GREELEY, Colo. (
(PPC - Get Report)
shares spiked higher amid heavy trading after the poultry producer's CEO said he does not expect any liquidity problems this year, alleviating investor fears.
CEO Bill Lovette said late Tuesday that, despite concerns earlier this year that Pilgrim's Pride was in danger of violating its debt covenants -- a worry that has pressured the company's stock price for months -- the company's banks are "comfortable" with its operational strategy.
He also said that
JBS USA Holdings
-- a Brazilian beef, pork and lamb processor that holds a 67.2% stake in Pilgrim's Pride -- could lend the poultry producer up to $100 million to serve as a "backstop."
"Some have assumed we would [violate our debt covenants], but we don't believe that's the case," Lovette said in a presentation to investors.
In 2008, rising chicken feed costs forced Pilgrim's Pride into Chapter 11 bankruptcy protection. As
commodity costs rose
again this year, Pilgrim's and fellow chicken producers like
(TSN - Get Report)
(SAFM - Get Report)
are once again under similar pressures.
Pilgrim's Pride shares were 9.2% higher at $5.10 in early-afternoon trading. More than 1.2 million shares changed hands just over halfway through the day's session, compared with average daily volume of just 940,000.
Tyson rose 0.4%, Smithfield added 0.9% and Sanderson gained 1.7%.
Written by Miriam Marcus Reimer in New York
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