Bermuda-based Bacardi is asking its shareholders to approve the first step towards an initial public offering - a marked break with the past for the family-controlled drinks giant.

The Miami Herald reported yesterday that Bacardi has mailed proxies to all shareholders seeking their approval of a plan to increase Bacardi's capital structure, which would require the issuance of additional shares beyond the 23.5 million currently held by about 600 family members. But it would still take a second shareholder vote and the approval of the board of directors before any new shares could be sold through the public market or issued in a private transaction, the Miami Herald said.

`'There are absolutely no plans to take the company public at this time, nor is there a need to raise any funds,'' said Ruben Rodriguez, Bacardi's chairman and outgoing chief executive. "But tomorrow that may change. It's in the company's best interest to have the flexibility in its financial structure to do private or public deals.''

Mr. Rodriguez's proposal, which was endorsed last week by the 16-member board of directors, is significant because it's the first time in recent history that Bacardi shareholders have been asked to take a formal vote regarding a plan to seek new capital.

In 1999, Bacardi's board of directors shelved the possibility of an IPO because of a lack of shareholder support.

That led to the departure of chief executive officer Chip Reid.

`'We felt shareholders would be more comfortable with a two-step process,'' Rodriguez said. "It's slower and easier for them to digest.''

Since he took over at Bacardi, Rodriguez has been trying gradually to change the culture at the conservative company that has 6,800 employees worldwide. His goal: develop consensus among family members who have been known for their factionalism and infighting that have often kept the company a step behind the competition, the Herald said.

In the last decade, Bacardi has diversified from its bestselling rum products and added Dewar's Scotch, Bombay gin, vodka and tequila to its product line.

But the liquor industry has seen heavy consolidation in the last decade, and there are now only three or four major companies worldwide.

Industry analysts say Bacardi must look at the public markets if it wants to continue to expand its portfolio.

`'It's something that's obviously necessary,'' Tom Pirko of Bevmark, an industry consultant told the Miami Herald. "If they're going to continue to grow, you've got to put fuel in the tank. The question is, has management been able to convince shareholders that this is the right thing?''

While Rodriguez believes a public offering would be essential if Bacardi had an opportunity to make a major acquisition, he won't support one at all costs.

`'We should not lose out on a major acquisition because of our capital structure,'' said Rodriguez, who says he would recommend a public offering in that case. "No one is going to support going public for no reason or just to pay down debt. That doesn't create shareholder value.''

Shareholders are also being asked to approve a change in the process for nominating members of the board of directors. The change would allow shareholders the right to nominate someone, while right now all nominations come from a nominating committee.

All votes are due by May 6 to the company's auditor, PricewaterhouseCoopers. That's when Bacardi will hold a special shareholder meeting in Bermuda and announce the results. In order for the changes to pass, they must be approved by two-thirds of all shareholders, not just the ones voting.