December 01, 2008
Too many chickens can spoil the roost. An oversupply of chickens was one of several significant challenges Pilgrim's Pride Corp. (NYSE: PPC), cited today as contributing to its decision to file for Chapter 11 bankruptcy with certain of its wholly owned subsidiaries.
In an effort to address certain short-term operational and liquidity challenges, Pilgrim's Pride filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas (the "Court").
The company's operations are expected to continue as normal throughout the bankruptcy process while it develops a reorganization plan to resolve its temporary operational and liquidity issues. Its operations in Mexico and certain operations in the United States were not included in the filing and will continue to operate outside of the Chapter 11 process.
The company has hatcheries, chicken processing and feed mill facilities nearby in Canton and Gainesville.
"Over the past year, Pilgrim's Pride has faced a number of significant challenges including high feed-ingredient costs, an oversupply of chicken, weak market pricing and softening demand," said Clint Rivers, president and chief executive officer. "After careful consideration of all available alternatives, the company's Board of Directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring."
Local creditors include:
• Airgas Dryice of Duluth Trade debt $1 million
• DST Transportation of Gainesville Trade debt $367,000
• Ryder of Alpharetta Trade debt (disputed) $267,806
As of Sept. 27, the company's total assets were $3.57 billion, with debts of $2.72 billion.
Rivers said the company expects to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability.
In conjunction with the filing, the company is seeking approval to enter into a $450 million debtor-in-possession financing facility arranged by Bank of Montreal as lead agent (the "DIP financing"). If approved by the court, the DIP financing will provide an immediate source of funds to the company, enabling it to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations.
The company has asked the court for additional authorizations, including permission to continue paying employee wages and salaries, to provide employee benefits without interruption, and to continue with its various customer programs.
During the Chapter 11 process, suppliers should expect to be paid for post-petition purchases of goods and services in the ordinary course of business.
"On behalf of the entire management team, I would like to thank our customers and suppliers for their continued support during this process. I also want to recognize our dedicated employees, whose continued support and commitment are crucial to the future success of our company. We are all dedicated to making this financial restructuring a success,"Mr. Rivers concluded.
Additional information about the restructuring is available at the company's Web site www.pilgrimspride.com. For access to Court documents and other general information about the Chapter 11 cases, visit www.kccllc.net/pilgrimspride.
About Pilgrim's Pride
Pilgrim's Pride Corporation employs approximately 48,000 people and operates 35 chicken processing plants and 11 prepared-foods facilities. Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico. For more information, visit www.pilgrimspride.com.
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