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Nice day today with over 5% increase. It will be very very nice to see this without the DQ!!! After it it gone, I may need to hit the DQ (Dairy Queen) on the way home to celebrate!
JBS Earnings Set to Triple on Convertible Debt Sale: Week Ahead
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By Paulo Winterstein and Lucia Kassai
Dec. 21 (Bloomberg) -- JBS SA’s planned sale of $2 billion in convertible bonds to finance the acquisition of Pilgrim’s Pride Corp. and Bertin SA may help triple the profit of the world’s biggest beef producer next year, Legg Mason Inc. said.
The 8.2 percent drop in JBS shares since the sale was announced Dec. 14 is unjustified because any dilution from the conversion of debt will be more than compensated for by a surge in revenue, said Aquico Wen, who manages the $1 billion Legg Mason Emerging Markets Equity Fund at Esemplia Emerging Markets.
JBS, based in Sao Paulo, expanded the past three years through about $9 billion of takeovers, including the purchase of Pittsburg, Texas-based Pilgrim’s Pride and Sao Paulo-based Bertin. The bonds may be converted into a 20 percent to 25 percent stake in JBS USA Holdings Inc., which plans to sell shares in an initial offering as soon as next year, JBS said this month in a regulatory filing.
“The acquisitions of Pilgrim’s Pride and Bertin, these are massively accretive,” said Jorge Mauro, an analyst at Legg Mason’s Esemplia Emerging Markets in London. After a “difficult” year for sales in 2009, “if you normalize 2010 and add all the acquisitions, on an EPS basis you could easily see it double or triple next year,” Mauro said.
Per-Share Profit
JBS earned 12 centavos a share in the second quarter after two quarters of losses. Profit slipped to 11 centavos a share in the July-to-September period. The company’s earnings per share was as high as 49 centavos in the third quarter of 2008 after JBS reported gains of 423.9 million reais from currency trades.
JBS has 2.28 billion reais ($1.28 billion) of bonds outstanding now, according to data compiled by Bloomberg.
JBS trades at 11.6 times earnings before interest, taxes, depreciation and amortization. That’s almost three times the value of Santo Andre, Brazil-based Marfrig Alimentos SA, the world’s fourth-biggest beef producer, and of Barretos, Brazil- based Minerva SA, according to data compiled by Bloomberg. BRF Brasil Foods SA, the Brazilian poultry producer formed after Perdigao SA took over Sadia SA, fetches 11.6 times so-called ebitda.
JBS has outperformed the benchmark Bovespa index this year, climbing 94 percent on the outlook a global recovery will boost revenue. The Bovespa has increased 78 percent, the best gain in six years, after a 41 percent drop in 2008.
The shares slumped 8.2 percent last week to 9.55 reais on Dec. 18 on speculation the conversion of bonds would dilute per- share profit and on concern the company is taking on more debt to expand through acquisitions, according to Sao Paulo-based Legan Asset Management, which sold JBS shares last month.
‘Frightening’ Debt Levels
“The level of debt is frightening and at this pace of acquisitions the company will likely increase debt even more in the future,” Fausto Gouveia, who oversees 200 million reais in investments for Legan Asset Management, said in a telephone interview from Sao Paulo.
The sale of a stake in JBS USA through bonds may enable Brazil’s state development bank BNDES to buy a stake in a company that isn’t publicly traded, Esemplia’s Mauro said in a telephone interview. Esemplia held more than 1.2 million JBS shares at the end of October.
A spokesman for Rio de Janeiro-based BNDES, which holds 20 percent of JBS through direct and indirect stakes, declined to comment.
The beef processor announced plans last week to buy Australian lamb producer Tatiara Meat Co. for A$30 million ($27 million) and said it was looking for assets in Europe and Asia to process and distribute meat.
