CINCINNATI -- Pierre Foods Inc. and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware to restructure its debt. The company intends to work with all parties 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.
"Filing for Chapter 11 is never an easy decision, however, we view this process [image-nocss] as an important step in our ongoing strategic restructuring," said Norbert Woodhams, CEO of Cincinnati-based Pierre Foods. "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."
He said, "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. 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-inpossession (DIP) financing from certain funds managed by Oaktree Capital Management LP.
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 Pierre Foods 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 its 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.
Pierre has retained Alvarez & Marsal, a restructuring and corporate advisory firm, to assist the company throughout the restructuring process.
For access to court documents and other general information about the Chapter 11 cases, visit www.kccllc.net/pierre.
Pierre Foods is a leading manufacturer, marketer and distributor of foodservice solutions, focusing on precooked and ready-to-cook protein products, compartmentalized meals and hand-held convenience sandwiches.
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