Fitch Ratings has upgraded the following ratings of Tyson Foods, Inc. (Tyson; NYSE:TSN) and its subsidiary Tyson Fresh Meats, Inc. (TFM):
Tyson Foods, Inc.
--Secured bank facility to 'BBB-' from 'BB+'.
Tyson Fresh Meats, Inc.
--7.95% Senior Notes due 2010 to 'BBB-' from 'BB+';
--7.125% Senior Notes due 2026 to 'BBB-' from 'BB+'.
At June 28, 2008, Tyson had approximately $3.1 billion in total debt. The Rating Outlook is Negative.
The rating actions follow the Sept. 10 amendment to Tyson's $1 billion credit agreement which expires Sept. 28, 2010. Excluding letters of credit, $715 million was available at June 28, 2008.
The amendment provides additional guarantees, primarily from the poultry and prepared food business, and pledges inventory and trademarks owned by Tyson and its U.S. subsidiaries. Furthermore, assets pledged by TFM and its subsidiaries will also secure obligations under TFM's notes due 2010 and 2026.
In addition to providing collateral and further guarantees, the amendment gives Tyson extra cushion under its maximum leverage covenant, which was scheduled to step down to 3.25 times (x) during fiscal 2009. The amendment increased this ratio to 3.9x for the period prior to Dec. 31, 2009 and 3.75x thereafter.
For additional information, see Fitch Ratings' Sept. 8 press release 'Fitch to Rate Tyson's Convertible Notes 'BB' & Secured Debt 'BBB-'; Outlook Negative', available on the web site at www.fitchratings.com.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.