Tyson Foods gets $1.8 billion term loan, ups revolver to $1.5 billion

By Wendy Van Sickle

Columbus, Ohio, May 17 – Tyson Foods Inc. obtained a new $1.8 billion three-year term loan on Friday and increased and extended its existing 2014 revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Interest on the new term loan will range from Libor plus a margin ranging from 100 basis points to 175 bps, based on the company’s ratings. There is a quarterly unused commitment fee at an annualized rate of 15 bps.

Proceeds are to be used to fund part of Tyson’s acquisition of all of AdvancePierre Foods Holdings, Inc.’s common shares for $40.25 per share in cash and to repay some AdvancePierre debt.

Initial loans will be available upon satisfaction of conditions relating to the planned acquisition of the Cincinnati-based producer and distributor of ready-to-eat sandwiches, sandwich components and other entrees and snacks to distribution outlets.

Morgan Stanley Senior Funding, Inc. is the administrative agent and is a lead arranger and bookrunner along with JPMorgan Chase Bank, NA, Bank of America Merrill Lynch and Rabobank UA, New York Branch.

JPMorgan, Bank of America, NA and Rabobank are the syndication agents.

U.S. Bank, NA, Wells Fargo Bank, NA, ABN Amro Capital USA LLC, Bank of China, New York Branch, Branch Banking and Trust Co. Fifth Third Bank, Industiral and Commercial Bank of China Ltd., New York Branch, ING Capital LLC, Mediobanca International (Luxembourg) AS, Sumitomo Mitsui Banking Corp. and TD Bank, NA are the documentation agents.

Tyson must maintain a maximum debt-to-capitalization ratio of 0.60 to 1.0 and a minimum ratio of consolidated EBITDA to interest of 3.75 to 1.0.

Amended, restated revolver

Tyson’s revolving credit facility was upsized to $1.5 billion from $1.25 billion, and its maturity was extended to May 12, 2022.

Its covenants are substantially the same as before the amendment and restatement and include a maximum debt-to-capitalization ratio of 0.60 to 1.0 and a minimum ratio of consolidated EBITDA to interest of 3.75 to 1.0.

Interest is Libor plus 90 bps to 150 bps, depending on ratings. The facility fee ranges from 10 bps to 25 bps, also based on ratings.

Morgan Stanley Senior Funding, J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Barclays Bank plc, CoBank ACB, RBC Capital Markets and Rabobank, New York Branch are the lead arrangers and bookrunners. JPMorgan Chase is the administrative agent.

Morgan Stanley, Bank of America and Barclays are the syndication agents, and CoBank, Rabobank and RBC are the documentation agents.

Proceeds of the revolver may be used for general corporate purposes.

The meat and food production company is based in Springdale, Ark.

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