LAUREL — Sanderson Farms Inc. has made public plans to locate a potential new poultry complex near Goldsboro, N.C. The construction of the new complex is subject to various contingencies, including obtaining satisfactory state and local incentives, locating suitable property, obtaining necessary permits and the approval of the company’s lenders of an amendment to its revolving credit agreement permitting, among other things, the capital expenditures for the Goldsboro complex.
Sanderson Farms expects to invest approximately $94 million in the potential new big bird de-boning complex. The project, if completed, will consist of an expansion of the feed mill for the company’s Kinston, N.C., plant, a hatchery, a processing plant with capacity to process 1.25 million chickens per week and a wastewater treatment facility. At full capacity, the plant is expected to employ approximately 1,100 people, require approximately 150 contract growers, and be equipped to process and sell 8.9 million pounds of dressed poultry per week. If all contingencies are met, the company expects to begin construction of the complex in the second quarter of fiscal 2011 and expects to begin operations in the third quarter of fiscal 2012.
According to Joe F. Sanderson Jr., chairman and CEO of Sanderson Farms, plans for this potential project have been approved by the company’s board of directors.
Sanderson said, “This planned expansion in North Carolina will support our growth strategy and further enhance our ability to drive revenue and earnings for our shareholders. Once fully operational, the production at this new facility, together with the new production at our Kinston, North Carolina, facility, will represent a 30 percent increase to our processing capacity, and is expected to provide steady production growth for the company through 2014. In today’s market environment, we believe we have a significant opportunity to leverage our efficient operations with the additional capacity of 1.25 million birds per week and take advantage of new markets.”
In a related item, Sanderson Farms has commenced an underwritten registered public offering of two million shares of its common stock. In connection with this offering, the company intends to grant the underwriters a 30-day option to purchase up to an additional 300,000 shares of common stock to cover over-allotments, if any.
Morgan Stanley and J.P. Morgan are the joint book-running managers of the offering, and BMO Capital Markets and Stephens Inc. are co-managers.
The company intends to use the net proceeds from the offering, together with other funds, to finance the construction of its new retail poultry complex in Kinston and the proposed poultry complex near Goldsboro. Pending such uses, net proceeds from the offering may be used to reduce indebtedness and to invest in cash and cash equivalents. The company may use some of the invested proceeds as working capital and for general corporate purposes.
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