Moody's takes action on beef processors

Moody's Investors Service said it put the ratings of some U.S. beef producers on review for possible downgrade based on the significant uncertainty surrounding future operating performance as a result of the announcement that a cow in Washington state was found to have BSE (bovine spongiform encephalopathy, also know as Mad Cow Disease) and the subsequent closing of key export markets for U.S. beef.

The ratings of Tyson Foods Inc. and guaranteed subsidiary IBP Inc.; National Beef Packing Co. LLC; and Swift & Co. were placed on review for possible downgrade.

Moody's also said it will continue its existing review of the long-term ratings of Cargill Inc. and Smithfield Foods for possible downgrade. The short-term Prime-1 ratings on Cargill Inc and its guaranteed subsidiaries are affirmed at Prime-1.

Ratings placed under review for possible downgrade are: Tyson Foods Inc.'s senior unsecured at Baa3; IBP Inc.'s senior unsecured at Baa3 based on a full guarantee of Tyson Foods Inc.; National Beef Packing Co. LLC's $160 million senior unsecured notes due 2011, rated B2; Swift & Co.'s $350 million senior secured revolving credit maturing 2007, rated Ba2, $200 million term loan maturing 2008, rated Ba2, $268 million 10.125% senior unsecured notes due 2009, rated B1, and $150 million 12.5% senior subordinated notes due 2010, rated B2.

A review for possible downgrade was continued for Smithfield Foods Inc.'s $350 million senior unsecured notes due 2013, rated Ba2; $300 million 8% senior unsecured notes due 2009, rated Ba2; and $200 million 7.625% senior subordinated notes due 2008, rated Ba3.

Moody's said its ratings review will consider the impact on beef markets and processors from the loss of export markets, as well as the degree to which domestic beef consumption may fall.

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