ML Macadamia reduces
dividend as outlook dims
ML Macadamia Orchards LP is slashing its dividend for the third time in 2 1/2 years.
The Big Island company said yesterday it will pay a dividend of 3 cents a share on Nov. 14 to unit holders of record on Sept. 30.
Technically a distribution of income to holders of partnership units, the dividend will be 40 percent less than the 5 cents paid out for each of the last 10 quarters.
Dennis Simonis, president and chief operating officer, said the company is still concerned about the dry weather it has experienced for three years at Kau, location of the majority of its 4,000-plus acres of trees.
The company also said the distribution reflects a lower price estimate from Mauna Loa Macadamia Nut Corp. for 2003 deliveries. Mauna Loa is the exclusive purchaser of ML Macadamia's nuts.
Simonis said, however, that the third quarter, the one covered by the dividend announcement, is not as important as the fourth quarter, which typically produces 40 to 50 percent of the annual nut harvest.
Counting this dividend, ML Macadamia will have made quarterly payouts for 70 consecutive quarters dating back to the inception of the partnership in 1986. It previously reduced its dividend to 9 cents a unit from 12.5 cents in December 2000 and to 5 cents a unit from 9 cents a unit in March 2001.
In the terms of its partnership agreement, the nut partnership must return to its investors all the cash flow it does not need for operations. The partnership lost $185,000 in the second quarter, an improvement from a loss of $241,000 from the year-earlier quarter.
ML Macadamia's stock, which has a dividend yielding of 5.5 percent before the reduction, closed yesterday at $3.65. Based on yesterday's closing price, the yield will now be 3.3 percent.
The dividend cut follows a gradual accumulation of shares by Farhad Fred Ebrahimi, president and chief executive officer of Denver-based Quark Inc. Ebrahimi, who gradually has been increasing his family's holdings in the company over the past several years, owns 10.5 percent, or 788,800 shares, of the 7.5 million outstanding shares, more than any other shareholder. Ebrahimi's company, Quark, makes the desktop publishing software QuarkXPress.
