S&P Upgrades Dole Food As IPO Proceeds To Repay Debt 3:25 pm ET 10/30/2009- Dow Jones
DOW JONES NEWSWIRES
Standard & Poor's Ratings Services upgraded its junk-status ratings on Dole Food Co. (DOLE) following the produce company's initial public offering, one day after Moody's Investors Service raised its outlook on Dole to positive for similar reasons. The company is using the nearly $415 million of proceeds to repay debt. S&P raised the ratings one step to B, five notches below investment grade, and removed them from watch for possible upgrade, where they were placed last week after Dole priced its IPO. "The ratings on Dole reflect its highly leveraged financial profile and participation in the competitive, commodity-oriented and volatile fresh produce industry, which is subject to seasonality, as well as political and economic risks," said credit analyst Alison Sullivan. The rating agency said the stable outlook is the result of Dole's solid liquidity profile and S&P's expectation that the company's credit measures will remain close to current levels. The rating could be lowered if Dole's performance declines or its covenant cushion significantly weakens or both, S&P said. An upgrade would require a sustained improved performance, prudent financial policy and a rolling four-quarter average leverage ratio of less than 5-to-1. Dole's shares recently traded at $11.71, down 2.4%, in a general market selloff. The stock is down 6% from the IPO price of $12.50.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com