Brazil-based meat giant JBS will acquire a majority stake in bankrupt US poultry processor Pilgrim’s Pride in a deal with an enterprise value of US$2.8bn.
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According to a filing with the US bankruptcy court of Texas, as part of Pilgrim’s Pride’s reorganisation plan all existing stock will be cancelled. The group will then sell 64% of new common stock to JBS for $800m, while existing shareholders will receive stock representing about 36% of the reorganised company in aggregate.
Proceeds from the sale of new stock will be used to repay Pilgrim’s Pride’s existing debts, the companies said in a joint statement. All creditors allowed claims will be paid in full, either in cash or by issuance of a new note, the companies emphasised.
The plan also calls for an exit facility for senior secured financing worth $1.75bn, to be provided by a group of lenders arranged by Joint Lead Arrangers CoBank, ACB and Rabobank.
“Over the past ten months, we have fundamentally restructured Pilgrim’s Pride as a market-driven company clearly focused on delivering the best service, selection and value to our customers as efficiently as possible,” said Pilgrim’s Pride president and CEO Don Jackson.
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By GlobalData“We have returned to profitability, the quality of our asset base has improved significantly and we are gaining additional business. We have been able to maximise the value of our company through our plan of reorganisation that achieves what precious few restructurings can: full repayment of allowed creditor claims and substantial retained value for existing stockholders,” he emphasised.
Jackson said that Pilgrim’s Pride was “truly excited” about the strategic growth opportunities available with JBS as a majority shareholder.
Commenting on the deal, JBS USA president and CEO Wesley Batista said that the company was “proud” to enter the US poultry market, where it expected to improve Pilgrim’s Pride’s competitiveness both domestically and internationally.
Pilgrim’s Pride said that it anticipates the plan to be confirmed by the bankruptcy court in time for the company to emerge from bankruptcy before the end of December.
