Pilgrim's Pride, expecting big loss, renegotiates credit
Pilgrim's Pride Corporation (NYSE: PPC) today announced that, based on preliminary results, it notified its lenders that the company expects to report a significant loss in the fiscal fourth quarter ending September 27, 2008. The company attributed the anticipated loss to high feed-ingredient costs, continued weak pricing and demand for breast meat, and the significant negative impact of hedged grain positions during the quarter.
As a result of this expected loss, Pilgrim's Pride recently informed its lenders that it does not expect to be in compliance with its fixed-charge coverage ratio covenant under its principal credit facilities as of the fiscal year ending September 27, 2008, but expects to be in compliance with all other covenants as of the end of the 2008 fiscal year.
Pilgrim's Pride also announced that it believes it has reached an understanding with the agents under its credit facilities to temporarily waive the fixed-charge coverage ratio covenant through October 28, 2008, and to provide continued liquidity under these facilities during this same period. The temporary waiver will be subject to the negotiation of a definitive written agreement with the lenders, and there can be no assurance that this negotiation will result in a waiver acceptable to Pilgrim's Pride and its lenders. Failure to obtain a waiver or amendment of this covenant may preclude the company from drawing funds under these facilities and permit the lenders to declare an event of default, either of which would have a material adverse effect on the company.