‘Healthy’ Growth
JBS considers debt levels at two to three times earnings as “comfortable because it allows us to grow in a healthy way,” Jerry O’Callaghan, the director of investor relations, said in a Dec. 17 interview. The company expects to cut costs by 500 million reais a year with the integration of Bertin and by another $200 million a year with Pilgrim’s Pride, according to an October presentation.
The bond sale, which will lift the company’s long-term debt to about six times Ebitda, probably won’t harm the company’s credit rating, Moody’s Investors Service and Standard & Poor’s said. JBS is rated B1 by Moody’s, four levels beneath investment grade, and B+ by S&P, also four levels below investment grade.
Moody’s may consider as much as 100 percent of the value of the convertible bonds as equity for credit rating purposes, Moody’s Soummo Mukherjee said in a telephone interview from New York. S&P may consider bonds that are convertible within three years as mostly equity, Reginaldo Takara, an S&P analyst, said by telephone.
The bonds will be purchased by “one or a few” investors, O’Callaghan said. JBS has yet to disclose terms of the bond.
Should the IPO of JBS USA fail, the bonds will be converted into JBS SA shares, according to company filings. Esemplia’s Wen said the offering may be a condition of the bond sale.
‘Limited’ Dilution
“If you work under that assumption, the earnings dilution is actually quite limited,” Wen said by telephone from London.
“The benefits of the debt sale will be more important than the dilution that shareholders will see,” Luiz Paulo Aranha, a manager at LLA DTVM, which bought 100,000 JBS shares this year for its NP Luma FIA fund, said in a telephone interview. “The result of this is that you’re going to have a less leveraged company that’s more fit to compete in a recovering market.”
The following is a list of events in Brazil this week:
Event Date
Weekly Trade Balance Dec. 20
Tax Collections Dec. 22
IBGE IPCA-15 -- Monthly Dec. 23
Central Government Budget Dec. 23
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; Lucia Kassai at lkassai@bloomberg.net
JBS sets date for acquisition of Pilgrim's Pride
(12/15/2009)
Rod Smith
JBS S.A. announced this week that a special stockholder meeting will be conducted Dec. 29 at which stockholders will be asked to approve the company's acquisition of Pilgrim's Pride Corp. and issuance of $2 billion in bonds to help finance that acquisition.
JBS said stockholders will also be asked to approve the merger of the company with Bertin S.A. in which Bertin and JBS shares will be pooled into a new holding organization in which JBS will have majority ownership.
The meeting will be held at JBS headquarters in Sao Paulo, Brazil.
The company also announced today it has reached an agreement with Vion Food Group in Australia for Swift Australia to acquire Vion's Tatiara Meat Co., which would make Swift Australia the largest lamb processor in Australia, with a capacity to handle 24,500 head per day.
Tatiara, headquartered in Bordertown, South Australia, markets lamb to high-end markets in Australia, Europe and North America and has annual revenues of $200 million (Australian, $183 million, U.S.)
JBS said it offered $30 million (Australian, $27.5 million, U.S.) for the company.
The acquisition is subject to customary closing conditions and Australian regulatory review.
Didnt a pr state that they wanted to be out of bk by the end of the year? ill look and see if i can find it
No exact date given in any PR (that I can remember).
Don't much matter to me if in Dec or Jan since my holdings are in a ROTH.
However, I am anxious to see how the market evaluates the deal, especially after the $2BIL financing.
Will this be out of BK by the end of the month?
The remaining 36% of the shares of common stock, valued at $450 million, will be issued to the existing equity holders of PPC."
Shares Outstanding: 74.06M x .36 = 26.64M
$450M / 26.64M = $16.89 PPS
If your math is correct:
$2.8B / 26.64M = $108.1 = early retirement!
I don't really know the post BK share structure.
However, I did find it VERY INTERESTING that the (new) Equity Placement for $2 BIL will ONLY net them 20 - 25% of the company.
Now, if they value 20% of the company at $2 BIL, what do you think the other 80% is worth? My math quickly says: $8 BIL.
