Pilgrim's Pride: First Day Motions Approved

US - Pilgrim's Pride Corporation has received court approval of 'First Day' motions. It has obtained interim approval to borrow up to $365 million in DIP financing, which will ensure operations will continue uninterrupted.

4 December 2008

3 minute read

North America

Pilgrim's Pride Corporation, together with certain of its wholly owned subsidiaries (collectively, the 'Company'), has announced the approval of 'first day' motions by the United States Bankruptcy Court for the Northern District of Texas (the 'Court'). The Company received interim approval to access $365 million of its $450 million debtor-in-possession financing facility arranged by Bank of Montreal as lead agent (the 'DIP financing'). The DIP financing, combined with cash generated from ongoing operations, will allow the Company to satisfy its customary business obligations, including the timely payment of employee wages and payments to vendors. The final DIP hearing is scheduled for December 17, 2008.

The Company also announced that it received Court approval to pay pre-petition employee wages, health benefits, and other employee obligations, among other things, during its restructuring under Chapter 11. Additionally, the Company is authorized to continue to honor all of its current customer policies without interruption, including marketing development, rebate and prepayment programs, coupon programs, product replacement and customer refunds.

"The Court's approval of our DIP financing and first day motions is a positive first step toward a successful restructuring," said Clint Rivers, president and chief executive officer. "Throughout this process, we will continue to operate our business without interruption, including paying employee wages and purchasing the goods and services necessary to serve our customers. We have been working hard to address the operational and financial challenges we currently face, and this restructuring will help us not only meet these challenges, but also enhance the efficiency of our operations, strengthen our balance sheet and position Pilgrim's Pride to compete more effectively in the future."

Additionally, the Company noted that the New York Stock Exchange (NYSE) has suspended Pilgrim's Pride common stock as a result of the Company's filing of its Chapter 11 petitions. The Company's common stock is now quoted on the Pink Sheets Electronic Quotation Service and has been assigned the ticker symbol "PGPDQ.PK."

As previously announced, the Company filed voluntary Chapter 11 petitions on December 1, 2008. The Chapter 11 cases are being jointly administered under case number 08-45664. The Company's operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual, outside of the Chapter 11 process.