New York, 1 Oct - Bankrupt Pierre Foods said on Tuesday it has asked a judge to approve a reorganization plan that will restructure some debt, allow it to be mostly taken over by funds of Oaktree Capital Management LP and emerge from bankruptcy near the end of the year.
Pierre Foods, which produces fully prepared meat, poultry and bakery products for schools, food service and vending markets, filed for Chapter 11 bankruptcy protection on July 15, citing rising raw material costs.
The reorganization plan, filed in Delaware bankruptcy court on Sept. 29, proposes converting $100 million of existing pre-petition secured debt to equity in the reorganized company, and converting $50 million into a new mezzanine facility.
The plan calls for the cancellation of $125 million of senior subordinated notes. Unsecured creditors, including the noteholders, would recover 12 cents on the dollar in cash for their claims.
Pierre Foods said it will ask the court to confirm the plan in early December and hopes to emerge from bankruptcy shortly thereafter.
Oaktree supplied the company's debtor-in-possession (DIP) credit facility, and upon confirmation of the plan, funds managed by Oaktree will become the majority owner of Pierre, the company said.
The plan is supported by Oaktree and Pierre's official committee of unsecured creditors.
"The filing of this consensual plan represents a significant step forward in our efforts to emerge from Chapter 11 as a stronger company that can operate profitably in this difficult economic environment and beyond," Norbert Woodhams, chief executive officer of Pierre Foods, said in a statement.