Heady cocktail of insults and allegations as Bacardi family fights off Wall Street

The scions of the Bacardi rum family gather next week in the gentle island of Bermuda. But the mood will be anything but holiday-like. Instead, one burning issue may split the clan asunder: should outsiders be allowed to invest in the world's largest privately owned drinks company?

Bacardi has travelled a long and colourful road since it was founded in Havana, Cuba, 141 years ago by the patriarch Don Facundo Bacardi y Maso. The family fled after the revolution, their assets confiscated. But they regrouped, won a trademark battle with Fidel Castro and prospered more mightily than ever.

But until now there has been one constant. The $5bn-a-year Bacardi group, boasting not only the celebrated rums, but brands such as Dewar's whisky and Bombay Sapphire gin, could employ outsiders as top managers. All along, however, it has been owned and ultimately controlled exclusively by Bacardis – the 600-odd direct and indirect descendants of Don Facundo himself. On Tuesday, at the shareholders' meeting in Hamilton, Bermuda, where the company is registered, all that may change.

On the agenda is a proposal that would allow the board, under chairman Ruben Rodriguez, to issue more shares. If a two-thirds majority agrees, the next step could be a public offering of Bacardi shares, in which non-Bacardis could buy 25 to 30 per cent of its stock, raising $1bn of funds for the company.

For Mr Rodriguez, one of those outsiders, there is no choice. Bacardi needs money to expand, he insists. The alternative, in a business where to stand still can be to perish, might be – horror of horrors – a takeover bid from a giant competitor, such as Diageo or Allied Domencq, long rumoured to be a Bacardi suitor.

But resistance will be fierce. Opposition is being led by Karen Bacardi-Fallon, a 40-year-old Boston lawyer believed to be one of the largest family shareholders and a great-great-granddaughter of Don Facundo.

In a blistering letter that promises anything but peace and brotherhood in Bermuda next week, she called the scheme "an insult". The missive is studded with words like "blackmail" and "bizarre". For Ms Bacardi-Fallon, the initiative is "a furtive attempt to disenfranchise shareholders of Bacardi Limited," cooked up by "this week's collection of investment bankers and Wall Street lawyers". To help the scheme through, Mr Rodriguez is proposing a two-tier system, whereby Class A family-owned shares would have 10 votes apiece, and new shares only one. The betting is that, Karen Bacardi or no Karen Bacardi, the plan will be approved.

But new pitfalls await. If it does go public, Bacardi will be subject to the tougher corporate disclosure and responsibility requirements under legislation passed by Congress last year in the wake of the Enron and WorldCom debacles. One way or another, Bacardi's veils of secrecy will surely soon be lifted.