The new agreement includes a substantial reduction of the interest coverage ratio covenant through January 2010, but the covenant relief comes with a price tag:
• the Tar Heel facility has been put up as collateral;
• interest rates on loans and fees are going up;
• the company has less flexibility regarding the terms under which it may borrow.
The company said it also is seeking similar covenant relief with the lender of its Euro Credit Facility, which is about $350 million.

Meanwhile, the United Food and Commercial Workers and Smithfield are scheduled to begin negotiating the first-ever contract at the company's Tar Heel plant in late February or early March, the Associated Press reported.

After 16 years of bitter battling, workers voted to have the union represent the facility's 4,500 employees late last year.

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