May 5, 2007

Tyson Foods improves credit rating

Increased cash flow in the last two quarters has resulted in a US$305 million reduction in the Tyson Foods' overall debt, which now stands at US$2.94 billion--down from $2.96 billion.

The company's goal is to reduce its debt level below US$2.7 billion by the fiscal year end in October, said Chief Financial Officer Wade Miquelon, during the recent earnings call.

Another US$125 million in debt will be retired in June, when the company's 7.45 percent bonds reach maturity.

The company continues to have ample liquidity with more than US$1 billion dollars available via a revolving credit line.

"While the industry metrics in protein inventory and pricing appear to have recovered to the point where Tyson Foods can slowly repair its financial profile, we view the story far from complete," said James Goldstein, debt analyst with CreditSights of New York.

CreditSights upgrade Tyson Foods' debt to "marketweight" from "underweight."

Ross said the biggest concern for Tyson and other food companies is their exposure to corn prices and adequate supply. He added they will monitor the company closely in the next two quarters to see how they work through managing those exposures.