US chicken producer Pilgrim’s Pride has voluntarily filed for Chapter 11 bankruptcy protection to address “short-term operational and liquidity challenges”.
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Pilgrim’s Pride’s profits have been hit by soaring feed costs and weak poultry prices in recent months. The company’s high level of indebtedness, primarily the result of its takeover of Gold Kist last year, also proved problematic amid turmoil in the credit markets.
In a statement released today (1 December) the company said that its operations are expected to continue “as normal” throughout the bankruptcy process, during which time it will develop a reorganisation plan to resolve operational and liquidity issues.
“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.
“We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability,” he added.
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By GlobalDataIn conjunction with the bankruptcy filing, Pilgrim’s Pride is seeking approval to enter into a US$450m debtor-in-possession financing facility.
If approved by the Court, the DIP financing will provide an immediate source of funds, enabling Pilgrim’s Pride to “satisfy the customary obligations” associated with the daily operations, including the timely payment of employee wages and other obligations.
The embattled chicken manufacturer has also asked for additional authorisations, such as permission to continue paying employees.
During the Chapter 11 process, suppliers should expect to be paid for post-petition purchases of goods and services, the company added.
