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Pilgrim's Pride Files for Bankruptcy

by 5m Editor
2 December 2008, at 9:28am

US - Pilgrim's Pride Corporation has filed for voluntary Chapter 11 petitions to address short-term operational and liquidity challenges. It says normal operations will continue.

Pilgrim's Pride Corporation, together with certain of its wholly owned subsidiaries (collectively, the 'Company'), has announced that in an effort to address certain short-term operational and liquidity challenges, it filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States 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. The Company's 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.

"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. We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability. We are proud of the consistently high quality of our products, our valued customer relationships and the high level of service we provide."

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.