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Smithfield Completes Secured Notes Offering

by 5m Editor
19 August 2009, at 12:10pm

US - Smithfield Foods last week closed its previously announced offering of $225 million aggregate principal amount of senior secured notes due July 2014.

The notes accrue interest at a rate of 10 per cent per annum and have been issued at a price equal to 104.0 per cent of their face value, plus accrued interest from 2 July 2009 up to 14 August 2009.

The notes have identical terms and conditions, other than issue date and issue price, as the $625 million of 10 per cent senior secured notes due 2014 issued by the Company on 2 July 2009.

The Company intends to use the proceeds from the notes offering, together with other available cash, to repay amounts outstanding under its European revolving credit facility, which will be terminated upon repayment in full.

The notes are guaranteed by substantially all of the US subsidiaries of the Company. The notes and guarantees are secured by first-priority liens, subject to permitted liens and exceptions for excluded assets, in substantially all of the Company's and its subsidiary guarantors' fixed assets, including certain real property, fixtures and equipment and tangible personal property, and by second-priority liens, subject to permitted liens, in substantially all of the Company's and its subsidiary guarantors' cash and cash equivalents, certain material intellectual property, the common equity of the subsidiary guarantors, inventory, accounts receivable and other personal property relating to such inventory and accounts receivable.

C. Larry Pope, President and Chief Executive Officer of the Company, said: "The issuance of these additional notes and the repayment of our European credit facility continue our proactive steps to strengthen our balance sheet. We have further reduced our exposure to financial covenant risks, and we believe this notes offering, together with our July notes offering, new ABL credit facility and new Rabobank term loan, will enable us to weather the current economic environment and the results of our hog production segment. We will continue to evaluate our options to strengthen our balance sheet even further going forward."