Moody's: Dole outlook negative

Moody's Investors Service said it changed the outlook of Dole Food Co., Inc. to negative from stable, reflecting the concern that the refinancing of the May 1, 2009 $350 million bond maturity may not be done on attractive terms given the sluggish high-yield capital markets.

Dole's corporate family rating of B3 and its senior secured debt ratings Ba3 (LGD2, 16% from 23%) were affirmed.

Moody's lowered the probability-of-default rating to Caa1 given the short time until the bond maturity and downgraded senior unsecured notes to Caa2 (LGD4, 65%) from Caa1 (LGD5,77%).

"The company's credit ratios are not the reason for the negative outlook or the lowering of the rating on the senior unsecured notes," Elaine Francolino, a Moody's vice president, said in a statement. "Should operating performance be sustained at current levels, Moody's would likely change the outlook back to stable and re-examine the probability of default rating when the bond is refinanced."

Improved profitability and debt reductions from asset sales have resulted in a decline in leverage, with debt-to-EBITDA ratio dropping to 7.3 times for the 12 months ended June 14 from 9.4 times at the end of fiscal 2006.

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