sing" consistent with its ongo- ing relationship with its core consumers. The 6th Annual Chicago Gospel Festival will highlight Chicago gospel genius as well as internationally acclaimed artists. 'Kratt joins all Chicago in its salute to the venerable Pop Staples and the fabulous Barrett Sisters." Ms. Gonzalez continued. 'While the range of all the talent is signiticant these honored veterans have demonstrated longevity. excellence over time. traditional reliability. These values Kraft believes in for ourselves and we welcome the opportuniry to salute them in others:: This year's inspirational line-up• beyond Pop Staples and The Barrett Sisters. include an abundance of Chicago's own multi-talented artists and national Gostxl guests including: Jesse Campbell. Rev. Clay Evans & The Fellowship Choir. The Soul • Children. of Chicago. Five Blind Boys of Alabama. General Foods. headquar- 1UR 8149t1 tered in Glenview. Illinois. is the multi-national food busi- ness of Philip Morris Com- panies, Inc. HORORING MANAGEMENT STUDIES GRADS! -Allene S. Roberu, center. Manager, Constituent Programs, Philip Morris Companies Inc., welcomes guest to a company spon- sored reception honoring minority businesspersons who recen- tly finished the fifth annual Small Business Management Seminar. W ith Ms. Roberts are, from left,Lynda Ireland• presi- dentofAMENY and also PresidentofPanache.inc..and Hilton O. Smith. Corporate Director. Turner Construction Corp.