Fitch: High Yield Food, Beverage & Restaurant Co's Provide Good Credit Protection

CHICAGO--(BUSINESS WIRE)--In a special report issued today, Fitch Ratings examines liquidity, debt structures and covenants for a subset of speculative grade food, beverage and restaurant companies. Fitch says liquidity is healthy, debt structures are fairly balanced between secured and unsecured obligations, and covenant restrictions provide adequate to good protection for bondholders.

Issuers reviewed and their IDRs include Tyson Foods, Inc. (Tyson; 'BB'; Outlook Stable); Smithfield Foods, Inc. (Smithfield; 'B-'; Outlook Stable); Dole Food Co. (Dole; 'B'; Outlook Stable); Del Monte Foods Co. (Del Monte; 'BB+'; Outlook Positive); ARAMARK Corporation (ARAMARK; 'B'; Outlook Stable); Burger King Corporation (Burger King; 'BB'; Outlook Stable); Constellation Brands, Inc. (Constellation; 'BB'; Outlook Stable); and Dean Foods Co. (Dean; Not Rated). In aggregate, these firms have nearly $24 billion of debt.

'Credit implications for these high yield food, beverage and restaurant companies are stable to positive, said Carla Norfleet Taylor, Director at Fitch. Del Monte's ratings have a Positive Outlook, after being upgraded in May, while continued debt reduction concurrent with strong operating performance by Tyson could result in positive rating actions.'

Liquidity and latest 12-month free cash flow for the firms in Fitch's universe currently averages approximately $800 million and more than $290 million, respectively. Roughly 57% of the $24 billion in debt of these companies is secured while 43% is unsecured. Fitch views Dole's covenants as being most restrictive but believes Smithfield provides the most protection in a leveraged buyout because of change of control put options in all of its bonds.

'Default risk for even the lowest rated companies, such as Smithfield and Dole, is no longer an immediate concern due to recent refinancing activity and improved operating results,' said Wesley E. Moultrie, Senior Director at Fitch.

The full report 'High Yield Food, Beverage, and Restaurants: Cross-Company Liquidity, Debt, and Covenant Analysis', is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Related Research: High Yield Food, Beverage, and Restaurants: Cross-Company Liquidity, Debt and Covenant Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=540829

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