OK, now if we (really) own 36% of the company, that puts us PGPDQ shareholders with: (are you ready for this) $2.88 BIL of value, NOT $450 MIL.
Taking it to the next step, that is like ~7x your estimate.
Something got to be wong with my math. If not, MERRY CHRISTMAS and a VERY VERY HAPPY NEW YEAR.
Anyone know if this is still true?
Posted on Tuesday, September 29, - LawFuel.com - Legal Newswire Service:
"The remaining 36% of the shares of common stock, valued at $450 million, will be issued to the existing equity holders of PPC."
Shares Outstanding: 74.06M x .36 = 26.64M
$450M / 26.64M = $16.89 PPS
UPDATE 1-Brazil JBS plans $2 bln convertible debt sale
Mon Dec 14, 2009 8:37am EST
Related News
UPDATE 1-Pilgrim's Pride set to exit bankruptcy this month
Thu, Dec 10 2009
U.S. wants Pilgrim's Pride bankruptcy plan revised
Wed, Nov 25 2009
Tyson beats, but investors fret over chicken
Mon, Nov 23 2009
Pilgrim's Pride posts profit
Mon, Nov 23 2009
UPDATE 1-Brazil's JBS Q3 profit drops on lower margins
Fri, Nov 13 2009
Stocks
JBS S.A.
JBSS3.SA
R$ 10.20
-0.20-1.92%
8:05am CST
Pilgrim's Pride Corporation
PGPDQ.PK
$7.01
+0.00+0.00%
8:05am CST
* JBS to sell $2 bln of bonds to fund Pilgrim's takeover
* Bonds will be convertible into JBS USA Holding stock
* JBS in talks with single investor over bond sale (Recasts; adds details of offering, background)
SAO PAULO, Dec 14 (Reuters) - Brazil's JBS SA (JBSS3.SA), the world's largest beef processor, said on Monday it plans to raise the equivalent of $2 billion in a bond offering, part of a plan to fund its U.S. unit after the takeover of Pilgrim's Pride Corp (PGPDQ.PK).
The bonds will be sold in reais in local capital markets to a single investor through a private placement, JBS said in a securities filing. The company is "in advanced talks" with the investor and expects to conclude the transaction in coming days.
The bonds will be convertible into shares of JBS USA Holding, JBS said, without giving further details on the terms of the debt.
Bondholders may hold between 20 percent and 25 percent of JBS USA after the debt is converted into stock, JBS said.
Pilgrim's Pride said last week it expects to emerge from bankruptcy protection by the end of December, nearly one year after it filed for Chapter 11. (Reporting by Elzio Barreto, editing by Maureen Bavdek, Dave Zimmerman)
Have not heard...
"...distributing new shares to current holders"
Anyone have details on this?
A court approved chicken producer Pilgrim’s Pride Corp. plan for reorganization on Thursday, and the company said that it expects to emerge from bankruptcy court protection this month. Pilgrim’s Pride filed for Chapter 11 protection last year facing high debt related to its buyout of rival Gold Kist Inc. in 2007 and rising feed costs that left the industry in a slump. The U.S. Bankruptcy Court in the Northern District of Texas approved the reorganization plan on Thursday. The plan includes selling a majority stake in the company worth $800 million to Brazilian beef giant JBS. The transaction includes paying off Pilgrim’s Pride’s creditors in full and distributing new shares to current holders.
Read more: http://newsok.com/business-briefs/article/3424192#ixzz0ZNzQeXd3
Great news. Court approved. Out by end of month!
http://www.lasvegassun.com/news/2009/dec/09/court-to-ok-pilgrims-pride-reorganization/
Atkinson said the company continues to expect to emerge from bankruptcy later this month.
In September, Brazilian beef company JBS said it would buy a majority stake in Pilgrim's Pride for $800 million in a transaction that would include paying off Pilgrim's Pride's creditors in full and distributing new shares to current holders.
