Moody's cuts Chiquita notes to B3, rates loans B1, new notes B3

Moody's Investors Service said it assigned a B1 rating to Chiquita Brands LLC's proposed new senior secured credit facilities.

Moody's also assigned a B3 rating to the planned $150 million senior unsecured notes of Chiquita Brands International Inc., downgraded Chiquita Brands International's existing senior unsecured notes to B3 from B2 and downgraded Chiquita's senior implied rating to B2 from B1. The outlook is stable.

These ratings actions conclude Moody's review of Chiquita's ratings, which was initiated on Feb. 24 after the company's announcement that it intended to acquire the Fresh Express unit of Performance Food Group Co. for $855 million in cash.

Proceeds from the proposed credit facilities, along with $50 million of debt secured by ships, $75 million of planned perpetual convertible preferred stock and cash on hand will fund the acquisition of Fresh Express.

Moody's said the ratings recognize that the addition of Fresh Express provides important diversification to Chiquita's business, but also takes into account the significant cost of the acquisition, its largely debt funding, the consequent increase in financial leverage, the challenges in integrating the new business and the continuing sensitivity of Chiquita's earnings and cash flow to the regulatory regime for banana imports in Europe.

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