SMITHFIELD, Va., June 30 VA-Smithfield-Foods
SMITHFIELD, Va., June 30 /PRNewswire-FirstCall/ -- Smithfield Foods, Inc.
(NYSE: SFD) announced today that it intends to offer $350 million aggregate
principal amount of its convertible senior notes due 2013 in a registered
underwritten public offering. In connection with the offering, Smithfield
intends to grant the underwriters a 30-day option to purchase up to $50
million aggregate principal amount of additional convertible notes solely to
cover over-allotments, if any.
The notes will be convertible subject to certain conditions into cash or a
combination of cash and shares of Smithfield's common stock. The interest
rate, conversion rate, offering price and other terms of the convertible notes
will be determined by negotiations between the underwriters and Smithfield.
Smithfield expects to use a portion of the proceeds from the offering to
fund the net cost of convertible note hedge and warrant transactions that
Smithfield expects to enter into with affiliates of certain underwriters of
the convertible notes (representing the cost to us of the convertible note
hedge transactions, partially offset by the proceeds to us of the warrant
transactions). In addition, Smithfield expects to use the proceeds from the
offering to pay down one of its short-term credit lines and its U.S. revolving
credit agreement. Receipt of net proceeds from the offering would also result
in termination of the commitments of the lenders under a bridge facility that
Smithfield put in place pending the sale of its beef operations, a transaction
it currently expects will close during the second quarter of its fiscal year
2009.
Smithfield intends to enter into privately-negotiated warrant transactions
relating to its common stock with the option counterparties, pursuant to which
it may be obligated to issue shares of its common stock. The convertible note
hedge transactions are expected to reduce the potential dilution to
Smithfield's common stock upon any conversion of the convertible notes.
However, the warrant transactions could separately have a dilutive effect to
the extent that the price of Smithfield's common stock exceeds the applicable
strike price of the warrants. If the underwriters exercise their over-
allotment option to purchase additional convertible notes, the notional size
of the convertible note hedge transactions and warrant transactions will be
automatically increased so that they also relate to a number of shares of
Smithfield's common stock initially issuable upon conversion of the additional
convertible notes.
In connection with establishing their initial hedge of these convertible
note hedge and warrant transactions, Smithfield has been advised that the
option counterparties and/or their respective affiliates expect to enter into
various over-the-counter derivative transactions with respect to its common
stock concurrently with or shortly after the pricing of the convertible notes
and, shortly after the completion of the underwriters' participation in the
distribution of the convertible notes, purchase Smithfield's common stock or
other securities, including the convertible notes, in secondary market
transactions. These activities could have the effect of increasing or
preventing a decline in the price of Smithfield's common stock concurrently
with or following the pricing of the convertible notes. In addition, the
option counterparties and/or their respective affiliates expect to modify
their hedge position following the pricing of the convertible notes from time
to time by entering into or unwinding various derivative transactions with
respect to Smithfield's common stock and/or by purchasing or selling
Smithfield's common stock or other securities, including the convertible
notes, in secondary market transactions (and are likely to do so during any
observation period related to the conversion of the convertible notes). These
activities could have the effect of increasing, preventing a decline in or
adversely impacting the value of Smithfield's common stock and/or the value of
the convertible notes.
Citi, Goldman, Sachs & Co. and JPMorgan are serving as joint book-running
managers for the offering.
The convertible notes offering is being made pursuant to a registration
statement filed with the Securities and Exchange Commission and available for
review on the SEC's website at www.SEC.gov. This press release is neither an
offer to sell nor a solicitation of an offer to buy the securities described
herein, nor shall there be any sale of these securities in any jurisdiction in
which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. The offering of the convertible notes will be made only by means
of a prospectus supplement and related prospectus. Copies of the preliminary
prospectus supplement and related prospectus for the offering can be obtained
from the joint-book running managers for the offering at the following
addresses or telephone numbers:
Citi: Citi-Brooklyn Army Terminal, 140 58th St., 8th Fl., Brooklyn, NY 11220
(800) 831-9146
Goldman, Sachs & Co.: Prospectus Department, 85 Broad St., New York, NY 10004
Fax (212) 902-9316 or email prospectus-ny@ny.email.gs.com
JPMorgan: Prospectus Library, 4 Chase Metrotech Center, CS Level, Brooklyn, NY
11245, (718) 242-8002
With sales of $11 billion, Smithfield Foods is the leading processor and
marketer of fresh pork and packaged meats in the United States, as well as the
largest producer of hogs.
This news release contains "forward-looking" statements within the meaning
of the federal securities laws. The forward-looking statements includes
statements concerning the Company's outlook for the future, as well as other
statements of beliefs, future plans and strategies or anticipated events, and
similar expressions concerning matters that are not historical facts. The
Company's forward-looking information and statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in, or implied by, the statements. These risks and uncertainties
include the availability and prices of live hogs and cattle, raw materials,
fuel and supplies, food safety, livestock disease, live hog production costs,
product pricing, the competitive environment and related market conditions,
hedging risk, operating efficiencies, changes in interest rate and foreign
currency exchange rates, access to capital, the investment performance of the
Company's pension plan assets and the availability of legislative funding
relief, the cost of compliance with environmental and health standards,
adverse results from on-going litigation, actions of domestic and foreign
governments, labor relations issues, credit exposure to large customers, the
ability to make effective acquisition, disposition, merger and joint venture
transactions and successfully integrate newly acquired businesses into
existing operations and other risks and uncertainties described under the
caption "Risk Factors" in the preliminary prospectus supplement and related
prospectus. Readers are cautioned not to place undue reliance on forward-
looking statements because actual results may differ materially from those
expressed in, or implied by, the statements. Any forward-looking statement
that the Company makes speaks only as of the date of such statement, and the
Company undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Comparisons of results for current and any prior periods are not intended to
express any future trends or indications of future performance, unless
expressed as such, and should only be viewed as historical data.
SOURCE Smithfield Foods, Inc.
