Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 7/3/09

Smithfield Foods announced Thursday it has entered into a new $1 billion asset-based revolving credit facility with JPMorgan Chase Bank, N.A., as administrative agent.

The new credit facility, which will mature July 2, 2012, replaces the Company's previous U.S. revolving credit facility and it includes an option, subject to certain conditions, to increase available commitments to $1.3 billion in the future. The new credit facility is guaranteed by substantially all of Smithfield's U.S. subsidiaries.

Smithfield also announced it has entered into a new $200 million term loan with Rabobank Nederland as administrative agent that will mature on August 29, 2013, replacing a $200 million loan that was due to mature in August 2011.

The company also said it has closed its previously announced offering of $625 million aggregate principal amount of senior secured notes due July 2014. The notes accrue interest at a rate of 10% per annum and have been issued at a price equal to 96.201% of their face value.

The Company intends to use the proceeds from the notes offering to repay borrowings and terminate commitments under its existing U.S. revolving credit facility, repay and/or refinance other indebtedness and for other general corporate purposes. Similar to the new credit facility, the notes are guaranteed by substantially all of Smithfield's U.S. subsidiaries.

"With the transactions we consummated today, we have taken decisive and proactive steps to restructure our balance sheet," said Smithfield CEO and President Larry Pope in a statement.

"In addition, the new credit facility, in conjunction with our intention to refinance our present European revolver, will begin to significantly reduce our exposure to financial covenant risks," he added. "We believe these actions will enable us to weather the current economic environment and the results of our hog production segment, which we expect to begin to improve in the second half of fiscal 2010."