That's unusual for a company in bankruptcy protection because typically creditors aren't repaid. The entire deal is valued at $2.8 billion, and it and another announced last month would make JBS the world's biggest meat maker
Judge will approve reorganization plan
CHICAGO, Dec 9 (Reuters) - The U.S. bankruptcy court judge presiding over Pilgrim's Pride Corp's reorganization has said he would approve the chicken company's reorganization plan once some wording in it was resolved, Pilgrim's Pride spokesman Ray Atkinson told Reuters in an e-mail.
"The judge said on the record that he was going to approve the plan, subject to working out certain language in the confirmation order. We're not sure at this time when the confirmation order will actually be entered," Atkinson wrote.
Once the largest U.S. chicken producer, Pilgrim's Pride filed for bankruptcy protection a year ago. As part of its plan to exit bankruptcy, it agreed to sell 64 percent of the company to Brazilian meat giant JBS SA (JBSS3.SA).
A hearing on the reorganization plan is under way this week in Fort Worth, Texas.
In addition to selling a majority stake in the company, in the past year Pilgrim's Pride has reduced production, closed and sold plants, and laid off workers. (Reporting by Bob Burgdorfer; Editing by John Picinich)
This is not an "Ongoing Concern" company anymore. I know from experience that during BK they have rewritten/cancelled contracts they felt were not to their best interest. Shut down and sold plants that were not profitable. I would not want to be one of their competitors next year.
Stock price will be, and in my opinion is now, based on profits, earned and projected, not depreciated value of the plants.
Pilgrim's has good people is a good company, now has been bought by a well run well financed company with lots of experience in the protein business and actually will be a good investment beyond $20.
Just my opinion, it's worth what you pay for it.
Let's hope...
I guess we will see.
No, but by the way the price is moving it looks to me that long term (I'm talking a few months) most folks are thinking this a good deal at $7. But who knows...
Any guesses on the pps?
Pilgrim's Pride seeks to leave bankruptcy
12:00 AM CST on Thursday, December 3, 2009
By KAREN ROBINSON-JACOBS / The Dallas Morning News
krobinson@dallasnews.com Bloomberg News contributed to this report.
Armed with $1.65 billion in proposed financing, Pilgrim's Pride Corp. will ask a judge to approve a plan next week that would allow it to exit bankruptcy.
The plan, which creditors voted on through Tuesday, still might need to clear one hurdle before the final OK.
Last week, the U.S. Department of Agriculture filed an objection to the company's exit plan complaining that the wording doesn't ensure regulatory compliance by Pilgrim's Pride and the reorganized firm, according to a filing in U.S. Bankruptcy Court in Fort Worth.
Some provisions of the plan are "over-broad in their application to the USDA" and its agencies, according to the objection. The filing includes language that could be added to the plan to resolve the agency's objection.
Pilgrim's Pride "will respond to the objection and it will be dealt with at the confirmation hearing," the company said in an email.
The confirmation hearing is Dec. 8.
Once the nation's largest chicken processor, Pilgrim's Pride filed for bankruptcy a year ago listing assets of $3.75 billion and debt of $2.72 billion. The company blamed rising grain costs and a poultry surplus that led to four straight quarterly losses.
Brazil's JBS SA, the world's largest beef producer, agreed to buy control of Pilgrim's Pride in the U.S. JBS will acquire a 64 percent stake in the company for $800 million in cash, based on an enterprise value of $2.8 billion.
Bloomberg News contributed to this report.
anybody have any thoughts on what will happen when this come out of bk? will it be a 1 for 3 stock swap?
FLAP!! Chikin' FLAP!!
Holding my chikens until I can sell for a (thick ass) steak dinner!
Nice day today - long overdue. Suppose there was some news? I'm still in - still got my cheekeens!!! Holding until they are out of BK and flying strong!!!
yeah i think im going to wait this out and see what happens after they come out of bk. my entry was at .39 alomost a year ago so im in it to win it. i dont think Bo would make a deal that was not good for shareholders!
