Ethanol opponent Pilgrim's Pride files bankruptcy

By Anna Austin | January 03, 2009
Web exclusive posted Dec. 8, 2008 at 9:53 a.m. CST

Pittsburg, Texas-based Pilgrim's Pride, the largest chicken producer in the United States, has filed for Chapter 11 bankruptcy, describing the restructuring action as a response to volatile feed prices, a slumping demand and an unmanageable debt load.

On Dec. 3, Pilgrim's Pride received interim court approval to access $365 million of $450 million in debtor-in-possession financing. The company said the financing will enable it to continue operating, make vendor payments and pay employee wages. A final court hearing on the debtor-in-possession will be held Dec. 17.

Pilgrim's Pride is a member of Food Before Fuel, a coalition of food and beverage industry groups striving to convince the U.S. government to reduce or eliminate ethanol subsidies. Founder and Chairman Lonnie "Bo" Pilgrim has been frequently associated with Texas Gov. Rick Perry, who, in late April, requested that the U.S. EPA grant a 50 percent waiver of the renewable fuels standard (RFS) enacted in the Energy Policy Act of 2005.

Earlier this year, The Houston Chronicle reported that Pilgrim's Pride had given $100,000 to the Republican Governors Association, six days after meeting with then-chairman Gov. Rick Perry. The following month, Perry requested a federal waiver of ethanol standards. The Houston Chronicle later reported that Lonnie "Bo" Pilgrim had spent more than $9,000 on airfare in June, so Gov. Rick Perry could attend a news conference promoting the waiver.

Lonnie "Bo" Pilgrim issued several statements in support of Perry's request. "I am proud to support Gov. Perry in his request for a 50 percent waiver of the renewable fuel standard," Pilgrim said. "Soaring feed-ingredient costs fueled by the federal government's ethanol mandate has created a crisis in our industry, the true effects of which are only just now beginning to be felt by consumers in Texas and other states in the form of higher food prices."

Pilgrim's Pride reported $7.6 billion in net sales for fiscal 2007. As of Sept. 27, the company reported a loss of $802 million in the fourth quarter, $3.75 billion in assets and $2.72 billion in debts.

Clint Rivers, Pilgrim's Pride president and chief executive officer, said the bankruptcy doesn't mean the company is going out of business. "I'd like to emphasize that we expect it will be "business as usual" as we work through this restructuring process," he said.