Tyson Foods 2009 Annual Report Download - page 56

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2016 Notes
The 2016 Notes carried an interest rate at issuance of 6.60%, with an interest step up feature dependent on their credit rating. On
November 13, 2008, Moody’s Investor Services, Inc. downgraded the credit rating from “Ba1” to “Ba3.” This downgrade increased
the interest rate from 7.35% to 7.85%, effective beginning with the six-month interest payment due April 1, 2009.
GO Zone Tax-Exempt Bonds
In October 2008, Dynamic Fuels received $100 million in proceeds from the sale of Gulf Opportunity Zone tax-exempt bonds made
available by the federal government to the regions affected by Hurricanes Katrina and Rita in 2005. These floating rate bonds are due
October 1, 2033. In November 2008, we entered into an interest rate swap related to these bonds to mitigate our interest rate risk on a
portion of the bonds for five years. We also issued a letter of credit as a guarantee for the entire bond issuance. The proceeds from the
bond issuance can only be used towards the construction of the Dynamic Fuels’ facility. Accordingly, the unused proceeds are
recorded as non-current Restricted Cash in the Consolidated Balance Sheets. We expect the majority of the unused proceeds will be
used by our second quarter of fiscal 2010.
Debt Covenants
Our revolving credit facility contains affirmative and negative covenants that, among other things, may limit or restrict our ability to:
create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or
transfer assets; pay dividends or make other payments in respect to our capital stock; amend material documents; change the nature of
our business; make certain payments of debt; engage in certain transactions with affiliates; and enter into sale/leaseback or hedging
transactions, in each case, subject to certain qualifications and exceptions. If availability under this facility is less than the greater of
15% of the commitments and $150 million, we will be required to maintain a minimum fixed charge coverage ratio.
Our 2014 Notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: incur
additional debt and issue preferred stock; make certain investments and restricted payments; create liens; create restrictions on
distributions from restricted subsidiaries; engage in specified sales of assets and subsidiary stock; enter into transactions with
affiliates; enter new lines of business; engage in consolidation, mergers and acquisitions; and engage in certain sale/leaseback
transactions.
Condensed Consolidating Financial Statements
Tyson Fresh Meats, Inc. (TFM), our wholly-owned subsidiary, has fully and unconditionally guaranteed the 2016 Notes. TFM and
substantially all of our wholly-owned domestic subsidiaries have fully and unconditionally guaranteed the 2014 Notes. The following
financial information presents condensed consolidating financial statements, which include Tyson Foods, Inc. (TFI Parent); Tyson
Fresh Meats, Inc. (TFM Parent); the other 2014 Notes' guarantor subsidiaries (Guarantors) on a combined basis; the elimination
entries necessary to reflect TFM Parent and the Guarantors, which collectively represent the 2014 Notes' total guarantor subsidiaries
(2014 Guarantors), on a combined basis; the 2014 Notes' non-guarantor subsidiaries (Non-Guarantors) on a combined basis; the
elimination entries necessary to consolidate TFI Parent, the 2014 Guarantors and the Non-Guarantors; and Tyson Foods, Inc. on a
consolidated basis, and is provided as an alternative to providing separate financial statements for the guarantor(s). Certain prior
period amounts have been recast to conform with current year presentation and to reflect the legal subsidiary ownership structure as
of October 3, 2009.