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JBS is also acquiring Bertin SA, one of Latin America’s largest beef producers. JBS says the two deals will make it "the largest multi-protein company in the world," displacing Arkansas-based Tyson Foods.
Pilgrim's Pride emerges from bankruptcy
Posted Monday, Dec. 28, 2009
By BARRY SHLACHTER
[email protected]
Pilgrim’s Pride emerged from bankruptcy Monday as a streamlined and profitable chicken producer that’s now majority-owned by a Brazilian meat giant and with the future of the company’s 81-year-old chairman, Lonnie "Bo" Pilgrim, in question.
"A chairman of the new board has not yet been decided," company spokesman Ray Atkinson said in an e-mail. Bo Pilgrim, who started the company with his brother in 1946, has appeared in numerous TV commercials with his pet chicken Henrietta, while his silhouette in pilgrim headgear has been used as a company symbol.
William Snyder of CRG Partners, a turnaround specialist who served as Pilgrim’s chief restructuring officer until Dec. 7, said he was told that Bo Pilgrim would stay on as a "major spokesman, the 'spiritual leader’ of the company and the chairman emeritus." But the board is to announce a successor as chairman this week.
A bankruptcy judge approved a deal in which JBS of Brazil invested $800 million in the Pittsburg-based company, receiving in return 64 percent of the shares and six of nine board seats. Existing shareholders received the rest of the shares.
The company announced that a consortium of banks, most of them foreign, extended a $1.75 billion loan, which along with JBS’ capital will allow Pilgrim’s to pay off all secured and unsecured creditors.
"Over the past 13 months, we have made significant improvements across our organization aimed at positioning Pilgrim’s Pride to respond quickly to the needs of the market," said Don Jackson, chief executive officer. Jackson was hired 10 days after the previous chief executive and chief operating officers were terminated in a major shake-up after the bankruptcy filing.
Changes include an emphasis on higher-margin prepared food products, said Snyder, of Southlake.
Crisis hit the company after it bought rival Gold Kist for $1.1 billion in December 2006, making Pilgrim’s the country’s biggest producer just before corn-based feed prices skyrocketed and wholesale chicken prices crashed. Pilgrim’s closed nine plants, canceled or renegotiated some 13,000 contracts and laid off more than 10,000 workers. Snyder acknowledged that many contract growers who borrowed heavily to build chicken houses to supply the now-closed plants will be in difficulty unless a rival producer like Tyson takes them on.
On Monday, Pilgrim’s shares, which at one point fell as low as 17 cents each, closed at $8.40 as an over-the-counter stock. The company announced that it will be relisted on the New York Stock Exchange today under the PPC symbol.
Snyder noted that not a single major U.S. bank that received bailout funds offered credit to a post-bankruptcy Pilgrim’s, forcing the company to look abroad. Aside from Dutch, British and Canadian banks, lenders included CoBank, a cooperative bank created by a group of U.S. agricultural lenders, he said.
JBS is also acquiring Bertin SA, one of Latin America’s largest beef producers. JBS says the two deals will make it "the largest multi-protein company in the world," displacing Arkansas-based Tyson Foods.
http://www.star-telegram.com/texas/story/1857123.html