DOW JONES NEWSWIRES 
 

Smithfield Foods Inc. (SFD) entered credit pacts and completed a note offering, key moves aimed at giving the meat processor more financial flexibility to weather the economic downturn.

The company entered a $1 billion credit facility, closed a $625 million note offering and entered a new $200 million term loan with Rabobank Nederland that pushes back a big maturity by two years.

Smithfield has also been hurt by a slide in hog price slides after the H1N1 flu scare erupted in April, though the flu can't be caught from eating pork. The company has already cut jobs, closed plants and reduced its herd amid an industrywide softening of once-booming export demand. The company had its first annual loss in three decades in 2008.

"We believe these actions will enable us to weather the current economic environment and the results of our hog production segment, which we expect to begin to improve in the second half of fiscal 2010," said President and Chief Executive C. Larry Pope.

Smithfield last week increased the size of the note offering from the initially planned $500 million. The company a week ago also disclosed it was in talks for the new asset-backed credit facility. Smithfield will pay 10% interest on the notes, which priced at a little over 96 cents on the dollar.

The credit line, which is backed by essentially all of the company's U.S. units, includes an option to boost available credit to $1.3 billion. The line, along with the planned refinancing of a European revolver, will significantly reduce financial-covenant risks, said Smithfield.

The new $200 million term loan replaces an earlier one of the same amount, but the maturity is pushed back to August 2013 from August 2011.

Shares of the company recently traded down 1.3% at $13.95 amid a broad market sell-off. The stock has more than doubled in value since late November but remains down almost half in the past 11 months.

-By Jay Miller, Dow Jones Newswires; 212-416-2355; jay.miller@dowjones.com