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Pierre Foods Files Voluntary Chapter 11 Petitions To Facilitate Debt Restructuring

2008-07-15 08:29:00

  Receives a Commitment for $35 Million of Debtor-in-Possession Financing

                     Operations Will Continue As Normal

        Pierre Remains Focused on Quality and Customer Satisfaction

    CINCINNATI, July 15 /EMWNews/ -- Pierre Foods, Inc. (the "Company"

or "Pierre") announced today that it and its subsidiaries filed voluntary

petitions for relief under Chapter 11 of the United States Bankruptcy Code

in the United States Bankruptcy Court for the District of Delaware (the

"Bankruptcy Court") to restructure its debt. The Company intends to work

with all of its constituencies 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.

    "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," said

Norbert Woodhams, Chief Executive Officer of Pierre Foods. "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-in-possession (DIP) financing from certain

funds managed by Oaktree Capital Management L.P. ("Oaktree"). 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 the Company 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

the Company's 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.

    Mr. Woodhams continued, "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. 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."

    Pierre has retained Alvarez & Marsal, a restructuring and corporate

advisory firm, to assist the Company throughout the restructuring process.

    The Company and its domestic subsidiaries filed their voluntary Chapter

11 petitions in the United States Bankruptcy Court for the District of

Delaware. The Pierre Foods, Inc. case has been assigned case number

08-11480. In connection with the filing, Pierre has requested that all of

the chapter 11 cases be administered under that case number. Additional

information about the restructuring is available at the parent Company's

website . For access to Court documents and other

general information about the Chapter 11 cases, please visit .

    About Pierre Foods, Inc.

    Pierre has enjoyed a dynamic history dating back over 60 years to 1946.

The company's foundation is built on its committed employees, key customer

relationships, trust, and providing the best products available. Today

Pierre Foods is a leading manufacturer, marketer and distributor of

high-quality, differentiated food solutions, focusing on pre-cooked and

ready-to-cook protein products, compartmentalized meals, and hand-held

convenience sandwiches. Pierre is headquartered in Cincinnati, Ohio.

    Forward Looking Statements

    In addition to historical information, this release contains forward-

looking statements within the meaning of the Private Securities Litigation

Reform Act of 1995. The words "expects," "anticipates," "estimates," and

similar expressions identify forward-looking statements. These statements

reflect Pierre's expectations at the time this release was issued and are

not guarantees of future performance or future events, but instead involve

various risks and uncertainties. Actual events and results may differ

materially from those described in the forward-looking statements. Among

the factors that could cause material differences are the ability of Pierre

to develop, prosecute, confirm and consummate a plan of reorganization with

respect to its Chapter 11 petitions, the ability of Pierre to operate its

business in the ordinary course during bankruptcy, the potential adverse

impact of the Chapter 11 petitions on Pierre's operations, management and

employees, increases in the price of raw materials, particularly beef,

pork, chicken, and cheese, a decline in meat consumption or in the

consumption of processed foods, outbreaks of disease among cattle, chicken

or pigs, changes in applicable governmental regulations, such as the USDA's

Commodity Reprocessing Program, work stoppages or interruptions and other

risks detailed from time to time in Pierre's periodic SEC reports. Pierre

undertakes no obligation to update or revise any forward-looking statement.

For Additional Information Contact: Cindy Hughes Chief Financial Officer (513) 874-8741 Meaghan Repko or Jed Repko Joele Frank, Wilkinson Brimmer Katcher 212-355-4449

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