Chiquita's Sr Nts Rtd 'B+' by S&P, Put on Watch Neg.NEW YORK--(BUSINESS WIRE)--June 11, 1999-- Standard & Poor's today assigned its single-'B'-plus senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating to Chiquita Brands International's $125 million senior notes due 2009 and Euro 75 million senior notes due 2009. Concurrently, these ratings were placed on CreditWatch with negative implications. These notes are being issued under the company's Rule 415 shelf registration dated May 1, 1996. Proceeds from these issues will be used for refinancing and general corporate purposes. Chiquita's existing double-'B'-minus corporate credit rating, single-'B'-plus senior unsecured debt rating, single-'B' subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". rating, single-'B'-minus preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. rating, and preliminary single-'B'-plus/single-'B' shelf debt remain on CreditWatch with negative implications, where they were placed May 19, 1999. The CreditWatch listings reflect the company's recent announcement that second-quarter results will be significantly below the level reported in the second quarter of 1998. Banana pricing in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community (EU) has been depressed due to an increased supply caused by a disproportionately large allocation of banana import licenses being granted under the EU banana quota regime in the second quarter. Because of this market problem, Standard & Poor's believes that it may be difficult for Chiquita to achieve financial results appropriate for the current ratings. To maintain the current ratings, Standard & Poor's expects Chiquita to achieve earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) to interest above 2.5 times (x) and total debt to EBITDA below 4.0x in fiscal 1999. The company is expected to maintain these ratios, on average, thereafter. Standard & Poor's will review its ratings for Chiquita after evaluating the severity of the weak pricing in the EU and the company's ability to improve results in the second half of the year. -- CreditWire |
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