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Diamond Foods Closes $125MM ABL With Wells Fargo, Others

February 20, 2014, 07:43 AM

Diamond Foods, Inc. announced the completion of the refinancing of its debt capital structure.

"We are pleased with our new debt structure," said Raymond Silcock, Diamond's Chief Financial Officer. "In addition to substantially reducing interest expense, it will also provide us financial flexibility for the future."

As part of the refinancing, Diamond closed on a $125 million syndicated secured credit facility pursuant to an asset-based Credit Agreement, among the Company, as Borrower, Wells Fargo Bank, National Association, as Administrative Agent, Swing Line Lender, Syndication Agent, Sole Lead Arranger and Sole Bookrunner, SunTrust Bank as Documentation Agent, and the other Lenders party thereto. The ABL Credit Facility has a 4.5 year term, during which the Company may make aggregate drawings not to exceed the lesser of $125 million and an amount equal to the borrowing base specified in the ABL Credit Facility. Under the ABL Credit Facility, the Company has a $20 million sublimit for the issuance of letters of credit, and a Swing Line Facility of up to $12.5 million for same day borrowings. The ABL Credit Facility was used to refinance certain indebtedness of the Company, and may be used to finance the ongoing general corporate needs of the Company and its subsidiaries.

In addition, the Company entered into a $415 million 4.5 year syndicated secured credit facility pursuant to a term Credit Agreement among the Company, as Borrower, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent, Credit Suisse Securities (USA) LLC, Wells Fargo Securities, LLC, Barclays Bank PLC, BMO Capital Markets and SunTrust Robinson Humphrey, Inc., as Joint Lead Arrangers and Joint Bookrunners, Wells Fargo Bank, N.A., Barclays Bank PLC, Bank of Montreal and SunTrust Bank as Co-Documentation Agents, and the other Lenders party thereto. Under the Term Credit Facility, the Company made a single drawing of $415 million on the Closing Date. The Company may request an additional term loan of up to $100 million, plus an unlimited amount under certain terms and conditions set forth in the Term Credit Facility.

The ABL Credit Facility and the Term Credit Facility replace the Credit Agreement dated as of February 25, 2010 among the Company, Bank of America, N.A., as Administrative Agent, and the other agents and lenders party thereto, which terminated on February 19, 2014.

The company also closed its previously announced Rule 144A offering of $230 million in aggregate principal amount of 7.000% Senior Notes due 2019. Credit Suisse Securities (USA) LLC, Wells Fargo Bank, National Association, Barclays Capital Inc., BMO Capital Markets Inc., and SunTrust Robinson Humphrey Inc. acted as initial purchasers of the notes. The proceeds from the offering will be used to prepay outstanding indebtedness under the Company's existing credit facility and to redeem its senior unsecured notes due 2020 held by Oaktree, including a prepayment premium.

Diamond Foods is an innovative packaged food company focused on building and energizing brands including Kettle Chips, Emerald snack nuts, Pop Secret popcorn, and Diamond of California nuts.

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