Packaging
Pierre Foods Files Voluntary Chapter 11 Petitions To Facilitate Debt Restructuring
Wednesday 16. July 2008 - Receives a Commitment for $35 Million of Debtor-in-Possession Financing Operations Will Continue As Normal Pierre Remains Focused on Quality and Customer Satisfaction
Pierre Foods, Inc. (the “Company” or “Pierre”) announced today that it and its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to restructure its debt. The Company intends to work with all of its constituencies to reach mutually acceptable resolutions and to exit bankruptcy as expeditiously as possible. Pierre’s operations are expected to continue as normal throughout the bankruptcy process and while the Company executes on its reorganization plans.
“As a result of rising raw material prices experienced throughout our industry, it is necessary for Pierre Foods to create a capital structure more appropriate for both our operations and the current marketplace,” said Norbert Woodhams, Chief Executive Officer of Pierre Foods. “We have taken and will continue to take steps to strengthen and streamline operations and right-size Pierre’s cost structure in order to avoid placing the burden of our inflated raw materials costs solely on our customers. After careful consideration of all available alternatives, the Company’s Board of Directors determined that filing for Chapter 11 was a necessary and prudent step that allows us to operate our business without interruption while continuing to implement a debt restructuring in a controlled, Court-supervised environment.”
In conjunction with the filing, the Company has received a commitment for up to $35 million of debtor-in-possession (DIP) financing from certain funds managed by Oaktree Capital Management L.P. (“Oaktree”). Upon Court approval, the financing, combined with cash from operations, will be used to fund the Company’s ongoing operations including payment of employee wages and benefits and payments to vendors for both goods and services provided during the Chapter 11 case. In addition, the Company has commenced restructuring discussions with affiliates of Oaktree that may involve the conversion of debt of the Company into equity through a plan of reorganization, which would result in material deleveraging of the Company’s balance sheet.
Several of the recent actions taken by the Company to improve its liquidity, conserve cash, optimize profitability and right-size its cost structure include supporting more efficient inventory management by eliminating product duplication and unprofitable product lines and implementing new strategies for increasing inventory turns; streamlining the Company’s organizational structure and focusing on profitable business ventures; enhancing customer service; and investing in research to focus on supporting profitable initiatives for customers and employees.
Mr. Woodhams continued, “Filing for Chapter 11 is never an easy decision, however, we view this process as an important step in our ongoing strategic restructuring. We expect to emerge from bankruptcy as a stronger, more competitive company, well positioned for growth and enhanced profitability. We are proud of the consistent quality of our products, our valued customer relationships and the high level of service we provide. Finally, we are grateful to all of our employees for their hard work, loyalty and dedication to Pierre Foods.”
Pierre has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the Company throughout the restructuring process.
The Company and its domestic subsidiaries filed their voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware. The Pierre Foods, Inc. case has been assigned case number 08-11480. In connection with the filing, Pierre has requested that all of the chapter 11 cases be administered under that case number. Additional information about the restructuring is available at the parent Company’s website www.pierrefoods.com . For access to Court documents and other general information about the Chapter 11 cases, please visit www.kccllc.net/pierre .