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Snafu won't affect Kraft IPO
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May 21, 2001: 6:52 p.m. ET
Kraft reveals possible quiet period violation, likely won't affect IPO
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NEW YORK (CNNfn) - The mistaken release of a "pre-marketing form" probably won't affect or delay the mammoth IPO of Kraft Foods Inc. which could raise $8.4 billion, an expert said Monday.
Northfield, Ill.-based Kraft revealed in a filing with the Securities and Exchange Commission Monday that underwriters mistakenly offered written copies of a "pre-marketing feedback" form to certain potential investors.
The form could constitute a prospectus that does not meet the requirements of the Securities Act of 1933, Kraft said. People who bought shares based on the pre-marketing form could receive refunds or damages.
"We urge all persons to read and base their investment decision only on the preliminary prospectus, dated May 21, 2001, and the final prospectus dated the date hereof," Kraft said in the Monday filing.
Both CSFB and Salomon Smith Barney declined to comment. Kraft could not be reached for comment.
Kraft, which is being spun off by tobacco marketer Philip Morris Cos. (MO: down $2.15 to $50.22, Research, Estimates) , plans to offer 280 million shares at $27 to $30 each via lead underwriters Credit Suisse First Boston and Salomon Smith Barney. Earlier this month, Kraft had filed to raise $8.7 billion, planning to sell 280 million shares at $26 to $31.
The IPO is expected to price June 13 and trade June 14. The food maker plans to trade on the New York Stock Exchange under the symbol "KFT." The SEC could punish Kraft by delaying the IPO, insiders said. The last violation occurred in November 1999 when Webvan Group CEO George Shaheen made positive comments to a magazine that were deemed to be a violation.
The Webvan (WBVN: down $0.01 to $0.14, Research, Estimates) IPO was postponed by a couple days but the publicity actually helped generate more buzz for the offering. Since Kraft's snafu happened well before its public offering, the mistake will likely not impact the IPO.
"There is plenty of time to do whatever has to be done to correct the situation," said John Fitzgibbon, editor of Gaskins IPO Desktop. "I don't see any problems."
The SEC could not be reached for comment. 
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