Dole Food raising cash by selling land

Dole Food Co. is selling land in Hawaii and California to avoid default on $350 million in bonds.

The asset sales may relieve pressure on 84-year-old billionaire Chairman David Murdock to make an emergency cash infusion into the Westlake Village-based company. Credit-default swaps suggest a 74% chance of default in the next five years, according to a JPMorgan Chase & Co. valuation model.

Closely held Dole, founded in Hawaii in 1851, is raising cash after European banana tariffs more than doubled in 2006 and shipping costs rose, eroding the company’s ability to repay debt. The company, which had revenue of $7 billion last year, hasn’t passed on the tariff increase, focusing instead on battling Chiquita Brands International Inc. to increase its 12% share of the European market.

“They’re aggressively selling assets and they’re working opportunistically to refinance their 2009 maturity,” said Suzanne Trepp, an analyst with Legg Mason Inc.-owned Western Asset Management Co. in Pasadena. The company holds Dole bonds in the $600 billion it manages.

Murdock, who rescued Dole from bankruptcy more than two decades ago, is worth $4.7 billion, according to Forbes magazine. He issued $1.6 billion in new and refinanced bonds in 2003 to buy Dole from public shareholders, valuing the company at $2.5 billion. He stepped down as chief executive of Dole in June.

Dole agreed in February to sell 2,000 acres in Hawaii for about $39 million, according to regulatory filings. The company owns 28,000 acres of pasture, forest and farmland in Oahu and relies on less than 3,000 acres of that land to farm pineapples, coffee and cacao.

Land in California and a flower unit, worth a combined $76.2 million, may also be sold, Dole said.