GREELEY, Colo. — Pilgrim's Pride Corporation announced that it has completed an agreement with its bank group to amend the financial covenants in its credit facility, effective yesterday.
The amendment suspends the existing fixed-charge coverage covenant and the senior secured debt covenant until the fourth quarter of fiscal 2012. The amendment also sets certain financial covenant levels at terms more favorable to the company. Following the suspension period, the financial covenants will be calculated under amended terms of the credit facility. In addition, JBS USA Holdings, the majority equity holder in Pilgrim's, has agreed to provide a $50 million subordinated loan in support of the company. Details regarding the amendment are outlined in the company's Form 8-K filed today with the Securities and Exchange Commission.
"This amendment will provide Pilgrim's with financial flexibility to 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. "Since the beginning of the year, we have been focused on strengthening our balance sheet by reducing inventories, improving accounts receivable and keeping a tight rein on capital expenditures. We are making good progress on these initiatives, which have allowed us to maintain strong liquidity, and will continue to work toward those goals. We took this proactive step to demonstrate to our stakeholders that Pilgrim's has the support of our bank group and JBS USA as we work to improve our business and operations."
CoBank ACB and Rabobank are the lead lenders in the bank group that provided the credit facility to Pilgrim's.
Forward-Looking Statements
Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's Pride Corporation and its management are forward-looking statements. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally; the ability to execute the company's business plan to achieve desired cost savings and profitability; the ability of the company to achieve the anticipated synergistic gains from the sale of 64% of its common stock to JBS USA Holdings, Inc; the ability of the company to re-open its idled facilities in the manner and on the time schedule planned due to, among other things, the company's dependence on commodity prices and economic conditions; future pricing for feed ingredients and the company's products; additional outbreaks of avian influenza or other diseases, either in Pilgrim's Pride's flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim's Pride's products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources, particularly in light of Pilgrim's Pride's substantial leverage; restrictions imposed by, and as a result of, Pilgrim's Pride's substantial leverage; changes in laws or regulations affecting Pilgrim's Pride's operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim's Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim's Pride's largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channel, including exports into Russia, the anti-dumping proceeding in Ukraine and the anti-dumping and countervailing duty proceeding in China; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in the Company's Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim's Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
About Pilgrim's Pride
Pilgrim's employs approximately 42,000 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. For more information, please visit http://www.pilgrims.com.
Contact: Gary Rhodes
Vice President, Corporate Communications & Investor Relations
(903) 434-1495
Source: Pilgrim's Pride Corporation