FFE terminates related-party lease agreements

The Trucker News Services

10/5/2006

DALLAS — Frozen Food Express Industries Inc. will terminate all existing equipment lease arrangements with outside ties to its CEO, Stoney M. “Mit” Stubbs, Jr., Chief Operating Officer S. Russell Stubbs and members of their immediate family.

The terminations, as recommended by the company’s audit committee and board of directors, were effective as of September 30, FFE reported in a Sept. 26 news release.

Many of the leases were, by their terms, not subject to cancellation. As a result, the company has agreed to pay a cancellation fee in connection with the termination of those leases. Likewise, the company will purchase 73 tractors at fair market value as determined by an independent third party and approved by the audit committee.

The purchase price for all 73 tractors is expected to be approximately $3.5 million. In addition, FFE has agreed to pay an early lease termination fee of approximately $275,000, which the audit committee determined to be reasonable and more favorable to the company’s other termination options. Furthermore, according to the statement, FFE believes that “the cancellation of the leases now with certainty is in the best interests of the company.”

The company reported that it also rents on a month-to-month basis another 82 trailers whose leases were to be terminated, and that FFE is not required to purchase those trailers but should any such purchase occur, it will also be at fair market value as determined by independent and unrelated third parties.

Frozen Food Express Industries Inc. stated in its release that it is the largest publicly owned, temperature-controlled carrier of perishable goods (primarily food products, health care supplies and confectionery items) on the North American continent. Its services extend from Canada, throughout the 48 contiguous United States, into Mexico.

—The Trucker News Services