Fitch upgrades Dole notes

Fitch Ratings said it revised the outlook for Dole Food Co. to positive from stable and upgraded its $227 million of 13 7/8% third-lien secured notes and $315 million of 8% third-lien secured notes to BB-/RR2 from B+/RR3 and its $155 million of 8¾% senior notes to B-/RR5 from CCC/RR6.

The agency affirmed Dole's long-term issuer default rating at B and its $350 million asset-based loan revolver and $239 million secured term loan B at BB/RR1. Also affirmed were Solvest Ltd.'s B long-term issuer default rating and BB/RR1 $593 million secured term loan C.

The agency said the upgrade of the notes is due to its recovery analysis and the continued absence of financial stress, primarily resulting from debt reduction.

Dole's ratings reflect its relatively high financial leverage, mid-single digit margins and the inherent volatility of the fresh produce industry, Fitch said.

In the agency's view, these factors are balanced by the company's adequate liquidity, limited near-term maturities, manageable debt amortization schedule and leading worldwide position in the fresh produce and value-added packaged fruits and vegetables business.

For the last 12 month ended Oct. 9, the total debt-to-operating EBITDA ratio was 4.5 times. The positive outlook is due to Fitch's expectation that this ratio will migrate toward 4 times in 2011 due to modest debt reduction and stable to moderately higher EBITDA margins.

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