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