Moody's rates Fresh Del Monte facility Ba2

Moody's Investors Service said it upgraded Fresh Del Monte Produce Inc.'s senior implied rating to Ba2 from Ba3 and assigned a Ba2 rating to its $400 million secured revolving credit facility due March 2007.

The outlook is stable.

Moody's said the upgrade reflects the company's low leverage and large equity base resulting from the profitability of its Del Monte Gold pineapple, its high levels of free cash flow relative to debt, and the progress made to date in expanding its global distribution and fresh cut infrastructure, the investment for which has been funded largely from internally generated cash flow.

The upgrade also recognizes the risks associated with the company's concentration in pineapples, the likelihood of future acquisition activity which could add leverage and business risk, and its exposure to fluctuating produce prices, particularly bananas.

Moody's said Fresh Del Monte has little debt at this time ($48.2 million). For the last 12 months ended Sept. 26, the company's debt/EBITDA was 0.2x, based on EBITDA of $293 million (excluding non-core earnings). Debt adjusted for the company's moderate level of lease obligations yielded an adjusted debt/EBITDAR ratio of 0.8x.

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