UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): November 30,
2008
PILGRIM'S
PRIDE CORPORATION
(Exact
Name of Registrant as Specified in its Charter)
Delaware 1-9273 75-1285071
(State or Other
Jurisdiction (Commission (IRS
Employer
of
Incorporation) File
Number)
Identification No.)
4845 US Highway 271
N.
Pittsburg,
Texas 75686-0093
(Address of Principal Executive
Offices) (ZIP
Code)
Registrant's
telephone number, including area code: (903) 434-1000
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
q Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
q Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
q
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
q
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
1.01. Entry into a Material Definitive Agreement.
The
information provided in Item 1.03 of this Current Report on Form 8-K regarding
the DIP Credit Agreement (as such term is defined below) is incorporated by
reference into this Item 1.01.
Item
1.02. Termination of a Material Definitive Agreement.
On
December 3, 2008, the Amended and
Restated Receivables Purchase Agreement dated as of September 26, 2008, among the Company, as servicer,
Pilgrim's Pride Funding Corporation, as seller, BMO Capital Markets Corp., as
administrator, and the
purchasers party thereto
(as amended, the "Receivables Securitization
Agreement") was terminated as described under Item
1.03 of this Current Report on Form 8-K, which is incorporated by
reference into this Item 1.02.
Item
1.03. Bankruptcy or Receivership.
On
December 1, 2008, Pilgrim's Pride Corporation (the "Company") and certain of its subsidiaries (the
"Subsidiaries") filed voluntary petitions for reorganization relief under
Chapter 11 of the United States Bankruptcy Code ("Bankruptcy Code") in the
United States Bankruptcy Court for the Northern District of Texas, Fort Worth
Division ("Bankruptcy Court"). The Company and the Subsidiaries will
continue to manage their properties and operate their businesses as
"debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code and the orders
of the Bankruptcy Court. The Subsidiaries consist of PPC
Transportation Company, PFS Distribution Company, PPC Marketing, Ltd., and
Pilgrim's Pride Corporation of West Virginia, Inc. (collectively, the "U.S.
Subsidiaries"), and To-Ricos, Ltd. and To-Ricos Distribution, Ltd. A
copy of the press release, dated December 1, 2008, announcing the bankruptcy
filing is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
On
December 2, 2008, the Bankruptcy
Court granted interim approval authorizing the Company and the Subsidiaries organized in the
United States to enter into that certain Post-Petition Credit Agreement among
the Company, as borrower, the U.S. Subsidiaries, as guarantors, Bank of
Montreal, as agent (the "DIP Agent"), and the lenders party thereto (the "DIP
Credit Agreement"). On December 2, 2008, the Company and the U.S.
Subsidiaries entered into the DIP Credit Agreement, subject to final approval of
the Bankruptcy Court.
The DIP Credit Agreement provides for an
aggregate commitment of up to $450 million, which permits borrowings on a
revolving basis. The Company received interim approval to access $365
million of the commitment pending issuance of the final order by the Bankruptcy
Court. The commitment includes a $25 million sub-limit for swingline loans and a $20 million
sub-limit for standby letters of
credit. Outstanding borrowings under the DIP Credit Agreement
will bear interest at a per annum rate equal to 8.0% plus the greatest of (i)
the prime rate as established by the DIP Agent from time to time, (ii) the
average federal funds rate plus 0.5%, or (iii) the LIBOR rate plus 1.0%,
payable monthly. The
loans under the DIP Credit Agreement were used to repurchase all receivables sold
under the
Receivables Securitization
Agreement and may be used to fund the working capital requirements of the
Company and its subsidiaries according to a budget as approved by the required
lenders under the DIP Credit Agreement. On December 3, 2008, the
Receivables Securitization Agreement was terminated and all receivables
thereunder were repurchased with proceeds of borrowings under the DIP Credit
Agreement.
Actual borrowings by the Company under
the DIP Credit Agreement are subject to a borrowing base, which is a formula
based on certain eligible inventory and eligible receivables. The
borrowing base formula is reduced by pre-petition obligations under the Fourth
Amended and Restated Secured Credit Agreement dated as of February 8, 2007,
among the Company and certain of its subsidiaries, Bank of Montreal, as
administrative agent, and the lenders parties thereto, as amended (the "BMO
Credit Agreement"), administrative and professional expenses incurred in
connection with the proceedings, and the amount owed by the Company and the
Subsidiaries to any person on account of the purchase price of agricultural
products or services (including poultry and livestock) if that person is
entitled to any grower's or producer's lien or other security
arrangement. The borrowing base is also limited to 2.22 times the
formula amount of total eligible receivables. The DIP Credit
Agreement provides for certain financial and other covenants, various
representations and warranties, and events of default that are customary for
transactions of this nature.
The principal amount of outstanding
loans under the DIP Credit Agreement, together with accrued and unpaid interest
thereon, are payable in full at maturity on December 1, 2009, subject to
extension for an additional six months with the approval of all lenders
thereunder. All obligations under the DIP Credit Agreement are
unconditionally guaranteed by the U.S. Subsidiaries and are secured by a first
priority priming lien on substantially all of the assets of the Company and the
U.S. Subsidiaries, subject to specified permitted liens in the DIP Credit
Agreement.
