The sweetheart deals continue unabashed at Pilgrim’s Pride…

May 14, 2010

One might think — OK, perhaps hope — that after going through the grind of bankruptcy and emerging relatively unscathed, that the executives at a particular company might feel a wee bit chastened, perhaps even cautious about how things could look to others. But that’s not exactly the case at Pilgrim’s Pride (PPC), which is something of a frequent flyer here at footnoted.

The company, which happens to be featured prominently in this WSJ story on so-called “bankruptcy beauties”, filed for bankruptcy in December 2008 and emerged a year later after selling a majority stake to Brazillian meat processing company JBS SA. In the WSJ story, founder Lonnie “Bo” Pilgrim recounts a discussion he had with a banker at Lazard (LAZ) about the company (and his own personal) woes:

“Dan, I was worth $1.1 billion,” said the 82-year-old Mr. Pilgrim, who founded the company by opening a feed store in 1946. “Somewhere along the way, I lost the ‘one.’ Can you help me find it?”

The article goes on to note that Pilgrim has “recover(ed) a chunk of his wealth”, which seems to be a mild understatement judging by the 10-Q that the company filed late last Friday. Then again, a lot of those details were buried deep in the footnotes, specifically these 3 footnotes on pg. 34:

(b) Until the Effective Date, Pilgrim Interests, Ltd., an entity related to Lonnie A. —Bo Pilgrim, guaranteed a portion of the Company’s debt obligations…At December 27, 2009, the Company had accrued loan guaranty fees totaling $8.9 million. The Company paid these fees after emerging from bankruptcy on the Effective Date.
(c) On February 23, 2010, the Company purchased a commercial egg property from Lonnie A. —Bo Pilgrim for $12.0 million.
(d) In connection with the Plan, the Company and Lonnie A. —Bo Pilgrim entered into a consulting agreement, which became effective on the Effective Date…Mr. Pilgrim will be compensated for services rendered to the Company at a rate of $1.5 million a year for a term of 5 years.

Now call us crazy, but that seems like some mighty nice rewards for someone whose stewardship led the company down the road to bankruptcy. After all, one could argue that these were the types of crazy deals that caused some of Pilgrim’s Pride’s problems in the first place. That the sweetheart deals continue under what’s essentially a new owner seem particularly offensive.

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