Fitch: WTO Dispute Ruling Positive for Dole Food Co., But Timing of Benefit Uncertain

Business Wire, Feb 8, 2008

CHICAGO -- Fitch Ratings views the World Trade Organization's (WTO) recent dispute ruling in favor of the United States against the European Union (EU) on its banana tariff policy as a potential positive for Dole Food Company (Dole, IDR 'B-'; Outlook Negative). While a final resolution has not been reached and the timing of any changes to the current EUR176/metric ton tariff is still uncertain, additional evidence continues to surface that a possible reduction in EU banana tariffs could occur in the near-term. In late 2007, a WTO dispute panel ruled in favor of Ecuador that the current EU import regime was not in compliance with international trade rules. These rulings follow continued negotiations between the EU and Latin American banana producing countries to cut import duties and drop international trade suits.

On Jan 1, 2006, the European Union (EU) - the second largest importer of bananas behind North America - implemented a 135% increase in import tariffs on bananas. The financial implications of these changes have been substantial. The incremental cost of the tariff along with elevated bunker fuel shipping, procurement and packaging costs have contributed to an approximate 200 basis point reduction in Dole's EBITDA margin. Since Dec. 31, 2005, the company's margin has declined to 4.4% from 6.4%.

Dole's credit protection measures remain weak for the 'B-' rating category. For the latest twelve month (LTM) period ended Oct. 6, 2007, leverage (defined as total debt-to-operating EBITDA) was 8.2 times (x), interest coverage (defined as operating EBITDA-to-gross interest expense) was 1.5x and funds from operations fixed charge coverage was 1.2x. While a potential reduction in the current European Union (EU) banana tariff would result in improved credit statistics, Dole's overall cost base will continue to be pressured by elevated fuel and packaging costs which Fitch expects to remain high in the near-term.

Fitch currently rates Dole, its Bermuda-based financing subsidiary and its intermediate holding company as follows:

--Issuer Default Rating (IDR) 'B-';

--Secured asset-based revolving facility 'BB-/RR1';

--Secured term loan B 'BB-/RR1';

--Senior unsecured debt 'CCC /RR5'.

Solvest Ltd. (Bermuda-based Subsidiary)

--Issuer Default Rating (IDR) 'B-';

--Secured term loan C 'BB-/RR1'.

Dole Holding Company, LLC (Intermediate Holding Company)

--Issuer Default Rating (IDR) 'B-'.

Dole had approximately $2.4 billion in consolidated debt as of the quarter ended Oct 6, 2007. The Rating Outlook is Negative.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.