On
November 30, 2008, the Company and certain non-debtor Mexico subsidiaries of the
Company (the "Mexico Subsidiaries") entered into a Waiver Agreement and Second
Amendment to Credit Agreement (the "Waiver Agreement") with ING Capital LLC, as
agent (the "Mexico Agent"), and the lenders signatory thereto (the "Mexico
Lenders"). Under the Waiver Agreement, the Mexico Agent and the
Mexico Lenders waived any default or event of default under the Credit Agreement
dated as of September 25, 2006, by and among the Company, the Mexico
Subsidiaries, the Mexico Agent and the Mexico Lenders, the administrative agent,
and the lenders parties thereto (the "ING Credit Agreement"), resulting from the
Company's filing of its bankruptcy petition with the Bankruptcy
Court. Pursuant to the Waiver Agreement, outstanding amounts under
the ING Credit Agreement now bear interest at a rate per annum equal to:
(i) the LIBOR Rate, (ii) the Base Rate, or (iii) the TIIE Rate,
as applicable, plus the Applicable Margin (as those terms are defined in the ING
Credit Agreement). While the Company is operating under its petitions for
reorganization relief, the Waiver Agreement provides for an Applicable Margin
for LIBOR loans, Base Rate loans, and TIIE loans of 6.0%, 4.0%, and 5.8%,
respectively. The Waiver Agreement further amended the ING Credit
Agreement to require the Company to make a mandatory prepayment of the revolving
loans, in an aggregate amount equal to 100% of the net cash proceeds received by
any Mexico Subsidiary, as applicable, in excess of thresholds specified in the
ING Credit Agreement (i) from the occurrence of certain asset sales by the
Mexico Subsidiaries; (ii) from the occurrence of any casualty or other insured
damage to, or any taking under power of eminent domain or by condemnation or
similar proceedings of, any property or asset of any Mexico Subsidiary; or (iii)
from the incurrence of certain indebtedness by a Mexico
Subsidiary. Any such mandatory prepayments will permanently reduce
the amount of the commitment under the ING Credit Agreement. In
connection with the Waiver Agreement, the Mexico Subsidiaries pledged
substantially all of their receivables, inventory, and equipment and certain
fixed assets.
Item
2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
information provided in Item 1.03 of this Current Report on Form 8-K regarding
the DIP Credit Agreement is incorporated by reference into this Item
2.03.
Item
2.04. Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On
December 1, 2008, the Company and the Subsidiaries filed
voluntary petitions for reorganization relief under Chapter 11 of the Bankruptcy
Code in the Bankruptcy Court, as described in Item 1.03 of this Current
Report on Form 8-K. The
filing of the bankruptcy petitions constituted an event of default under the
2006 Amended and Restated Credit Agreement dated as of September 21, 2006, among
the Company, as borrower, CoBank, ACB, as administrative agent, and the lenders
party thereto, as amended, and the BMO Credit Agreement (together, the "Prior
Credit Agreements"). The total principal amount of the obligations
under the Prior Credit Agreements was $1,437,193,843 as of December 1,
2008. As a result of
such event of default, all obligations under the Prior Credit Agreements became
automatically and immediately due and payable, subject to an automatic stay of
any action to collect, assert, or recover a claim against the Company and the
application of applicable bankruptcy law.
The filing of the bankruptcy petitions
also constituted a termination event under the Receivables Securitization
Agreement. As a condition of the DIP Credit Agreement, all
receivables under the Receivables Securitization Agreement were repurchased and
the Receivables Securitization Agreement was terminated, as described in Item
1.03 of this Current Report on Form 8-K.
The filing of the bankruptcy petitions
also constituted an event of default under the 7 5/8% Senior Notes due 2015, the
8 3/8% Senior Subordinated Notes due 2017 and the 9 1/4% Senior Subordinated
Notes due 2013 (collectively, the "Notes"). The total principal
amount of the Notes was approximately $657 million as of December 1,
2008. As a result of
such event of default, all obligations under the Notes became automatically and
immediately due and payable, subject to an automatic stay of any action to
collect, assert, or recover a claim against the Company and the application of
applicable bankruptcy law.
Item
3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On
December 1, 2008, the Company received a notice from the New York Stock Exchange
(the "Exchange") that the Exchange had determined that the listing of the
Company's common stock should be suspended immediately. The Exchange
noted that it reached this decision in light of the Company's announcement to
file a voluntary petition for reorganization relief under Chapter 11 of the
Bankruptcy Code in the Bankruptcy Court, which is described in Item 1.03 of this
Current Report on Form 8-K.
The last
day that the Company's common stock traded on the Exchange was December 1,
2008. The Company does not intend to take any further action to
appeal the Exchange's decision, and therefore it is expected that the common
stock will be delisted after the completion of the Exchange's application to the
Securities and Exchange Commission.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
99.1 Press release dated December 1,
2008
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
PILGRIM'S PRIDE
CORPORATION
Date: December
4,
2008 By:
/s/ Richard A.
Cogdill
Richard A. Cogdill
Chief Financial Officer, Secretary and Treasurer
EXHIBIT
INDEX
Exhibit
Number Description
99.1 Press release dated December 1,
2008