September 11, 2009

Pilgrim's Pride Corporation is seeking to keep control of its Chapter 11 restructuring as it prepares to submit its bankruptcy-exit plan before the end of the month.

 

The chicken producer is asking the US Bankruptcy Court in Fort Worth, Texas, to extend by three months the time in which it has the exclusive right to submit the plan detailing how it will address its US$2.7 billion debt load and emerge from bankruptcy.

 

After spending "a significant amount of time" negotiating a restructuring plan with its stakeholders, Pilgrim's Pride said it's nearly ready to put forth a plan that should see it leave bankruptcy behind by the year's end.

 

"The debtors are in the final stages of developing a plan of reorganization and expect to file it with the court by Sept. 30, 2009, and emerge from Chapter 11 by Dec. 31, 2009," the company said in court papers.

 

Pilgrim's Pride is specifically seeking to extend its so-called exclusivity period to Dec. 31 from Sept. 30, and it seeks to extend the time it has to get its creditors on board with the plan to March 1, 2010, from Nov. 30.

 

The company's request comes as it's reportedly ironing out a deal to be acquired out of bankruptcy by Brazilian beef producer JBS SA.

 

The deal, which The Wall Street Journal reported news of last week and which hasn't been publicly announced, would declare JBS and its roughly US$2.5 billion offer the leading bid at an auction of the chicken producer's assets.

 

According to the Journal, the deal would pay off US$1.2 billion in secured debt, US$1 billion in unsecured debt and would leave millions of dollars left over for the company's shareholders, who often don't receive any payments in bankruptcy proceedings.

 

Pilgrim's Pride said it believes that the restructuring plan it's currently working on "will garner the support of all stakeholders" and said it's not seeking the extension as a bargaining tactic with creditors.

 

The extension will help, not harm, creditors, Pilgrim's Pride added, because it provides a greater chance for creditors to recover more of what they're owed.

 

"Termination of the exclusive periods, on the other hand, could give rise to the threat of multiple plans and a contentious confirmation process resulting in increased administrative expenses and consequently diminishing returns to the debtors' creditors," Pilgrim's Pride said.

 

The bankruptcy court will consider the proposed extension - the company's second such request since it filed for bankruptcy late last year - at a Sept. 29 hearing.

 

The Pittsburgh, Texas, chicken producer has been under Chapter 11 protection since Dec. 1, 2008.