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CINCINNATI -- In an effort to restructure its debt, Pierre Foods Inc., a major product supplier to the c-store industry, along with its subsidiaries filed Chapter 11 under the United States Bankruptcy Code earlier this week.
"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," Norbert Woodhams, Chief Executive Officer of Pierre Foods, said in a released statement.
The company has retained the services of Alvarez & Marsal, a restructuring and corporate advisory firm, to assist with the varied process. Woodhams noted that the company intends to continue as normal as plans are devised and deployed.
"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," he said. "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."
Upon filing, the company received a commitment for up to $35 million of debtor-in-possession (DIP) financing from certain funds managed by Oaktree Capital Management L.P. Once court approval is granted, Woodhams explained 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.
"Filing for Chapter 11 is never an easy decision; however, we view this process as an important step in our ongoing strategic restructuring. We expect to emerge from bankruptcy as a stronger, more competitive company, well positioned for growth and enhanced profitability," Woodhams said in a released statement. "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."