The facility contains a new provision that allows the lien on such collateral to be released following the company satisfying a corporate credit ratings test which occurs when the company’s corporate credit ratings are at least Baa3 or BBB-, in each case with stable outlook or better, from either Moody’s Investors Service Inc. (Moody’s) or Standard & Poor’s Ratings Services (S&P) and at least Ba2 or BB, in each case with stable outlook or better, from the other rating agency. Corporate credit ratings Baa3 or higher with Moody’s and BBB- or higher with S&P are generally considered to be “investment grade.” Tyson's current corporate ratings are Ba2 and BB+.
The amended credit facility is scheduled to mature, and the commitments thereunder will terminate, subject to the achievement of certain conditions, on Feb’ 23, 2016. As of Feb. 23, 2011, there were no outstanding borrowings under the original credit facility, and no borrowings are expected at the time of the effectiveness of the amendment. The amended credit facility, combined with Tyson’s other ongoing debt management efforts, are expected to reduce the company’s net interest expense for the 2011 fiscal year to $245 million. It also contains financial maintenance covenants typical of an investment grade facility that will provide the company with greater operating and strategic flexibility than it had in its previous credit facility.
“This amended credit facility, and particularly the collateral release provision, is another reflection of the company’s improved financial performance since the 2009 fiscal year,” said Dennis Leatherby, executive vice president and chief financial officer. “As we’ve said on more than one occasion, getting our company back to ‘investment grade’ has been one of our goals and this amended credit facility is a sign of our lenders’ confidence, which we greatly appreciate, that we will reach that goal.”