Pittsburg, Texas-based Pilgrim's Pride Corp. has requested court approval to sell its interest in a grain elevator business to joint venture partner Archer Daniels Midland Co. for $5 million. The price tag is small, but in bankruptcy, every little bit helps.
The nation's largest poultry producer
filed for Chapter 11 on Dec. 1, citing soaring corn prices and an inability to renegotiate its debt. Pilgrim's Pride has secured a debtor-in-possession loan and is attempting to reorganize. According to court filings, the company received only one offer after putting the grain elevator business on the block, and the price was lower than the $5 million offer from ADM. In addition, under terms of the JV, ADM has right of refusal on any sale.
Pilgrim's Pride made its way to the top of the poultry industry pecking order via its 2007 acquisition of rival Gold Kist Inc. for $1.2 billion. That deal was sealed after a 10-month proxy fight that ended just as corn prices began rising and chicken exports were in decline. Pilgrim's Pride had hoped the synergies gained by scaling up would strengthen it in a toughening market. Of course, no one at that time could have predicted the collapse of the credit market, which ultimately proved a challenge too great for Pilgrim's Pride to overcome.
- Suzanne Stevens
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