US: Banks demand restructuring chief at Pilgrim's
Lenders to Pilgrim's Pride Corp. have ordered the ailing US poultry group to appoint a chief restructuring officer as part of their agreement to give the company more time to sort out its financial problems.
The banks behind Pilgrim's yesterday (27 October) agreed to extend their temporary waiver under the company's credit facilities and provide the firm with continued liquidity until 26 November.
However, as part of that agreement, the lenders have stipulated that Pilgrim's must install a chief restructuring officer in a matter of days.
In a regulatory filing, the lenders said the waiver "requires the company to engage a chief restructuring officer within ten business days after the company receives a list of candidates for such [a] position".
Pilgrim's has suffered from soaring feed costs and weak poultry prices in recent months. The company's debts have also proved a concern for investors amid the recent chaos in the credit markets.
The company said the agreement with its lenders would give it the "flexibility" it needs to come up with a plan to "refinance and recapitalise the business".
"Lenders have been constructive and supportive throughout this challenging period and we believe that like us, they are encouraged by recent industry egg set data and the continued decline in grain and other feed ingredient prices, which if sustained should bode well for our company and the industry as a whole," Pilgrim's said.
Industry watchers, however, remained more cautious about the prospects for the company. Ann Gilpin, an analyst at Morningstar, said the extension of the temporary waiver was "positive news for equity holders".
However, she added: "We are not changing our fair value estimate or uncertainty rating as a result of this extension. We doubt that industry conditions will dramatically turn around in the next few weeks, even though the firm is taking the right steps to manage profitability. Come 26 November, should the lenders decide not to give Pilgrim's Pride another extension, the firm could be in serious financial distress, possibly bankruptcy."
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