Tyson Foods enters into new $1.5 billion two-year term loan

By Wendy Van Sickle

Columbus, Ohio, April 1 – Tyson Foods, Inc. entered into a $1.5 billion two-year term loan agreement on Friday with Morgan Stanley Senior Funding, Inc. as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Borrowings will bear interest at Libor plus a margin ranging from 125 basis points to 200 bps, depending on the company’s credit ratings.

Tyson said it entered into the term loan agreement, in part, to provide additional liquidity as well as preserve financial flexibility in light of recent uncertainty in the global markets.

The agreement limits the ratio of the company’s debt to capitalization to a maximum of 0.6 to 1, which can be adjusted temporarily to 0.65 to 1 upon the consummation of an acquisition that meets specific criteria and requires the ratio of the company’s consolidated EBITDA to interest to be at least 3.5 to 1.

The term loan was drawn in full on Wednesday. Proceeds may be used to finance general working capital needs, for other general corporate purposes and to refinance existing debt.

Morgan Stanley, BofA Securities, Inc. and CoBank ACB are the joint lead arrangers and bookrunners.

Tyson Foods is a Springdale, Ark., meat and food production company.

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