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"I have birds going out again Tuesday and Wednesday, and we normally don't get paid for about 14 days," said Don Thornsbrough of Carlisle County. "It's going to be interesting to see how this works out."
Thornsbrough and his son, Chad, are among 230 contract growers for the Pittsburg, Texas, company, whose Monday Chapter 11 petition reported $3.75 billion in net assets against $2.72 billion in debt. Late Friday, the company projected a fourth-quarter loss of $802 million.
Chapter 11 usually allows businesses to downsize and narrow their focus to protect themselves from creditors during restructuring. Suppliers should expect to be paid for post-petition purchases of goods and services in the ordinary course of business, said Clint Rivers, Pilgrim's president-CEO.
"Over the past year, Pilgrim's Pride has faced a number of significant challenges including high feed-ingredient costs, an oversupply of chicken, weak market pricing and softening demand," he said in a press release. "We expect to emerge from this restructuring a stronger, more competitive company that is well positioned for growth and enhanced profitability."
So far, the Thornsbroughs have had no trouble getting paid or taking deliveries for the 29,400 chickens they raise in each of eight barns, about seven times yearly, for the Mayfield plant.
But Don Thornsbrough said poultry and grain farmers under contract with Pilgrim's are on edge, especially now with the bankruptcy action.
"I know one farmer who sold corn to them for $7.48 a bushel, and I doubt he'll get that now," Thornsbrough said. "Prices have dropped to about half what they were when some of these farmers signed contracts."
Pilgrim's has sought court approval of $450 million in financing, with the Bank of Montreal as lead agent, to pay daily operational debts including employee wages and other obligations.
In November, the company cut 335 salaried and salaried non-exempt jobs -- including roughly 10 at Mayfield -- across its 36 chicken-processing plants in the U.S., Puerto Rico and Mexico. With 1,500 workers, the Mayfield plant is one of western Kentucky's largest employers.
Pilgrim's has no current plans for more layoffs or plant closings as a direct result of the bankruptcy filing, said Ray Atkinson, corporate communications director.
Much of Pilgrim's debt stems from its $1.1 billion purchase of rival Gold Kist in early 2007. Three times before filing Chapter 11, Pilgrim's extended deadlines on paying $25.7 million in interest to creditors.
Pilgrim's shares fell 46 percent Monday from $1.15 to 62 cents. The 52-week high was $29.59.
Joe Walker can be contacted at 575-8656.
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