Smithfield Foods has entered into a US$1bn asset-based revolving credit facility with JPMorgan Chase Bank.


The new credit agreement replaces the company’s previous US revolving credit facility and it includes an option to increase available commitments to $1.3bn in the future.


The new credit facility is scheduled to mature on 2 July 2012 and is guaranteed by substantially all of the US subsidiaries of the company.


The meat processor also announced that it has closed its previously announced offering of $625m of senior secured notes due July 2014. The notes accrue interest at a rate of 10% per annum and have been issued at a price equal to 96.201% of their face value.


Smithfield said it intends to use the proceeds from the notes offering to repay borrowings and terminate commitments under its existing US revolving credit facility, repay and refinance other indebtedness and for other general corporate purposes.


The company has also entered into a new $200m term loan with Rabobank Nederland as administrative agent that will mature in August 2013. The new term loan replaces the company’s previous $200m term loan with Rabobank Nederland that was scheduled to mature in August 2011.


Larry Pope, president and CEO of the company, said: “With the transactions we consummated today, we have taken decisive and proactive steps to restructure our balance sheet. The new credit facility, new senior secured notes due 2014 and new Rabobank term loan provide a clear path to repayment of near-term obligations and the extension of certain mid-term maturities, while maintaining more than adequate liquidity.


“In addition, the new credit facility, in conjunction with our intention to refinance our present European revolver, will begin to significantly reduce our exposure to financial covenant risks. We believe these actions will enable us to weather the current economic environment and the results of our hog production segment, which we expect to begin to improve in the second half of fiscal 2010.”


In June, Smithfield reported a fourth-quarter loss of almost US$79m, deepening its losses over the fiscal year.


The company booked a net loss of US$78.8m for the three months to 3 May as losses from its hog production unit continued. The result compared to net income of US$2.4m a year earlier.