Moody's upgrades Chiquita notes

Moody's Investors Service said it changed Chiquita Brands International Inc.'s outlook to stable from developing, upgraded its 7 7/8% senior secured notes to Ba3 (LGD3) from B1 (LGD3) and affirmed the company's B2 corporate family rating, B2-PD probability of default rating and SGL-3 speculative grade liquidity rating.

The upgrade of the notes is a result of a change in the company's capital structure. The agency said the company partially repaid its 7 7/8% notes due 2021 and 4.25% convertible notes due 2016 using proceeds from related-party loans (together with a capital contribution in the case of the 7 7/8% notes).

The change in the outlook to stable and the affirmation of the other ratings reflects the completion of the acquisition of the company and the associated filing of its financial statements in its 2014 10-K filing. The agency explained that the outlook was changed to developing in March 2014 as a result of a number of uncertainties associated with Chiquita's announcement that it planned to merge with Fyffes, plc, which ultimately did not occur.

The B2 corporate family rating incorporates Chiquita's high though improving financial leverage profile, ongoing business volatility, a moderate degree of litigation overhang and the company’s vulnerability to sharp performance fluctuations, Moody’s said.

The agency said the rating favorably considers Chiquita's geographic diversification, well-established brands and adequate liquidity profile.

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