Smithfield Foods has moved to reassure investors that it is in compliance with its debt covenants and has adequate liquidity after its shares fell 21% on Friday.
Go deeper with GlobalData
The shares dropped amid concerns that the growing US financial crisis would affect the company’s access to credit.
Smithfield said it “is on very sound financial footing” and as of 25 September it had over US$500m in liquidity from committed lines of capital.
The company said it is currently in compliance with all covenants and expects to be in compliance for all its major facilities through the fiscal year ending 26 April 2009, with no significant debt payments due until late 2009.
The concerns for the hog and pork producer came the same week Pilgrim’s Pride endured a slump in its shares after it said it would post a “significant” quarterly loss due to high feed costs.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSome analysts believe Smithfield shares could be experiencing many of the same issues.
“Smithfield is a very highly leveraged company that is struggling with profitability and perhaps concerns about its liquidity situation and their financial health,” Ann Gilpin, analyst at Morningstar told Reuters.