Are you and I the only ones left to enjoy this ride. I'm not thinking of getting off until sometime next year, and maybe not then.
It looks to me as though Washington is looking to suck as much cash out of the exit from BK as possible through threats and creative regulations. I'm not selling until I hear more. This is a huge american company going into foreign hands but this has happened before, eg, when BUD was sold.
U.S. wants Pilgrim's Pride bankruptcy plan revised
Wed Nov 25, 2009 5:21pm EST Email | Print | Share | Reprints | Single Page[-] Text [+]
The objection was filed by the U.S. Attorney's office on behalf of the U.S. Department of Agriculture.
Is this something we should be discussing?
Pilgrim's Pride told Reuters in an e-mail that it "will respond to the objection and it will be dealt with at the confirmation hearing."
The confirmation hearing is set for Dec. 8.
In its objection the government stated "there is no authority to excuse noncompliance by the Debtor and the reorganized debtor with applicable federal law and regulations or to excuse, release, or bar appropriate actions by those agencies under federal law and regulations."
In its filing, the U.S. government proposed an addition to the plan to address its concerns.
Part of the proposed addition states that nothing in the plan shall prevent the government from "bringing any claim, suit, action, or other proceedings" against any party or person involved in the reorganized company for violating government laws and regulations.
Pilgrim's Pride filed for bankruptcy protection in December 2008, and has since filed a reorganization plan and has said it expects to exit bankruptcy by the end of this year.
Part of its reorganization plan includes selling a 64 percent stake of the company to Brazilian meat producer JBS SA (JBSS3.SA). (Reporting byBob Burgdorfer) ((bob.burgdorfer@thomsonreuters.com ; +1 312 408 8723; Reuters Messaging: bob.burgdorfer.reuters.com@reuters.net)) ((For help: Click "Contact Us" in your desk top, click here [HELP] or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com; +1 646-223-
After this pops some will be wishin they bought this chicken!
I'm riding right beside you. It's been a wild ride but I'm in at least into the first quarter of 2010.
Seems like things are progressing; however, wish the stock was holding stronger than it is...
JBS IPO DATE 2nd week in Jan.
Nov. 16 (Bloomberg) -- JBS SA, the world’s biggest beef producer, said it expects to conclude a $2.5 billion private share sale in its U.S. business by the end of year and price a $2 billion initial public offering for the unit in January.
JBS will give presentations to investors in the U.S. between Jan. 4 and Jan. 8 before setting the price for the public share sale in the week of Jan. 11, Chief Executive Officer Joesley Batista said today in an interview in Sao Paulo.
Sao Paulo-based JBS is raising cash to pay for the $800 million acquisition of U.S. poultry producer Pilgrim’s Pride Corp. and fund a $2 billion global distribution network. The company controls about 10 percent of the world’s beef processing after Batista made about 30 acquisitions since 1993, including Swift & Co. in 2007 and two Smithfield Foods Inc. units.
Brazilian companies have raised about 43.5 billion reais ($25.4 billion) in share sales this year, including a record initial public offering by Banco Santander (Brasil) SA in October, which generated 13.2 billion reais.
Foreign investors have bought about 58 percent of the shares sold in the Brazilian offerings this year, according to the Web site of exchange owner BM&FBovespa SA. Last year, Brazilian companies raised 34 billion reais in share sales.
JBS said Sept. 16 that it was in an “advanced process of negotiation” for the $2.5 billion private share sale, which would not represent more than 26.3 percent of the U.S. unit.
Win Court Approval
JBS expects the purchase of bankrupt Pilgrim’s Pride to win court approval in the U.S. by December and to complete the operation by the end of the first quarter, Batista said. The company is also buying Brazilian competitor Bertin.
JBS, which currently has about $1 billion of cash, will ask investors to forgo a right to seek early payments on $625 million worth of bonds following the acquisition of Bertin, Chief Financial Officer Marcos Bastos told reporters in Sao Paulo today.
