Pilgrim’s Pride Files for Voluntary Chapter 11 Bankruptcy
Normal operations to continue…
Pilgrim’s Pride ( PPC) today 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. Debt service and cash flow have been hampered by the financial crunch and the increase in feed costs, partly due to the use of corn for ethanol production. Certain foreign markets have been protecting domestic chicken production industries by restricting imports and there is a worldwide oversupply of chickens.
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.
This sounds like a responsible approach to, what we all hope, is a temporary financial hardship. This could be a model for the auto industry. By taking a pro-active step into bankruptcy, Pilgrim’s Pride has diffused any panic on the part of suppliers and customers. They already have worked out some of the financing problems as well.
Pilgrim’s Pride does not have any operations in Delaware. In fact the closest PP chicken processing facilities to us are in Morefield, WV and Broadway, VA. Delaware has a significant chicken processing industry that is dominated by the privately held Allens Farms operation. Since Allen’s is a private operation we do not know how bad things may be for them. The president of Allen Family Foods, Charles Allen, was recently quoted as saying business for the Seaford, Delaware company is bad because of “decreased international business, increased costs and less demand”.
Quick Facts for Pilgrim’s Pride:
• Pilgrim’s Pride Corporation (NYSE: PPC) is the largest chicken company in the United States and the second-largest in Mexico.
• The company’s net sales in fiscal 2007 totaled $7.6 billion.
• Pilgrim’s Pride is currently ranked #327 on the Fortune 500 list of largest U.S. corporations.
• Pilgrim’s Pride employs approximately 50,000 people in the United States and Mexico.
• The company has major facilities in Texas, Alabama,Arkansas, Florida, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, Puerto Rico and Mexico, as well as other facilities in Arizona and Utah.
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