Chiquita sets Wednesday launch, solidifies structure of $650 million credit facility

By Sara Rosenberg

New York, March 18 - Chiquita Brands International Inc. has scheduled a bank meeting for 1 p.m. ET Wednesday to launch its proposed $650 million credit facility, according to a market source. Wachovia and Morgan Stanley are joint lead arrangers and joint bookrunners on the deal, with Wachovia the left lead and Goldman Sachs as documentation agent.

Previously it was known that the deal would launch next week but a specific date had been unavailable.

Furthermore, it was previously anticipated that the deal would be sized at $600 million, but it was upsized by $50 million as the company now expects to only raise $300 million in junior capital - comprised of convertible preferreds and high-yield bonds - as opposed to $350 million in junior capital, the source explained.

The facility will be presented to lenders next week as a $125 million five-year term loan A with an interest rate of Libor plus 175 basis points, a $150 million five-year revolver with an interest rate of Libor plus 175 basis points and a commitment fee of 50 basis points and a $375 million seven-year term loan B with an interest rate of Libor plus 225 basis points, the source said.

The increase in the facility came from adding $25 million to the term loan A, which was previously expected to be sized at $100 million, and adding $25 million to the term loan B tranche, which was previously expected to be sized at $350 million.

Chiquita's loan commitment letter from the banks did allow for the term loan A to be sized at up to $150 million and the revolver to be sized at $150 million to $200 million, depending on the amount of proceeds received from the proposed junior debt offerings.

Proceeds from the term loans, the junior capital and $75 million of cash on hand will be used to finance the $855 million cash acquisition of the Fresh Express fresh-cut produce segment of Performance Food Group Co. and to refinance existing Chiquita debt.

Borrowings under the revolver will be primarily available for working capital requirements and general corporate purposes.

Pro forma for the acquisition, the company's debt to EBITDA ratio is expected to be 4 times and EBITDA to interest coverage of 3.5 times, but by 2006 the debt ratio should drop below 3 times and interest coverage rise to more than 5 times.

Closing of the transaction is expected to be complete during second quarter.

Chiquita is a Cincinnati marketer, producer and distributor of bananas and other fresh produce.

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