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Smithfield Foods provides details on new $1.03 billion revolver
By Toni Weeks
San Luis Obispo, Calif., April 7 – Smithfield Foods, Inc. gave more details about its new $1,025,000,000 revolving credit facility obtained on April 2 with Rabobank Nederland, New York Branch as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.
The new revolver replaces the company’s previous $1,025,000,000 revolver, which was set to mature in June 2016, and includes an option, subject to certain conditions, to increase available commitments by up to $375 million in the future.
The new revolver, which matures May 1, 2020, contains a foreign currency subfacility for borrowings in Canadian dollars, Japanese yen, euros and British pounds sterling of up to the foreign-currency equivalent of $100 million. There is also a $50 million subfacility for swingline borrowings and a $150 million subfacility for issuances of letters of credit.
Borrowings bear interest at Libor plus 175 basis points to 275 bps. The exact margin varies based on the company’s ratio of consolidated funded debt to consolidated EBITDA. Letters of credit accrue fees at a rate equal to the applicable margin over Libor. There is also a commitment fee of 30 bps to 50 bps, also based on the ratio of consolidated funded debt to consolidated EBITDA.
Under the agreement, the company must maintain a total consolidated leverage ratio of not more than 0.5 to 1.0 and a minimum interest coverage ratio of not less than 2.50 to 1.00.
“The refinancing of our core working capital facility will further improve our cost of debt while ensuring ample liquidity,” C. Larry Pope, president and chief executive officer, said in a previous news release.
Smithfield, Va.-based Smithfield Foods is a food company and a wholly owned subsidiary of WH Group Ltd.
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