The acquisition of Bertin will likely win approval from Brazilian antitrust authorities by the end of this month, Batista said.
Ok. GLTU. I am riding it down taking it on the chin hoping some day news will set this chicken a flyin.
Alrighty fellas. Good Luck to you guys. I sold out last week at $6.15. Man, I got lucky too...it started its decent the next day. I still whole heartedly believe in this stock, I just cant stand to sit around and watch em draw it down for the next two months. I will probably jump back in around the 15th on January. Good Luck to all!
Thank! So, what would the pps be?
The following is extracted from the proxy package received by mail:
SCF = (0.36 x NNS) / NES
where:
NNS = The number of shares necessary to cause SCF to be 1, or such other number of shares agreed in writing by the parties.
It is currently anticipated that 214,281,636 shares of New PPC Common Stock will be issued on the Effective Date, although the Debtors may revise this number prior to the Effective Date.
NES = The total number of Existing Shares
SCF = Share Conversion Factor
Seems like the ratio 3 to 1 mentioned earlier is OK, unless smb can explain this formula otherwise.
Anyone get the Proxy package in the mail?
Sounds great to me, I've been in a couple of JBS plants. They are VERY well funded and great operators. Anyone have other thoughts.
US Department of Justice approves sale of 64% stake in Pilgrim's Pride Corporation to JBS USA Holdings
Thu. November 12, 2009; Posted: 01:13 PM
You too can increase your ETF trading!
Nov 12, 2009 (Datamonitor Financial Deals Tracker via COMTEX) -- PGPDQ | Quote | Chart | News | PowerRating -- Update on October 14, 2009:
US Department of Justice has approved the proposed acquisition of a 64% stake in Pilgrim's Pride Corporation by JBS USA Holdings, Inc.
JBS USA Holdings is a subsidiary of JBS S.A., a Brazil-based producer and exporter of beef. Pilgrim's Pride is a US-based producer of poultry products.
Announcement (September 16, 2009):
JBS USA Holdings has entered into a stock purchase agreement to acquire a 64% stake in Pilgrim's Pride for an enterprise value of approximately $2,800 million in cash and debt.
Under the terms of purchase agreement, Pilgrim's Pride will issue a 64% of the total issued and outstanding new common stock in exchange for aggregate consideration of $800 million in cash.
On the closing date, the existing stockholders of Pilgrim's Pride will also become entitled to receive, for each share of common stock of the company held by them, one share of the new common stock. The existing stockholders of the company will collectively own an aggregate of 36% of the new common stock on the closing date. All creditors of the debtors holding allowed claims will be paid in full, either in cash or by issuance of a new note.
Rumor (September 3, 2009):
According to The Wall Street Journal, JBS is planning to acquire Pilgrim's Pride for approximately $2,500 million.
Rothschild and Rabo Securities USA, Inc. are acting as financial advisors and Shearman & Sterling LLP as legal advisor to JBS on this transaction.
Deal Value (US$ Million) 2800
Deal Type Acquisition
Sub-Category Majority Acquisition
Deal Status Announced: 2009-09-16
Deal Participants
Target (Company) Pilgrim's Pride Corporation
Acquirer (Company) JBS USA Holdings, Inc.
Deal Rationale
The acquisition would enable JBS to strengthen its position in meat business.
For full details for JBS click here.
With another month of no news coming...they are going to have this stock down to 5.00 before we know it at this rate!!
Too much drama for me,with the liklihood of much upside dripping away slowly like so much chicken gravy-this has been a monster for me,but I'm out. Good luck to all,and thanks for a great board.
Don't have a good source. Just told this yesterday.
It does not jive with anything I know. I need to and will do some DD. Let you know if I learn anything.
You are right about Bo and his family. They own a majority of the stock. When ever CHX then PGP now PGPDQ sends out a proxy to stockholders it says something to the effect, The Pilgrim family has 60%+ of the votes and supports this change but you can vote anyway if you want to.
