US-based meat giant Tyson Foods has secured a fresh credit agreement with its lenders with a deal that will see the company use all of its assets as collateral for the loans.
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In a filing to the US Securities and Exchange Commission today (17 December), Tyson disclosed that the agreement will see the company and some of its subsidiaries “pledge substantially all of their assets to secure performance of the company’s obligations under the credit agreement”.
Tyson has also won a higher leverage covenant for the next two quarters. The covenant will rise to 4.5x for the first two quarters of Tyson’s fiscal 2009 year, fall to 4.25x for the third quarter and 3.5x after that period.
The new lending agreement signals a level of confidence in Tyson from the financial community. The meat sector as a whole has suffered this year due to soaring feed costs and while weak demand and an over-supply of meat has weighed on prices.
Last month, Tyson posted a rise in fourth-quarter earnings but saw annual profits tumble due to costs linked to plant closings.
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By GlobalDataFor the period ended 27 September, net income reached US$48m from $32m a year ago.
Sales for the quarter climbed to $7.20bn from $6.57bn in the previous period last year.
For the fiscal year, Tyson’s earnings tumbled to $86m from $268m a year ago. Sales rose to $26.86bn from $25.73bn in 2007.
