SMITHFIELD, Va., July 1 /PRNewswire-FirstCall/ -- Smithfield Foods, Inc. (NYSE: SFD) announced today the pricing of its $350 million aggregate principal amount convertible senior notes due 2013 through a registered underwritten public offering. In connection with the offering, Smithfield granted the underwriters a 30-day option to purchase up to $50 million aggregate principal amount of additional convertible notes solely to cover over-allotments, if any. The closing of the offering is expected to occur on July 8, 2008, subject to customary closing conditions.

The senior unsecured notes will bear interest at a rate of 4.00% per year, payable semi-annually in arrears, beginning on December 30, 2008.

The notes will be convertible subject to certain conditions into cash or a combination of cash and shares of Smithfield's common stock, at an initial conversion rate of 44.0820 shares of common stock per $1,000 principal amount of the notes. The conversion rate is subject to adjustment in certain circumstances. The initial conversion rate represents an initial conversion price of approximately $22.68 per share, or a conversion premium of approximately 30% to the closing price of Smithfield's common stock on July 1, 2008, which was $17.45 per share.

Smithfield may not redeem the Notes prior to their maturity. Holders of the notes may require Smithfield to purchase all or a portion of their notes, in cash, upon the occurrence of certain fundamental changes involving Smithfield.

Smithfield estimates that the net proceeds of this offering will be approximately $338.6 million (or approximately $387.3 million if the underwriters' over-allotment option is exercised in full), after deducting the underwriting discounts and commissions and estimated offering expenses. Smithfield expects to use approximately $45.1 million of the proceeds from the offering to fund the net cost of convertible note hedge and warrant transactions that Smithfield expects to enter into with affiliates of certain underwriters of the convertible notes (representing the cost of the convertible note hedge transactions, partially offset by the proceeds of the warrant transactions). In addition, Smithfield expects to use the net proceeds from the offering to pay down $100 million of one of its short-term credit lines and to use the balance to reduce amounts outstanding under its U.S. revolving credit agreement.