Reuters: Deals: Diamond Foods reaches forbearance agreement with lenders

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Diamond Foods reaches forbearance agreement with lenders Mar 21st 2012, 21:10 Wed Mar 21, 2012 5:10pm EDT (Reuters) - Diamond Foods Inc (DMND.O) said it reached an agreement with its lenders to get continued access to its credit agreement and the company agreed to suspend dividend payments. Some analysts had said Diamond's expected earnings restatement resulting from improper accounting of walnut payments would put it in breach of its debt covenants. Under the amended agreement, Diamond, maker of Kettle chips and Pop Secret popcorn, will have access to its credit facility through June 18, the company said in a statement. Diamond also said its lenders will not seek remedial action under the credit agreement until June 18. The company said the interest rate on its credit facility will increase by 75 basis points and it also agreed to pay a one-time fee to its lenders. In February, Diamond said it would restate earnings for 2011 and 2010 and removed its top management after its audit committee found that payments to walnut growers had been improperly booked in those years.

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