Dole Food Co., the world's largest fresh-fruit and vegetable producer, is selling land in Hawai'i 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, Calif.-based company, whose $350 million issue maturing in 2009, a third of the debt outstanding, has dropped 13 percent this year. Credit-default swaps suggest a 76 percent chance of default in the next five years, according to JPMorgan Chase & Co.

Closely held Dole, founded in Hawai'i in 1851, is raising cash after European banana tariffs more than doubled to $277 per metric ton 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 to customers, focusing instead on battling Chiquita Brands International Inc. to increase its 12 percent 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, Calif. "We all know that in a worst-case scenario there are deep pockets involved here, too, but that's not even on the table right now."

Western Asset Management 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, Forbes magazine reported. He issued $1.6 billion bonds in 2003 to buy Dole from public shareholders, valuing the company at $2.5 billion. He stepped down as chief executive officer of Dole in June 2007.

Dole agreed in February to sell 2,000 acres in Hawai'i for about $39 million. The company owns 28,000 acres of pasture, forest and farmland on O'ahu 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, also may be sold, Dole said.

Trepp said that Dole Chief Financial Officer Joseph Tesoriero told investors at a conference held last month in Orlando, Fla., by Lehman Brothers Holdings Inc. that the company had "locked up $120 million in asset sales." Dole will use that and the proceeds of anticipated asset sales to help pay off debt, she cited Tesoriero as saying.

Murdock and Chief Executive Officer David DeLorenzo declined to be interviewed or answer questions by e-mail, said Marty Ordman, a company spokesman. The company would not comment, Ordman said.

Asset sales haven't yet improved the price of Dole bonds. An 8.63 percent note maturing in May 2009 yields 21.5 percent, or 19.8 percentage points more than comparable U.S. Treasuries, according to Trace, the bond pricing system of the Financial Industry Regulatory Authority. Chiquita's 7.5 percent note maturing in November 2014 was trading at 5.4 percentage points above Treasuries.

Dole "investors are concerned about the company's ability to refinance its upcoming maturity," Carla Norfleet Taylor, a credit analyst for Fitch Ratings Ltd. in Chicago, said March 10. She rates the bonds CCC+, or seven levels below investment grade, and said bondholders would have a "below average" chance of recovering their money if Dole defaults.

All four Dole bonds are at distressed levels compared with Treasuries. Debt trading at a spread of 1,000 basis points or more is considered distressed, indicating investors are concerned about a possible default.

Credit-default swap contracts tied to Dole's bonds were quoted yesterday at 30 percent upfront and 5 percent a year, according to CMA Datavision. That means it would cost $3 million in advance and $500,000 a year to protect $10 million in Dole bonds for five years.

Dole has lagged behind competitor Fresh Del Monte Produce Inc., whose shares have risen 79 percent in 12 months, in cutting costs. Dole's operating margin last year was 2.9 percent, versus 5.5 percent for Fresh del Monte, according to Bloomberg data. Interest expenses during the past two years were nearly twice Dole's $209 million operating income. The company hasn't posted a profit for two straight years.