Tyson Amends Credit Line

by 5m Editor
24 February 2011, at 12:42am

US - Tyson Foods has amended its $1 billion credit facility with JPMorgan Chase Bank as Administrative Agent so that teh facility will continue to be secured by the company’s domestic cash, accounts receivable and inventory, and guaranteed by substantially all of the company’s domestic subsidiaries.

The facility contains a new provision, among others, which allows the lien on such collateral to be released following the company satisfying a corporate credit ratings test.

The amended credit facility is scheduled to mature, and the commitments thereunder will terminate, subject to the achievement of certain conditions, on 23 February 2016. As of 23 February 2011, there were no outstanding borrowings under the original credit facility, and no borrowings are expected at the time of the effectiveness of the amendment.

At Tyson’s existing credit rating, the amended credit facility, together with Tyson’s other ongoing debt management efforts, are expected to reduce the company’s net interest expense for the 2011 fiscal year to $245 million. In addition, the amended credit facility contains financial maintenance covenants typical of an investment grade facility that will provide the company with greater operating and strategic flexibility than it had in its previous credit facility.

“This amended credit facility, and particularly the collateral release provision, is another reflection of the company’s improved financial performance since the 2009 fiscal year,” said Dennis Leatherby, executive vice president and chief financial officer for Tyson Foods.

“As we’ve said on more than one occasion, getting our company back to ‘investment grade’ has been one of our goals and this amended credit facility is a sign of our lenders’ confidence, which we greatly appreciate, that we will reach that goal.”