Around CGC
In this issue:
ContiGroup Completes New Credit Agreement
After months of work, CGC completed a
new financing agreement with ten major lenders on August 13. The $250
million revolving credit facility, or revolver, replaces that of May
2000 and will be used mainly to finance the inventories and receivables
of ContiGroup businesses. It will remain in effect until October 2005.
As in 2000, the new
agreement requires ContiGroup to borrow on a secured basis, using the
inventory and receivables of Wayne Farms and ContiBeef as collateral.
At the same time, the agreement significantly lowers the company's
up-front fees and allows it to borrow, at least initially, at a lower
interest rate than in the past. This lower rate reflects the company's
relatively strong performance in fiscal 2001 and 2002, and will remain
in effect until March 31 of next year. After March 31, the interest
rate will vary in accordance with the company's financial position.
CGC Treasurer Richard
Anderson notes that new agreement is largely a revision of the
original, with comparable terms and covenants, and that the lending
group, headed by Rabobank, is also much the same as it was in 2000.
These factors helped to make negotiations much simpler this time
around. ContiGroup has also benefited from its experience with the
first revolver and from the track record that it has established with
the banks over the last two years.
XIT Feedmill Makes it Ten!
The
XIT feedmill team has successfully celebrated its 10th year without a
lost-time accident. The XIT mill manufactures 350,000 tons of feed each
year, and operates 7 days per week, 365 days a year. Congratulations to
Daryl Stull, Mill Manager; Ben Fort, General Manager of XIT; and all
the men and women on the XIT team. XIT celebrated this outstanding
achievement with a BBQ lunch on August 6. Gift certificates were also
presented to each mill employee. XIT Feeders was built as a 33,000 head
facility in 1972. Through several expansions, it has grown to a
one-time occupancy level of 75,000 head.
--Cherry Chavez
 |
| The
XIT mill team marks ten years of safe operation. From left, George
Neill, Richard Miller, Mark Thompson, Bill Redman, Walter Williams,
Chuck Miller, Alex Banda, Daryl Stull (Mill Manager), Lena Melton. Not
pictured, Chris Chavez. |
New Safety Records at Wayne Farms
Albertville Reaches Two Million Hour Mark
We
proudly boast of reaching the 2 million hour mark without a lost time
injury during the second week of July. This is the first time in the 55
year history of the Albertville plant to reach 2 million man hours
without a lost time injury. We celebrated the milestone with a cookout
of hotdogs and hamburgers for all the employees with our Magnificent
Management doing the cooking. Each employee received a comemorative
T-shirt designating them as a member of the 2 million man hour team.
--Cathy Walling
Three Million Safe Hours at Pendergrass
Wayne
Farms LLC employees at the Pendergrass facility recently completed the
safest year in plant history and achieved one of the best records for
any Wayne Farms facility in 2001 and 2002.
The
Pendergrass facility compiled the safety record in 2001 and 2002 by
completing the period with no lost-time accidents. "Improving our
safety statistics is terrific, but the most important fact is that no
one lost any time from work," said David Sewell, Pendergrass Safety
Manager. "Communication and listening to our employees has been the
key. We highlight safety as the first and last point of all
communications, and we're stressing proactive measures and asking all
employees to let us know of any possible safety hazards so that we can
take the necessary actions to avoid any accidents."
Each employee was awarded a Wayne Farms jacket to mark the achievement. Wayne Farms LLC THANKS its employees for their effort.
--Bob Massaro
Douglas Achieves New Record
Among
other safety achievements at Wayne Farms, the Douglas plant has now
gone more than 450 days without a lost-time accident, a new plant
record. Congratulations to everyone at Douglas!
Support for Multiple Sclerosis BEEFaTHON
The
Panhandle Division of the National Multiple Sclerosis Society recently
organized an MS BEEFaTHON to raise funds for the Panhandle Division.
Merchants and individuals from throughout the area donated services and
items to be auctioned on live local TV in support of the fund raiser.
Cimarron
Feeders, Coronado Feeders, XIT Feeders and Hartley Feeders all
participated with the donation of custom cut beef quarters and helped
make this event a success.
--Suzanne Foley
New York Remembers September 11th
On
Wednesday, September 11, CGC New York joined together to mark the one
year anniversary of that terrible day in U.S. history. At a breakfast
that morning, we observed a minute of silence at 8:46 am. Paul Fribourg
then spoke, letting us know how grateful he was that our employees and
families were safe and well, thanking everyone for their dedication
during this difficult past year, and expressing hope for a safer year
ahead. Other members of the Management Committee also spoke. During the
day, we reflected on the past year and also remembered the support we
received from the rest of the ContiGroup organization.
--Robin Derin
Beef Rebounds in Japan
Japanese
beef consumption, which fell sharply following the BSE scare last fall,
is again on the rise, according to the U.S. Meat Export Federation.
Several factors are responsible for the turnaround, notably efforts by
the Japanese government to test cattle and prosecute firms involved in
the mislabeling of imported and domestic beef. The turnaround has also
been helped by two Meat Export Federation campaigns designed to
emphasize the safety and quality of U.S. beef. The most recent of
these, aisareru beef--loosely translated as "the beef people
love"--features three American women from the U.S. beef industry. It is
intended to appeal directly to Japanese women, who typically make most
decisions about beef purchases. Another segment of the campaign
features the actress and singer Yu Hayami, who has been promoting U.S.
beef with a newly published cookbook.
At
ContiBeef, Market Risk Manager Tommy Beall notes that the MEF has
helped to restore consumer confidence and believes that the upturn in
Japan is a positive sign. At the same time, he sees a general reduction
in the U.S. cattle supply, rather than improvement in Japan, as the
main reason for the expected rise in cattle prices this fall.
"The
recovery in exports to Japan has been gradual and the improvement we're
looking for this year is much more supply-related," says Tommy, adding
that improvement in the Japanese market, if it continues, will
nonetheless be an important bonus for U.S. beef producers.
With
regard to exports, Tommy notes that the industry has been helped this
year by higher sales to countries like South Korea and Mexico. These
countries tend to purchase lower-priced cuts and, as a result, the
total dollar value of exported U.S. beef has fallen by 5% through June,
compared to the same period last year. Nevertheless, South Korea and
Mexico have picked up much of the slack from Japan, and have helped
total export volume to rise by 7% for the first half of 2002. "Korea
and Mexico don't have the same market impact as Japan," says Tommy,
"but exporting the extra pounds has been a huge plus and should
continue in the future."