A state Supreme Court justice has ordered the AriZona Iced Tea group of companies to make an initial payment of $125 million to one of the company's co-founders, but suspended the 9 percent interest that has been accruing on his ownership stake at a rate of about $1.3 million a week.
In October, Justice Timothy Driscoll ruled that AriZona, based in Woodbury, would have to pay co-founder John Ferolito and a family trust about $1 billion for their 50 percent stake in the enterprise. Ferolito had filed a lawsuit in October 2010 to force the company to buy out his family's shares.
The $125 million down payment, with $75 million due in 60 days and $50 million within 120 days, falls between the figures sought by the legal team of Ferolito of Colt's Neck, New Jersey, and co-founder Domenick Vultaggio of Sands Point, who remains with the company.
Interest has been accruing since the lawsuit was filed and Driscoll agreed to suspend the calculation of interest from Oct. 14, the conclusion of the trial's first phase when he set a value on the company's worth that would allow for Ferolito's payout.
Louis Solomon, the attorney representing AriZona and Vultaggio, said AriZona likely will appeal Driscoll's ruling to add interest dating from 2010 to the Ferolito settlement.
A final decision on whether Ferolito should receive interest calculated after the first phase of the trial will be made in the second phase of the nonjury trial, Driscoll said Thursday.
The trial's second phase would set the precise amount to be paid to Ferolito and the family trust and a schedule for the payments, said Nicholas Gravante Jr., attorney for Ferolito.
Driscoll said his crammed court docket in Mineola meant the earliest he could schedule the second phase was in April, but he left open the possibility that another justice would preside at an earlier date.
Solomon said the company has about $380 million in cash, some of which is needed for operations. He said lenders have been hesitant to provide funds, given the uncertainties stemming from Ferolito's lawsuit to dissolve the company and the lack of audited financials since 2006.
Deloitte LLP is auditing the company as part of AriZona's effort to secure fresh capital.
Driscoll said he is mindful of AriZona's need to maintain a "significant cash position."
"Simply put, all -- or even most -- of the company's available cash . . . cannot go to Mr. Ferolito if the company is to survive" during the trial's second phase, he said.
The company, No. 1 in the U.S. ready-to-drink iced tea market, says it has about 1,000 employees, including 400 in Woodbury.