Chiquita Slips on Salad Bet

Company’s cash dwindles after 2005 purchase of Fresh Express fails to pan out.

Chiquita Brands International Inc. is burning through cash faster than any U.S. packaged-foods company after its $855 million 2005 purchase of Fresh Express Inc. in a bid to diversify into salads failed to raise profit.

The owner of the namesake banana label is consuming funds at a rate that would exhaust its $53 million of cash in fewer than eight months, down from 131 months two years ago, according to data compiled by Bloomberg. The firm’s $200 million 4.25 percent convertible securities, which traded above face value last year, have dropped to 79 cents on the dollar.

Total Debt

The company’s $589 million of total debt is the most relative to earnings among 31 packaged foods and meats companies in the U.S. with more than $100 million owed, Bloomberg data show. Leverage of 7.55 times in the three months ended June 30 was up from 4.09 a year ago and higher than 5.71 at similarly- rated Dole Food Co.

Salad Business

“We expect this to result in increased sales, reduced costs and strong bottom-line performance,” Aguirre said.

‘Tight’ Liquidity

Chiquita has an average maturity of 3.4 years for its $306 million of bonds outstanding that include $106 million of the 7.5 percent notes. Those bonds traded at 98.5 cents on the dollar on Aug. 8 to yield 8.25 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

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