Pricing was increased on Dole Foods' existing $1.425 billion credit last Wednesday after leverage increased. Pricing is tied to a leverage-based grid. Dole's $350 million asset-based revolver and $1.075 million term loan both saw pricing stepped up to LIBOR plus 2% from LIBOR plus 1 1/4%.
Pricing was set when the company's leverage was 3.25 times, but leverage has since increased to 3.4 times, according to a filing with the Securities and Exchange Commission. Dole reported net income for the second quarter of $18.5 million, compared to $32.3 million in the same quarter last year. Second quarter EBITDA was $110 million, down from EBITDA of $148 million a year prior.
The covenant-lite deal, led by Deutsche Bank, launched in March and was one of the first deals to ignite the "covenant-lite" craze that flooded the market earlier this year. One investor involved in the deal was upbeat. "It is a good deal if you're already holding the paper," he said.
As a result of the earnings report, which was better-than-expected, Dole's bonds popped last week. Its 8 5/8% '09 jumped five points to 100; its 8 7/8% '11 notes climbed to 99 1/4 from 95 1/2. A KDP Investment Advisors report said the fact the bonds jumped on these earnings highlights the extent to which expectations for Dole were modest.
Based in Westlake Village, Calif., Dole Foods provides fresh fruits, vegetables and juice products. A spokeswoman did not return a call.