Tyson Foods restructures debt

Tyson Foods said Wednesday (June 6) the company plans to redeem all of the $810 million 10.5% unsecured bonds due March 2014. In doing so, the meat giant had to amend its credit facility and prepare to issue $1 billion in new bonds at 4.5% made under an effective shelf registration statement on file with the U.S. Securities and Exchange Commission.

The new 4.5% senior bond issue will extend the financial obligation out to 2022.

As of March 31, Tyson Foods had $2.2 billion of total reported debt.

All three rating company's weighed in on the refinance. Fitch Ratings has assigned a 'BBB' rating to Tyson Foods proposed issuance of 10-year senior unsecured notes.

Fitch noted, "Tyson's rating reflects the company's low financial leverage, improved operating efficiency, and prudent risk management strategy. The rating also incorporates the low margin and volatile earnings and cash flow characteristics of the commodity protein industry. However, Fitch believes Tyson's diversification across chicken, beef, and pork and its position as one of the world's largest protein companies enhance the company's credit profile. Each of the various proteins is subject to different production cycles and supply/demand dynamics; therefore, strength in one protein can offset weakness in another. Tyson's considerable scale, as represented by over $32 billion of annualized sales, and distribution capabilities enables the firm to better meet the needs of customers"

Moody's gave the new issue a Baa3 rating but said the company is up for an annual rating review.

Standard & Poor's Ratings Services assigned Tyson a "BBB-" issue level rating on the new senior notes because of the company's guarantees.