Seminis is proposing to issue $140 million of senior subordinated notes that would be used to repay $100 million of the company's $190 million "B" loan and for potential future acquisitions. This more aggressive financial policy and incremental increase in leverage to prefund future acquisitions has led Standard & Poor's to revise its outlook from stable to negative.
Seminis' senior secured credit facility is rated BB- by S&P. The facility, led by Citigroup and Harris Nesbitt, has been amended and restated to increase the revolver and reduce the amount of the term loan. The amendment increased the revolver by $15 million to $75 million and raised the step-down level on its leverage covenant test from 3.5 times to five times. The $90 million "B" loan is due in 2009. In addition to the outlook revision, S&P assigned a recovery rating of 1 to the credit facility, indicating a 100% recovery of principal in the event of a default. The two leads wrapped up the credit last September (LMW, 9/28).
Lease-adjusted total debt to operating EBITDA is expected to be about 4.4 times and operating EBITDA coverage of interest expense is expected to be around 2.5 times for the fiscal year ended September 2004, S&P notes. Seminis is the world's largest developer, grower and manufacturer of fruit and vegetable seeds. Calls to Seminis officials were not returned.
* Yell Finance's July 2003 IPO enabled the company to improve its capital structure, according to Moody's Investors Service. Net proceeds of £332 million were use to reduce debt and repay a vendor loan note. Moody's has upgraded Yell's senior credit facility rating from Ba3 to Ba2. The upgrade reflects Moody's view that Yell will continue improvements in debt protection measures that have occurred since the IPO and will keep leverage below four times. Low capital expenditure requirements increase the company's ability to generate free cash flow, Moody's notes. Yell's £200 million revolver is undrawn.
Yell publishes classified directories in the UK and Yellow Pages in the US. Yell has generated solid revenue growth despite increased pricing pressure driven by UK regulation over the past two years, Moody's says. But this is an ongoing challenge which is likely to lead to modest margin pressure over time, Moody's adds. A Yell spokesman declined comment.