MILWAUKEE (AP) -- A court approved chicken producer Pilgrim's Pride Corp. plan for reorganization on Thursday, and the company said it expects to emerge from bankruptcy court protection this month.
Pilgrim's Pride filed for Chapter 11 protection last year facing high debt related to its buyout of rival Gold Kist Inc. in 2007 and rising feed costs that left much of the industry in a slump.
The U.S. Bankruptcy Court in the Northern District of Texas approved the reorganization plan Thursday, the company, based in Pittsburg, Texas, said in a news release.
The plan includes selling a majority stake worth $800 million to Brazilian beef giant JBS. The transaction includes paying off Pilgrim's Pride's creditors in full and distributing new shares to current holders.
The deal, which was announced in September, is unusual for a company in a bankruptcy case; more typically, creditors aren't repaid. The entire deal is valued at $2.8 billion.
Along with a deal to buy Bertin SA, one of Latin America's largest producers and exporters of milk products, beef and leather, buying Pilgrim's Pride would make JBS the world's biggest meat producer. The purchase of Gold Kist, worth more than $1 billion, had made Pilgrim's Pride the largest chicken producer in the U.S., with about 23 percent of the market before it filed for bankruptcy protection last year.
The Federal Trade Commission and Department of Justice already have approved the sale to JBS.
The bankruptcy court's approval of Pilgrim's Pride's reorganization plan comes exactly a year after the company sought protection. The company has shuttered plants, cut thousands of jobs and shed production to help bolster its profits this year.
"The past 12 months have been filled with tremendous challenges and unprecedented opportunities," said Don Jackson, who took over as CEO shortly after the filing. "There have been a lot of tough, painful decisions made about the future of this company, yet our employees have joined together to create a new market-driven organization that is clearly focused on serving our customers."
AP Business Writer Vinnee Tong contributed to this report from San Francisco.
Copyright 2009 The Associated Press.