Pilgrim’s Pride Corp., once the largest chicken processor in the United States, has emerged from bankruptcy and is ready to join with its new buyer and issue new stock, according to a document filed with the U.S. Securities and Exchange Commission on Monday.
Texas-based Pilgrims’ Pride filed for Chapter 11 bankruptcy reorganization a little more than a year ago and prepared the way for its acquisition by Brazilian beef and pork producer JBS SA with the Monday filing.
JBS will give its shareholders a vote on the plan today in a special stockholder meeting at the company’s headquarters in Sao Paulo, Brazil.
The merged company will rival Tyson Foods Inc. of Springdale in size and its offerings of beef, pork and chicken in the United States.
The SEC document states that, on Monday, all Pilgrim’s Pride stock was canceled and converted to rights to receive shares of the new stock when issued by the merged companies.
The filing also includes the Amended and Restated Certificate of Incorporation and the Restated Corporate Bylaws for the new company, which will continue operation under the Pilgrim’s Pride name.
The company will issue 800 million shares of Common Stock and 50 million shares of preferred stock, the filing stated.
JBS paid $800 million for 64 percent of Pilgrim’s Pride and will seek $2 billion in finance bonds for the new stock issue, the filing stated.
Pilgrim’s Pride was the United States’ largest poultry company and produced 24 percent of the chicken sold in the U.S. when it filed for Chapter 11 on Dec. 1, 2008, citing problems meeting its credit obligations.
In 2008, poultry companies faced financial and operational challenges - an oversupply of chicken, softening demand and weak market pricing. Poultry processors incurred heavy losses because of rising corn prices, which increased the expense of feeding chickens.
During its bankruptcy year, Pilgrim’s Pride cut production costs by closing plants, laying off workers and canceling contracts with chicken growers.
In Arkansas, the company employs 1,979 in poultry operations in Batesville and De Queen, a feed mill in Hope and a sales office in Bentonville. It closed plants in El Dorado and Clinton in the past 18 months.
Pilgrim’s Pride employs about 41,000 people in chicken-processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico, according to the company’s Web site.
JBS SA is the world’s largest beef producer and exporter. The company became the third-largest U.S. pork producer when it bought Swift & Co. in 2007. It also bought the U.S. beef operations of Smithfield Foods Inc. last year.
Business, Pages 25 on 12/29/2009