Chiquita Brands Int'l Rtgs Placed on Watch Neg by S&P.NEW YORK--(BUISNESS WIRE)--S&P's CreditWire 11/4/98--Standard & Poor's today placed its double-'B'-minus corporate credit rating, 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, 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". and 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. ratings, and preliminary single-'B'-plus/single-'B' shelf debt rating of Chiquita Brands International Inc. on CreditWatch with negative implications. This action reflects continued weak operating performance for the current rating, as well as the uncertainty surrounding the potential impact of Hurricane Mitch Hurricane Mitch was one of the deadliest and most powerful hurricanes on record in the Atlantic basin, with maximum sustained winds of 180 mph (290 km/h). The storm was the thirteenth tropical storm, ninth hurricane, and third major hurricane of the 1998 Atlantic on the company's financial profile. About $1.1 billion of total debt is outstanding. Recent financial results have been below levels expected for a commodity-oriented food processor at the current rating level. For the 12 months ended September 1998, 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 ) interest coverage was weak at about 2.1 times (x), and total debt to EBITDA was high at about 5.5x. While the widespread damage caused by Hurricane Mitch will reduce banana supplies and likely result in higher banana prices in the near term, the net impact of lower volumes, higher prices, and the cost to restore lost banana supplies remains uncertain. Standard & Poor's will review its ratings on Chiquita after evaluating the company's ability to improve operating results and the ultimate impact of the damage caused by Hurricane Mitch.--CreditWire |
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