Diamond agrees to amendment, halts dividend
March 22, 2012
by Eric Schroeder
SAN FRANCISCO — Diamond Foods Inc. said it has reached an agreement with its lenders to amend its credit agreement, a move that will allow the company to keep its credit line open until June 18. The amendment requires Diamond to suspend dividend payments to shareholders. Additionally, the company said it will be charged 75 basis points more on its credit line and must pay a one-time fee of 25 basis points.
“I am pleased to have reached this agreement with our lender group,” said Rick Wolford, interim president and chief executive officer. “This agreement enables Diamond to continue to work through our restatement process and with our financial adviser to develop capital alternatives to strengthen Diamond’s balance sheet and reduce leverage. Also, during this period, Diamond will continue working to rebuild our walnut grower relationships, to take steps required to ensure Diamond’s competitiveness and ongoing success in the walnut industry and, importantly, to continue to successfully support the growth of our snack brands.”
Diamond Foods on March 13 retained Dean Bradley Osborne Partners L.L.C. as a financial adviser to assist the company in addressing its financial reporting and restatement issues. In early February, the company announced the results of an internal investigation and said it would be restating its earnings for fiscal years 2010 and 2011 due to certain crop payments made to walnut growers in August 2010 and September 2011. As a result of the investigation, Michael J. Mendes, chief executive officer, and Steven M. Neil, chief financial officer, left the company.