Chiquita credit facility expected to launch mid-March with an approximate size of $600 million

By Sara Rosenberg

New York, March 2 - Chiquita Brands International Inc. is expected to hold a bank meeting some time around mid-month, although an exact date has not yet been set, to launch its proposed credit facility that is estimated to be sized at $600 million, according to a market source.

Wachovia and Morgan Stanley are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead. Goldman Sachs is documentation agent.

The facility is anticipated to consist of a $150 million five-year revolver, a $100 million five-year term loan A and a $350 million seven-year term loan B, the source said, adding that the structure is still somewhat fluid at this point.

The pro rata tranche sizes are slightly different then those listed in the commitment letter that the company filed with the Securities and Exchange Commission in late-February.

In the commitment letter, the term loan A was sized at $150 million and the revolver was sized at $150 million to $200 million, depending on the amount of proceeds received from proposed junior debt offerings.

Also, according to the commitment letter, the term loan A and the revolver are talked at Libor plus 175 basis points, and the term loan B is talked at Libor plus 225 basis points. The revolver will carry a commitment fee of 50 basis points.

The company is getting the new credit facility, and plans on using at least $350 million in gross proceeds from the issuance of unsecured senior notes and convertible securities, as well as $75 million of cash on hand, to finance the $855 million cash acquisition of the Fresh Express fresh-cut produce segment of Performance Food Group Co. and refinance existing Chiquita debt.

If proceeds from the notes and convertible offering exceed $350 million, commitments under the term loan tranches will be reduced, the commitment letter said.

If proceeds from the notes and convertibles are in excess of $300 million, the revolver will be reduced dollar-for-dollar up to $50 million, bringing it to the currently anticipated size of $150 million.

Borrowings under the revolver will be primarily available for working capital requirements and general corporate purposes.

Chiquita has also received a commitment for a $225 million one-year term loan C with an interest rate of Libor plus 375 basis points just in case the notes and convertibles are not issued prior to closing of the transaction.

Pro forma for the acquisition, the company's debt to EBITDA ratio is expected to be 4 times and EBITDA to interest coverage of 3.5 times, but by 2006 the debt ratio should drop to below 3 times and interest coverage rise to more than 5 times.

Closing of the transaction is expected to be completed during second quarter.

Chiquita is a Cincinnati marketer, producer and distributor of bananas and other fresh produce.

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