Bo and his sons are really good people, you might want to read his book. They will always do the right thing.
If that is the case. I will be getting out way before that!!!
No way the shareholders would vote this through if that was the case. Should be one ofr one! Bo Pilgrim included..The Pilgrim family are large shareholders in pgpdq. Right now JBSAY is priced at 12.46. So if you have 900 shares of pgpdq today at 6.15 per share, thats $5,535.00. Now you trade those 900 shares for 300 shares of JBSAY which has a current value of $12.46 and your value is now $3,738.00. Thats an immediate loss of 33% in value to everyone who is holding a position in PGPDQ. Does not seem like a likely plan. Can you state your source of where you got this information?
Have not heard that news. What is JBS trading at? I am not like most on this web.
Anybody know????
I heard today that PGPDQ will be exchanged for JBS stock 3 to 1. If you own 300 shares of PGPDQ you will soon own 100 shares of JBS. I heard this, and have no real info.
Has anyone else heard this?
What do you think of JBS in the 12 month term?
Is there any one on this website that thinks beyond a .0001 move in the price of a stock?
I like chicken that is safe to eat! Maybe the below article is an opportunity for Pilgrim's Pride Corp...GLTA Stockinvestor
http://www.walletpop.com/blog/2009/10/29/chinese-chickens-which-fast-food-chain-may-serve-you-this-scary/15#comments
Would you eat chicken imported from China? Overwhelmingly, 96% of WalletPop readers say they wouldn't touch the stuff.
Now that a 2004 ban on chicken imported from China has been lifted, it could be awfully tempting for some of America's favorite fast-food chains to buy the cheap meat. We asked seven of the biggest fast food chains in the U.S. whether they would buy the chicken when it becomes available. Three said they will only buy American chicken. Three would not say what they'll do. And one, a very big one, left the door wide open.
McDonald's, the maker of McNuggets and the McChicken sandwich, would not rule out using chicken products imported from the land of recalls and food safety disasters.
"As a matter of practice, we review potential supplies of raw materials globally that could meet our high quality, food safety and value screens to our customers," McDonald's vice president Walt Riker told WalletPop.
But, Riker did not want to discuss the matter further. "It is inappropriate to project anything more based on a hypothetical and speculation," he said.
Do you think McDonald's should have said it won't buy chicken from China? Yes. McNuggets suddenly seem a lot less appealing. 54038 (92.0%)
No. They can buy what they want from where they want. 2580 (4.4%)
22 (0.0%)
We'll see. Maybe Chinese chicken products will be OK. 2088 (3.6%)
It really isn't that big of a leap for McDonald's to get into the Chinese chicken game. After all, some of America's biggest chicken concerns -- such as Tyson -- are advocating to open the chicken coop door to China. And Happy Meals already have a fair amount of Chinese components -- the toys, obviously, and the apple juice. (To be fair to McDonald's, most apple juice sold in America is made using a powdery concentrate from otherwise inedible apples grown in China and shipped around the world in 55-gallon drums.)
What did the other fast food chains have to say?
Kentucky Fried Chicken strongly affirmed its commitment to a USA-only chicken policy.
"As you may know, in the U.S. our chicken on the bone is delivered fresh, not frozen," KFC spokesman Rick Maynard said. "It is all sourced locally, in the United States. All of our poultry products served at KFC U.S. restaurants come from the U.S."
The Popeyes chicken chain also said it would stick with American chicken.
"All Popeyes' chicken supply, including prepared chicken products, is procured from domestic distributors and not sourced internationally," the company said in a statement sent to WalletPop. "Popeyes is aware of the possibility that the ban on imported Chinese chicken products could be lifted. However, the relationship with our domestic distributors will not be affected in the event this should occur."
And Wendy's took the same posture. "All domestic restaurants use U.S. chickens," senior vice president. Denny Lynch said. "We have no plans to change."
