Pilgrim's Pride has struggled more than competitors in the meat industry due in part to a heavy debt load.

"This is an income statement issue. They will have to get chicken prices to go up or corn prices to go down in the next four weeks, and I doubt that is going to happen," said Morningstar analyst Ann Gilpin. "Bankruptcy is a very real possibility here."

Asked to comment on speculation that it may seek bankruptcy protection, Pilgrim's Pride spokesman Gary Rhodes said in an e-mail: "We don't comment on rumors or speculation. As we said in our press release, our focus right now is on finalizing a written agreement with the banks to provide a temporary waiver on the fixed-charge coverage ratio covenant. We have reached an understanding, now we need to complete the agreement."

In its statement, Pilgrim's Pride did not quantify the expected quarterly loss, which it attributed to high feed costs, weak demand and prices for chicken breast meat, and a major negative impact of hedged grain positions.

Analysts had forecast a loss of 99 cents a share, excluding special items, for the fourth quarter ending on Sept. 27, according to Reuters Estimates. The company has reported losses in each of its previous three quarters.

Due to the expected loss, Pilgrim's Pride said it had recently told its lenders that it did not expect to be in compliance with its fixed-charge coverage ratio covenant under its principal credit facilities for this fiscal year.

The company said it thought it had reached an understanding with its lenders to temporarily waive that covenant through Oct. 28 and to provide continued liquidity under those facilities for that time. It said it expects to be in compliance with all other covenants as of the end of fiscal 2008.

Pilgrims shares were down 32.6 percent at $4.29 in afternoon trading on the New York Stock Exchange after falling to $3.26 earlier in the session.

BUYING TIME?

"No lender is going to be calling them on these loans. I think all the lenders are in agreement that they will let them survive at least for another couple of months, at least to see if chicken prices improve," said Rich Nelson, an analyst at Allendale Inc.

"I don't think it is as dire as the market is trading right now, but certainly Pilgrim's is in a bad financial situation," he said.

The chicken industry has suffered this year due to high prices for feed and fuel. Ample meat supplies have prevented companies from raising prices enough to cover higher costs.

A weak U.S. economy has also caused consumers to shift to cheaper foods and to dine out less.

Pilgrim's Pride has struggled more than most, in part because of some $1.5 billion in long-term debt it took on after its January 2007 purchase of smaller rival Gold Kist Inc.

To cope, the company has closed plants and reduced production. It has shortened the length of its meat contracts with customers to more quickly pass on the higher costs.

Some competitors could stand to benefit from Pilgrim's troubles, said JPMorgan analyst Ken Goldman.

"We would not be surprised if Tyson and Sanderson Farms staged relief rallies" on Pilgrim's news, Goldman said.

Tyson shares rose 8.4 percent while Sanderson gained 4.4 percent on Thursday.

(Additional reporting by Ajay Kamalakaran in Bangalore) Keywords: PILGRIMSPRIDE/ Please write your own byline and save in your preferences vj

COPYRIGHT

Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

MMMM

Pilgrim's Pride Corporation is the largest chicken company in the United States and Puerto Rico and the second-largest in Mexico. Pilgrim's Pride employs approximately 53,500 people and operates 36 chicken processing plants and 12 prepared-foods facilities. Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico. For more information, please visit http://www.pilgrimspride.com.

Contact: Gary Rhodes

               Vice President, Corporate Communications & Investor Relations
               (903) 434-1495

SOURCE Pilgrim's Pride Corporation

http://www.pilgrimspride.com/

The two companies had signed the JV agreement in 2006 establishing the VF Arvind Brands to design, market and distribute VF's branded lifestyle apparel in India. The JV was 60 per cent owned by VF and the rest 40 per cent stake was with Arvind Mills.

"The two brands have not taken off in the way it was expected and so the company is pausing for the moment. The entire issue over the two brands would be re-looked into and then decide upon the future course of action," the source said.

When contacted company officials declined to comment.

Regarding the reported sale of Arvind Mill's inventory to Reliance Retail, a spokeperson of the company refused to confirm or deny the news. "We cannot say anything in this regard," the spokesperson said.

Pilgrim's Pride also announced that it believes it has reached an understanding with the agents under its credit facilities to temporarily waive the fixed-charge coverage ratio covenant through October 28, 2008, and to provide continued liquidity under these facilities during this same period. The temporary waiver will be subject to the negotiation of a definitive written agreement with the lenders, and there can be no assurance that this negotiation will result in a waiver acceptable to Pilgrim's Pride and its lenders. Failure to obtain a waiver or amendment of this covenant may preclude the company from drawing funds under these facilities and permit the lenders to declare an event of default, either of which would have a material adverse effect on the company.

About Pilgrim's Pride

Pilgrim's Pride Corporation is the largest chicken company in the United States and Puerto Rico and the second-largest in Mexico. Pilgrim's Pride employs approximately 53,500 people and operates 36 chicken processing plants and 12 prepared-foods facilities. Pilgrim's Pride products are sold to foodservice, retail and frozen entree customers. The Company's primary distribution is through retailers, foodservice distributors and restaurants throughout the United States and Puerto Rico and in the Northern and Central regions of Mexico. For more information, please visit http://www.pilgrimspride.com.

Forward-Looking Statements

Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's Pride Corporation and its management, including as to changes in pricing, demand and market conditions for chicken products and profitability, are forward-looking statements. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally, including fluctuations in the commodity prices of feed ingredients and chicken; compliance with covenants in credit facilities in a volatile and adverse market; additional outbreaks of avian influenza or other diseases, either in our own flocks or elsewhere, affecting our ability to conduct our operations and/or demand for our poultry products; contamination of our products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of our cash resources, particularly in light of our substantial leverage; restrictions imposed by, and as a result of, our substantial leverage; changes in laws or regulations affecting our operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause our costs of doing business to increase, cause us to change the way in which we do business, or otherwise disrupt our operations; competitive factors pricing pressures or the loss of one or more of our largest customers; inability to consummate, or effectively integrate, any acquisition or realize the associated cost savings and operating synergies currently anticipated; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channels; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim's Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact: Gary Rhodes

              Vice President, Corporate Communications & Investor Relations
              (903) 434-1495

SOURCE Pilgrim's Pride

http://www.pilgrimspride.com