US lawsuit claims Pilgrim's Pride hid its problems
CHICAGO, Oct 30 (Reuters) - Pilgrim's Pride Corp PPC.N has been sued on behalf of investors claiming the U.S. chicken producer misrepresented its financial condition and concealed its capital problems, a San Diego law firm said on Thursday.
The lawsuit, a copy of which was obtained by Reuters, named Ronald Acaldo as the plaintiff, saying he bought the stock between May 5 and Sept. 24. However, the document said the lawsuit was filed on behalf of any investors who bought the shares during that period.
"Due to defendants' positive, but false, statements, Pilgrim's Pride's stock closed as high as $26.85 per share in late May 2008," the statement from Coughlin Stoia Geller Rudman and Robbins LLP said. A spokesman for the law firm said the lawsuit had been filed on Wednesday.
A Pilgrim's Pride spokesman said the company does not comment on "pending or threatened litigation."
The lawsuit was filed in the U.S. District Court for the Eastern District of Texas. It claims the company knew but did not disclose that its financial results were "continuing to deteriorate." Pilgrim's Pride is based in Pittsburg, Texas.
The company's shares traded under $1 on Thursday, a day after a research report from CreditSights said there was a high probability the chicken producer would file for bankruptcy protection in December.
In late September, Pilgrim's warned it expected to report a significant loss and that it could default on a credit covenant as a result. It has since received two temporary waivers from its lenders.
"With the news of Pilgrim's Pride's significant losses, its shares fell to $3.84 per share on September 25, 2008 from $10.26 per share on September 23, 2008, and from the company's Class Period high of $26.85 per share in late May 2008," the law firm said in its statement.
Pilgrim's Pride has lost money for nearly a year due to higher costs for feed and fuel, debt obligations, low meat prices, and losses on grain hedges.
Pilgrim's Pride shares traded as low as 83 cents per share on Thursday on the small-cap Arca platform after the stock was halted on the New York Stock Exchange. They closed down 21.4 percent at 99 cents. (Reporting by Bob Burgdorfer, Editing by Toni Reinhold)
