Pilgrim´s Pride to Sell Majority Stake to JBS

Under the terms of the plan of reorganization, Pilgrim's Pride has entered into an agreement to sell 64% of the new common stock of the reorganized Pilgrim's Pride to JBS S.A., through its JBS USA Holdings, Inc. subsidiary (JBS U.S.A.), for $800 million in cash.

17 Sep 2009 --- Pilgrim's Pride Corporation and six of its subsidiaries that are debtors and debtors in possession in the Chapter 11 cases pending in the United States Bankruptcy Court for the Northern District of Texas have announced that they will be filing a joint plan of reorganization and disclosure statement under Chapter 11 of the Bankruptcy Code.

Pilgrim's Pride and JBS have agreed to a transaction representing an enterprise value of approximately $2.8 billion. Under the terms of the plan of reorganization, Pilgrim's Pride has entered into an agreement to sell 64% of the new common stock of the reorganized Pilgrim's Pride to JBS S.A., through its JBS USA Holdings, Inc. subsidiary (JBS U.S.A.), for $800 million in cash.

Proceeds from the sale of the new common stock of the reorganized Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan. Under the terms of the plan, all creditors of the Debtors holding allowed claims will be paid in full, either in cash or by issuance of a new note. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares representing 36% of the reorganized Pilgrim's Pride in aggregate.

The plan also calls for an exit facility for senior secured financing in an aggregate principal amount of $1.75 billion to be provided by a group of lenders arranged by Joint Lead Arrangers CoBank, ACB and Rabobank.

Pilgrim's Pride said that it anticipates the plan to be confirmed by the Bankruptcy Court in time for the Debtors to emerge from bankruptcy before the end of December.

"Over the past 10 months, we have fundamentally restructured Pilgrim's Pride as a market-driven company clearly focused on delivering the best service, selection and value to our customers as efficiently as possible," said Don Jackson, president and chief executive officer. "Thanks to the shared commitment and hard work of our employees, we believe that Pilgrim's Pride is positioned to emerge from bankruptcy as a stronger, more efficient competitor. We have returned to profitability, the quality of our asset base has improved significantly and we are gaining additional business. While we recognize that some of the changes made during our restructuring have been painful for our employees and contract growers, these decisions were absolutely necessary in helping Pilgrim's Pride to operate more efficiently while protecting the greatest number of jobs in the long-term. As a result of the improvements achieved this year, we believe we have been able to maximize the value of our company through our plan of reorganization that achieves what precious few restructurings can: full repayment of allowed creditor claims and substantial retained value for existing stockholders."

"Looking ahead, we are truly excited about the strategic growth opportunities available with JBS as our majority shareholder," Dr. Jackson added. "JBS has a well-earned global reputation for operational and service excellence in beef and pork production. We are confident that our plan will earn the support of all stakeholders and provide the foundation for sustained, profitable growth in the years ahead."

"We believe our reorganization plan will pave the way for Pilgrim's Pride to emerge from bankruptcy before the end of the year and mark a new beginning for this proud company, one that I fully support and endorse," said Lonnie "Bo" Pilgrim, senior chairman. "While the past year has been a difficult time for everyone involved in our restructuring, I take pride in knowing that we have a plan in place to pay back our creditors in full and preserve a great deal of value for our existing stockholders."

"Two years ago, JBS acquired Swift & Company, a U.S. beef and pork company, with a goal of managing its strong assets and turning it into a well-managed, efficient and profitable company. We believe the company's performance demonstrates our continued success in meeting this goal," said Wesley M. Batista, president and chief executive officer of JBS USA Holdings. "In 2008, we acquired Smithfield Beef and Five Rivers Cattle Feeding to strengthen our beef platform and provide synergies to our existing operations. As a U.S. beef and pork company, we are proud to now enter into the U.S. poultry industry with the acquisition of Pilgrim's Pride. We look forward to working with Pilgrim's management to increase the company's competitiveness both domestically and internationally. As we have accomplished with our beef and pork platforms, we will utilize our existing assets and strong management to grow Pilgrim's poultry business. We are excited about the opportunity to work with Pilgrim's employees, contract growers, customers, vendors and shareholders to enhance value."

The plan and the proposed disclosure statement have not yet been approved by the Bankruptcy Court and are subject to further negotiations with stakeholders. As a result, the plan and the proposed disclosure statement may be materially modified before approval.

The proposed disclosure statement includes a historical profile of the Company, a description of proposed distributions to creditors, and an analysis of the plan's feasibility, as well as many of the technical matters required for the solicitation process, such as descriptions of who will be eligible to vote on the plan and the voting process itself.

Lazard acted as sole investment banker to Pilgrim's Pride in connection with its financial restructuring and transaction with JBS. CRG Partners Group, LLC acted as chief restructuring officer. Baker & McKenzie LLP and Weil Gotshal & Manges LLP served as legal advisors. Rothschild and Rabo Securities USA, Inc. acted as exclusive financial advisor to JBS U.S.A. and Shearman & Sterling LLP as its legal advisors.

In addition to customary Chapter 11 proceedings, the completion of the transaction is subject to Hart-Scott-Rodino and other antitrust reviews and customary closing conditions.