Pennexx Foods sues Smithfield Foods for $226 million
December 4, 2003
Dow Jones Business News reports that Pennexx Foods Inc., a small Pennsylvania meat grinder, sued its largest shareholder, pork-processing giant Smithfield Foods Inc., for $226 million Wednesday, alleging that its one-time partner plotted its demise. The lawsuit, filed in federal district court in Philadelphia, contends that because Pennexx refused to sell out to Smithfield, Smithfield "implemented a strategy to take over and then eliminate Pennexx." Among other allegations, the suit contends that faulty or inappropriate equipment was installed, leading to production delays and contributing to financial losses. Last year Pennexx reported a loss of $8.8 million on sales of $48.7 million. First-quarter 2003 losses on sales of $12.8 million totaled $3.1 million. Pennexx eventually defaulted on a credit agreement with Smithfield that, this past June, led to Smithfield''s takeover of the Philadelphia plant. In a filing with the Securities and Exchange Commission, Pennexx said Smithfield sold the assets, leaving Pennexx unable to continue its business. Representatives of Smithfield, Smithfield, Va., couldn''t immediately be reached for comment.