Burger King, Chick-Fil-A and Arby's did not respond to questions from WalletPop about chicken from China. Only processed chicken products, not whole chickens, would be imported.
The temptation to use Chinese manufacturing facilities and buy products from China has proven almost irresistible to many American companies. You can usually get what you need from China a whole lot cheaper than you could if it was made here, even though it has to be shipped halfway around the world.
But food safety in China has had a terrible track record. Just last year, tens of thousands of chickens had to be killed after being exposed to avian flu (following the outbreak in 2004 that led to the U.S.ban). At about the same time last year, nearly 300,000 babies took ill in China after drinking melamine-tainted powdered milk. Oh yeah, and that same melamine was also found in chicken feed -- which led it to also being found in Chinese chickens. And that's not even mentioning how many people's pets died in 2007 after eating pet food with a tainted ingredient that came from China.
George T. Haley, a professor and author of "New Asian Emperors: The Business Strategies of the Overseas Chinese," said the Chinese central government is becoming more responsive to U.S. government requests to raise their safety standards, although food safety is monitored by local and regional authorities.
"The problem is well known and the FDA has substantially increased its testing of Chinese processed foods and chemicals," Haley said. "While the Central government in Beijing has limited capacity to do very much, it is cooperating with U.S....authorities."
Still, he and others are concerned that the U.S. Department of Agriculture -- which, under the new law that lifts the ban, would be charged with inspecting Chinese facilities and making the findings public -- is not up to the challenge.
"Due to significant budget cuts by previous administrations, (food safety inspectors) cannot do the job," Haley said.
Food safety expert Mark Jarvis, CEO of global food safety and consulting firm Steritech, said Americans should be concerned about food coming from China.
"China has a very difficult challenge in the lack of confidence people have with any consumable products from China," he said. "There have just been a lot of issues from China...that are grounds for real concern. Although the government is saying all the right things...I think they've got a long way to go."
And Jarvis said he's not so sure having inspections in China will really mean all that much, given the problems the government has had policing food safety in the U.S.
Former Assistant Secretary of Commerce for Import Administration David Spooner said politically the U.S. had little choice but to lift the ban. China had filed a World Trade Organization complaint over the ban and he said they rightly accused the U.S. of singling them out -- something forbidden by WTO rules. He said the requirements placed on the Chinese -- allowing U.S. inspectors into their plants and then publishing their findings -- still might be placing too much of a burden on the Chinese to comply with WTO rules. And the Chinese might not agree to the terms, Spooner said.
But if the imports do start, he noted that consumers could end up with the chicken whether they want it or not.
"Poultry doesn't have to be labeled," he said. "I don't think consumers will know the poultry they are buying is from China."
been holding since last november! Bought in at .39 cents! :)
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Pilgrim's Pride Corporation
1770 Promontory Circle
Greeley, CO 80634-9038
United States
Phone: 970-506-8000
Fax: 970-506-8307
Website: http://www.pilgrims.com
Business Summary |
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Pilgrim's Corp. produces, processes, markets, and distributes fresh and frozen chicken products to retailers, distributors, and foodservice operators primarily in the United States. Its fresh chicken products consist of refrigerated (non-frozen) whole or cut-up chicken; and pre-marinated or non-marinated, as well as prepackaged case-ready chicken, which includes various combinations of freshly refrigerated, whole chickens, and chicken parts. The company also offers a range of prepared chicken products, including portion-controlled breast fillets, tenderloins and strips, delicatessen products, salads, formed nuggets and patties, and bone-in chicken parts. In addition, it exports whole chickens and chicken parts to approximately 95 countries, including Mexico, Russia, Puerto Rico, and China. The company was formerly known as Pilgrim's Pride Corporation. Pilgrim's Corp. was founded in 1945 and is headquartered in Greeley, Colorado. Pilgrim's Corp. operates as a subsidiary of JBS USA Holdings, Inc.
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