Pierre Foods to Merge With Advance Food, Advance Brands

Advance Pierre Foods will supply value-added protein, handheld convenience products

CINCINNATI -- Senior management from Pierre Foods Inc., Advance Food Co. Inc. and Advance Brands LLC have announced that the boards of all three companies have unanimously approved and entered into a definitive merger agreement. The combined company will be called Advance Pierre Foods and creates a leading supplier of value-added protein and handheld convenience food products to the foodservice, convenience store, school, retail, club and vending and channels.

The transaction is expected to close within the next two months and is subject to customary closing conditions. [image-nocss] Funds managed by Oaktree Capital Management LP, a Los Angeles-based investment firm, are currently the majority shareholder of Pierre Foods and upon closing, will maintain a majority share of the combined company. The current shareholders of Advance Food Co., the Allen and McLaughlin Families, will own a minority share of the combined company.

Bill Toler, current CEO of Pierre Foods, will become the CEO of the newly combined company and Greg Allen, current CEO of Advance Food, will join the board of the combined company.

"Pierre is extremely pleased to merge with these two outstanding companies we have known and admired over the years. The new and expanded product offerings and distribution network will give our combined customers tremendous variety, quality and value," said Toler. "Our businesses are wonderfully complementary, and we share common corporate philosophies around the importance of taking care of both customers and employees."

Advance Pierre Foods will offer a full line of packaged sandwiches, fully cooked chicken and beef products, Philly-style steak, breaded beef, pork, poultry and bakery products.

Headquartered in Cincinnati, with some divisional leadership based in Oklahoma, Advance Pierre Foods will operate protein processing facilities in Oklahoma, Ohio and Iowa as well as sandwich assembly facilities in North Carolina, Ohio and South Carolina. The company will also operate bakeries in North Carolina and Oklahoma.

The management team for Advance Pierre Foods includes executives from all three companies. Integration planning for all company functions is underway.

"Pierre has had a long tradition of providing innovative and high-quality products which are a natural fit for our company," said Mark Allen, current president of Advance Food. "The combination of resources from all three companies will provide more options and opportunities across all sales channels, resulting in a stronger company going forward into the future."

In the newly combined company, Mark Allen will run the division focused on foodservice and school channels.

"Putting our companies together truly combines the best of both worlds for all of our customers and creates a world class organization to serve their needs," said Billy McPherson, vice president of sales for Advance Brands.

"Both Pierre and the Advance companies are coming off of successful years," said Matthew Wilson, managing director at Oaktree Capital Management. "We are very excited about the growth opportunity created by putting these three financially strong companies together."

Credit Suisse, Barclays Capital, Morgan Stanley and BMO Capital Markets have entered into financing arrangements, subject to customary closing conditions, to provide debt financing for the transaction and Morgan Stanley, Barclays Capital and Credit Suisse acted as Oaktree and Pierre's financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP acted as Oaktree and Pierre's legal advisor. Bass, Berry & Sims served as legal advisor to the Advance Cos.

Pierre Foods is a leader in providing fully cooked protein and sandwich products to a wide variety of customers including schools, restaurants, retail supermarkets, vending machines, the military and convenience stores. Pierre Foods offers more than 1,000 products, including more than 400 types of full-size and mini sandwiches, in addition to beef, pork, poultry, bakery items and peanut butter products. Leading the trend towards healthier food options for our nation's youth, Pierre recently rolled out Smart Picks, 60 new items that are reduced fat, reduced sodium or enhanced protein or higher fiber menu options available now for school cafeterias all over the country. Pierre is currently owned by funds managed by Oaktree Capital Management LP, a Los Angeles-based investment firm.

Advance Food is a leading national manufacturer of value-added, center-of-the-plate protein products for the foodservice industry. It manufactures pre-portioned, ready-to-cook and fully cooked beef, pork, veal, chicken and turkey products, including Steak-EZE brand of Philly-style steaks. Advance Food products reach customers in restaurants, business and industry foodservice venues, schools and universities, military bases, healthcare facilities, hotels and stadiums and arenas across the United States and abroad.

Advance Brands is a joint venture formed in 2001 between Advance Food Co. and Cargill Meat Solutions. It supplies convenience foods under the brand names Fast Fixin', Fast Classics and Steak- EZEconvenient chicken, beef and pork products sold in retail supermarkets and club stores nationwide.

Oaktree Capital is a premier global alternative and nontraditional investment manager with more than $76 billion in assets under management as of March 31, 2010. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, high-yield and convertible bonds, senior loans, private-equity (including power infrastructure), real-estate, emerging market equities and mezzanine finance.