October 28, 2008
Pilgrim's Pride Corp's lenders have agreed to provide liquidity under credit facilities through November 26, as it seeks time to turn around the business.
With the news, Pilgrim's Pride shares increased 15 percent.
The company stated it has made significant progress in developing an appropriate and effective response to the issues facing Pilgrim's Pride.
In September, Pilgrim's Pride was expecting to report a quarterly loss that would lead it to default on a credit covenant due today.
High feed and fuel costs, and low meat prices have chipped away Pilgrim's Pride earnings, causing it to incur losses for consecutive quarters.
However, investment and agricultural experts said the company has a chance to shore up its business next year as feed costs drop, providing it can convince its lenders to give it a reprieve for a few more months.
Pilgrim's Pride on Monday estimated that the annualised benefit of current feed ingredient prices is about US$1 billion compared with the conditions seen when it last discussed quarterly earnings on July 29.
The company said it would exercise a 30-day grace period on a US$25.7 million interest payment due on November 3.
Pilgrim's Pride is now reviewing its businesses and has hired Lazard for advice on refinancing and recapitalisation. It is also working with Bain Corporate Renewal Group on making improvements to its operations.