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Pilgrim's Pride Corp. (PGPDQ) has agreed to sell 64% of new
common stock to Brazilian beef giant JBS SA (JBSS3.BR) for $800
million as the chicken processor disclosed its bankruptcy
reorganization plan.
The Wall Street Journal reported earlier this month that a deal
was in the works for the second-largest U.S. chicken company.
The deal announced Wednesday calls for proceeds from the stock
sale to fully fund cash distributions to allowed claims, either in
cash or notes. Current Pilgrim's Pride shareholders will own 36% of
the reorganized company. That is a victory for the shareholders,
who typically get nothing when a company files for bankruptcy.
Pilgrim's Pride current shares rose 10% to $5.52. The stock fell
as low as 14 cents in the wake of December's bankruptcy filing,
which took place as falling meat demand and prices made the ability
to deal with its more than $2 billion of debt more difficult.
The plan needs bankruptcy court approval. Pilgrim's Pride hopes
to leave bankruptcy by year's end.
JBS has been increasing its U.S. presence in recent years,
buying Swift & Co. for $225 million in 2007 and the U.S.
beef-processing operations of Smithfield Foods Inc. (SFD) last
year.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com