May 7, 2009

Pilgrim's Pride Corp. is seeking bankruptcy court permission to sell its Farmerville, Louisiana, chicken-processing plant to Foster Farms for US$80 million, pending better offers at auction.

The Pittsburg, Texas, company had slated the plant for closure until Louisiana state officials stepped in and offered to pay US$40 million of Foster Farms' total bid in order to keep the plant open.

Pilgrim's Pride said Monday's (May 4) request to sell the plant is "the culmination of those efforts" to satisfy the company's goals and ease concerns about the impact the closure would have on the community, according to documents filed with the US Bankruptcy Court in Fort Worth, Texas.

Foster Farms would serve as the lead bidder to acquire the plant and five nearby facilities. The deal would keep 1,300 workers on the job.

Pilgrim's Pride is seeking court permission to hold an auction for the plant. If the court approves of the sale procedures, the deadline for competing bidders to make an offer would be May 15, and an auction would be scheduled for May 18. A court hearing to review the auction results would be held May 19.

Foster Farms, a Livingston, California, chicken and turkey producer, would collect a US$2.4 million breakup fee if it's bested at auction. Don Jackson, Pilgrim's Pride chief executive, once headed up Foster Farms' poultry division.

The Farmerville plant includes a processing facility, cook plant, hatchery, feed mill and protein-conversion plant. The facility is supplied by 127 independent chicken farmers.

It was among three plants Pilgrim's Pride said it would close in February, part of a bid to cut US$110 million in costs and scale back the company's production capacity.

Facing pressure from local officials in Douglas, Georgia, and El Dorado, Arkansas, where the other two plants are located, the company has since agreed to put those facilities up for sale as well, but no potential buyer has been found.

Pilgrim's Pride, which filed for bankruptcy in December 2008, has begun winding down operations at those two locations.