Fitch affirms Dean Foods

Fitch Ratings said it affirmed Dean Foods Co.'s issuer default rating at B, bank credit facility at BB- with a recovery rating of RR2 and senior unsecured debt rating at CCC with a recovery rating of RR6.

The agency also said it affirmed Dean Holding Co.'s issuer default rating at B and senior unsecured debt at CCC with a recovery rating of RR6.

Fitch said it removed the ratings from Rating Watch negative, where they were placed on Dec. 3, following the amendment to Dean's senior secured credit and receivables purchase agreements.

Conditions of the amendment include the issuance of at least $400 million of unsecured notes with maturity of no less than seven years on or before Feb. 28, 2011 and utilization of net proceeds to prepay a portion of its 2014 tranche A term loan, Fitch said.

On Dec. 9, Dean issued and priced $400 million of 9¾% eight-year notes due Dec. 15, 2018, for which Fitch assigned a CCC rating with a recovery rating of RR6, and since that time has used proceeds to prepay a portion of its 2014 tranche A term loan, the agency said.

The stable outlook is due to the alleviation of covenant risk following the amendment and a belief that cushion under Dean's covenants is currently adequate and will gradually improve in 2011, Fitch said.

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