NEW YORK CITY (dpa-AFX) - Snack maker Diamond Foods Inc. (DMND) said Wednesday that it has reached a deal with its lenders to amend its credit agreement, enabling the company to gain continued access to revolving credit. However, the deal also requires the company to suspend dividend payments to stockholders.
The company also said it is exploring 'capital alternatives' to strengthen its balance sheet. A report in the Wall Street Journal said that Diamond is in talks with private-equity firms about a possible minority investment to bolster its balance sheet.
Diamond, working with its current bank group, will have continued access to its existing revolving credit facility through June 18, 2012. The company will also continue to make scheduled term loan payments during this period.
But the amendment requires Diamond to suspend dividend payments to stockholders. The company noted that the interest rate on borrowings under the facility will increase by 75 basis points. In addition, Diamond has agreed to pay a one-time forbearance fee of 25 basis points to its lenders.
Diamond said it continued to make progress with its restatement and is pursuing actions with its financial advisor, Dean Bradley Osborne, to explore 'capital alternatives' to strengthen its balance sheet.
Rick Wolford, Diamond Food's Interim President and Chief Executive Officer said, 'This agreement enables Diamond to continue to work through our restatement process and with our financial advisor to develop capital alternatives to strengthen Diamond's balance sheet and reduce leverage.'
Wolford added, 'Also, during this period, Diamond will continue working to rebuild our walnut grower relationships, to take steps required to ensure Diamond's competitiveness and ongoing success in the walnut industry and, importantly, to continue to successfully support the growth of our snack brands.'
A report in the Wall Street Journal said that Diamond is in talks with private-equity firms, including KKR & Co. (KKR), Blackstone Group LP (BX) and TPG, about a possible minority investment to bolster its balance sheet.
Some of the private equity firms are reportedly exploring the possibility of taking Diamond private, but are wary due to the unresolved federal probe into payments made by the company to its walnut growers.
Diamond said in early February that it replaced its CEO Michael Mendes and CFO Steven Neil after an internal probe found that the company improperly accounted for payments to walnut growers. The company also said it will restate its results for the past two fiscal years 2010 and 2011.
In mid-February, Procter & Gamble Co. (PG) and Diamond said they mutually agreed to terminate Diamond's proposed $2.35 billion acquisition of P&G's Pringles snack business. The companies decided to terminate the deal as it got delayed due to the accounting scandal at Diamond.
DMND closed Wednesday's trading at $25.64, up $0.61 or 2.44 percent on a volume of 3.34 million shares. In after-hours, the stock declined $0.40 or 1.56 percent to $25.24.
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© 2012 AFX News
