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Moody's ups some Dole notes to B2
Moody's Investors Service said it changed the outlook of Dole Food Co., Inc. to stable from negative, following the issuance of third-lien notes that will refinance much of a bond maturing on May 1.
The agency said it upgraded the rating on the $349.9 million (originally $325 million) senior secured third-lien notes due 2014 to B2 (LGD3, 31%) from B3 (LGD3, 38%) based on a change within the loss-given-default assessment.
Moody's affirmed the company's corporate family rating of B3, probability-of-default rating of Caa1 and senior secured term loan B at Ba3 (LGD2, 10% from 15%) and senior unsecured notes at Caa2 (LGD5, 82%).
Proceeds will help refinance the $345 million outstanding on a senior unsecured bond due May 1, 2009.
"The stable rating outlook reflects Moody's expectation that operating performance will be sustained at current levels and that credit metrics will benefit from the use of asset sale proceeds to reduce debt," Elaine Francolino, a Moody's vice president, said in a statement.
The upgrade reflects Moody's anticipation that the notes will benefit from lower-than-expected priority domestic payables, which rank ahead of the notes, and higher-than-expected foreign payables, which rank below the third-lien notes, according to the agency.
The affirmation of Dole's other ratings is based on the company's improved operating performance in fiscal 2008, the agency said. Better earnings from robust banana demand and prices and debt reductions from asset sales have resulted in a decline in leverage, with its debt-to-EBITDA ratio dropping to 6.8 times for the 12 months ended Oct. 4 from 9.4 times at the end of fiscal 2006.
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