Smithfield gets $200 million unsecured credit facility, increases U.S. facility

By Sara Rosenberg

New York, June 26 - Smithfield Foods Inc. entered into a $200 million unsecured committed credit facility in June and exercised its option to increase the amount committed under its U.S. credit facility by $25, according to a 10-K filed with the Securities and Exchange Commission Thursday.

The unsecured facility due Dec. 15 is intended to help bridge the company's working capital needs through the time of the closing of the sale of Smithfield Beef, which is expected to occur in the second quarter of fiscal 2009.

As of mid-June, no funds were borrowed under the unsecured facility.

The company thinks that it may be able to access the capital markets and replace some of its short-term credit facilities before the sale of Smithfield Beef closes, and has therefore engaged investment bankers to assist us in that effort.

Potential securities to be issued could include common or preferred stock, equity-linked hybrids, convertible notes or high-yield senior notes.

In addition, the company said that it received approval for a reduction in the interest coverage ratio from 3.0 to 1 to 2.0 to 1 under its U.S. credit facility, euro credit facility and senior secured notes until the end of fiscal 2009. Approval was sought since the company thought it would be unable to comply with the covenant.

Smithfield is a Smithfield, Va.-based processor and marketer of fresh pork and packaged meats.

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