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Pilgrim's Pride Reaches Agreement with Banks

by 5m Editor
27 June 2011, at 8:15am

US - Pilgrim's Pride Corporation announced that it has completed an agreement with its bank group to amend the financial covenants in its credit facility, effective on 23 June.

The amendment suspends the existing fixed-charge coverage covenant and the senior secured debt covenant until the fourth quarter of fiscal 2012. The amendment also sets certain financial covenant levels at terms more favorable to the company. Following the suspension period, the financial covenants will be calculated under amended terms of the credit facility. In addition, JBS USA Holdings, the majority equity holder in Pilgrim's, has agreed to provide a $50 million subordinated loan in support of the company. Details regarding the amendment are outlined in the company's Form 8-K filed on 24 June with the Securities and Exchange Commission.

Bill Lovette, president and chief executive officer, said: "This amendment will provide Pilgrim's with financial flexibility to meet the challenges posed by continued volatility in the grain markets and weak pricing for chicken in the domestic market. Since the beginning of the year, we have been focused on strengthening our balance sheet by reducing inventories, improving accounts receivable and keeping a tight rein on capital expenditures. We are making good progress on these initiatives, which have allowed us to maintain strong liquidity, and will continue to work toward those goals. We took this proactive step to demonstrate to our stakeholders that Pilgrim's has the support of our bank group and JBS USA as we work to improve our business and operations."

CoBank ACB and Rabobank are the lead lenders in the bank group that provided the credit facility to Pilgrim's.