Chiquita Brands International term loan "C" fell under par after the company announced its revenues would be hurt by the E. coli scare in the U.S. The Wachovia-led term loan "C" fell to 99 5/8 100 at the end of the week from 100 1/2 last Monday. Its 7 1/2% '14 notes fell two-and-a-half points to 87. A dealer said Chiquita's revenues are expected to be off by $60 million in the third quarter of 2006 because of the E. coli scare, which is tied to sales of fresh spinach.
Chiquita said its Fresh Express operations are experiencing lower sales and unforeseen costs because of concerns about the safety of fresh spinach. It is investing funds to improve investor confidence in the quality of its products and food safety standards. To reduce debt and create long-term shareholder value, Chiquita is also selling shipping assets and suspending its quarterly dividend. The company's total debt was $992 million as of June 30, according to a Standard & Poor's release. The ratings agency placed Chiquita's B+ corporate credit rating on review for downgrade. A spokesman did not return a call.
Dole Food Co. was also affected by the E. coli scare; its credit default swaps widened 70 basis points to 572, according to Markit Group. Dole's 8 5/8% '09 bonds fell a point to 97 before rebounding three-quarters of a point. Its 8 3/4% '13 notes fell three-and-a-quarter points to 92 before rebounding to 93 1/8. A Dole spokeswoman said it is too early to say how the E. coli scare will impact its operations.