June 25, 2011


Pilgrim's Pride changes loan agreement on feed price pressure



Pilgrim's Pride Corp., facing losses and unrelentingly high feed prices, changed its loan covenants to gain more flexibility in clearing its debt.


The new terms help Pilgrim's Pride meet the challenges posed by continued volatility in the grain markets and weak pricing for chicken in the domestic market, said Bill Lovette, president and chief executive officer.


Its shares rose 35 cents, or 6.4%, to US$5.74 in morning trading Friday (Jun 24).


The Greeley, Colo.-based company said the new deal suspends its existing fixed-charge coverage covenant and its senior secured debt covenant until the fourth quarter of fiscal 2012. The amendment also sets some financial covenant levels at terms "more favourable" to the company, though it did not give specifics.


Also, JBS Holdings, which owns most of Pilgrim's Pride shares, agreed to give Pilgrim's Pride a US$50-million loan.


In April, Pilgrim's Pride said its first-quarter loss had more than doubled, as the company faced higher prices for feed and was forced to liquidate some of its inventory. Revenue rose 15% to US$1.89 billion.


The company has been implementing price increases and restructuring its business units to boost results.

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