- Pros Say: More Retailers to Go Under
- European Central Banks Expected to Slash Rates
- Euro Stocks Rally on Expected Rate Cuts
- MGA Ordered to Stop Selling Bratz Dolls
- Euro Stocks to Open Flat before Rate Decisions
- Nomura to Cut Up to 1,000 Positions in London
- Capital One to Purchase Chevy Chase
- Australia Economy Injured as Vehicle Sales Crash
- Japan Faces Deep Recession, Central Banks Cut Rates
- 3-D In A Recession: Director James Cameron Weighs In
- Lightning Round: Microsoft, Motorola, NYSE and More
- Lightning Round OT: Hertz, Textron and More
- Mad Mail: Cramer's Plan for the SEC
- The Plaxico Burress Good Judgment Award
- Cramer's Call on Celgene
- Your First Move For Thursday December 4th
- Web Extra: Fast & Furious Trades For Thursday
- Cramer's M&A Plays
Text Size 
Pilgrim's Pride, the largest U.S. chicken company, filed for voluntary bankruptcy protection after struggling this past year with high feed costs and low meat prices.
The news sent shares of Pilgrim's Pride down 46 percent and weighed on stocks of competitors Tyson Foods and Sanderson Farms.
 |
Pilgrim's Pride intends to operate normally while it develops a reorganization plan and said that after making a round of cutbacks earlier this year, it had no plans to close additional plants or lay off more employees.
"This was not a surprise,'' Paul Aho, economist at the consulting firm Poultry Perspective, said of the filing. "It was a horrible year for the poultry industry.''
While a bankruptcy filing had been anticipated by analysts after Pilgrim's sought repeated extensions from creditors on a debt covenant, there apparently was hope it could be avoided.
"Bankruptcy was anticipated but not a given,'' Ken Goldman, J.P. Morgan analyst, said in a research note. "Right or wrong, some investors believed that Chapter 11 could be avoided.''
For Pilgrim's Pride, which produces about a quarter of the nation's chicken, conditions were worse than for its competitors.
In addition to high feed costs, the company was on the wrong side of grain hedges and was hurt by debt obligations from its 2006 acquisition of smaller rival Gold Kist.
"After careful consideration of all available alternatives, the company's Board of Directors determined that a Chapter 11 filing was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring,'' Chief Executive Clint Rivers said in a statement.
Nearly $1 Billion Loss
In a Securities and Exchange filing on Friday, the company said it anticipated a net loss for the fiscal year ended September 27 of $998.6 million, or $14.40 per share.
"We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability,'' Rivers said.
Its Mexico operations and certain U.S. operations were not included in the bankruptcy filing and will operate outside of the Chapter 11 bankruptcy process, the company said.
In conjunction with the filing, Pilgrim's asked for approval to enter into a $450 million debtor-in-possession financing facility arranged by Bank of Montreal as lead agent.
If approved by the bankruptcy court, the financing will provide an immediate source of funds and enable Pilgrim's Pride to cover obligations for its daily operations, including timely payment of wages, the company said.
Pilgrim's Pride shares [PPC
Loading...
()
] were down more than 40 percent, at near 6 cents per share on Monday afternoon. The company's yearly high was $29.59 on December 11, 2007.
Tyson Foods shares [TSN
Loading...
()
] were down more than 7 percent at above $6, and Sanderson Farms [SAFM
Loading...
()
] shares were off nearly 10 percent at below $29.
Print
Email
Del.icio.us
Digg It
Data is a real-time snapshot *Data is delayed at least 15 minutes