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Pilgrim's Pride files plan of reorganisation

Pilgrim's Pride and 6 of its subsidiaries that are debtors and debtors in possession in the chapter 11 cases pending in the US Bankruptcy Court for the Northern District of Texas have announced they have filed a joint plan of reorganisation and disclosure statement under chapter 11 of the Bankruptcy Code.

As previously announced, Pilgrim's Pride and JBS have agreed to a transaction representing an enterprise value of approx. $2.8 bln. Under the terms of the plan of reorganisation, Pilgrim's Pride has entered into an agreement to sell 64% of the new common stock of the reorganised Pilgrim's Pride to JBS S.A., through its JBS USA Holdings, Inc. subsidiary (JBS U.S.A.), for $800 mln in cash.

Proceeds from the sale of the new common stock of the reorganised Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan. Under the terms of the plan, all creditors of the Debtors holding allowed claims will be paid in full. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares, representing 36% of the reorganised Pilgrim's Pride in aggregate. The plan also calls for an exit facility for senior secured financing in an aggregate principal amount of at least $1.65 bln.

The disclosure statement hearing is currently scheduled to take place on 20 October, 2009, before the Bankruptcy Court. If the Bankruptcy Court determines that the proposed disclosure statement provides adequate information to vote on the plan, then the proposed disclosure statement and plan, along with the appropriate ballots, will be sent to shareholders to vote on the plan. Since the proposed plan of reorganisation represents a "100% plan", with creditors being repaid in full, shareholders represent the only impaired class and will be the only group entitled to vote on the plan of reorganisation.

Natalie Berkhout

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