CHICAGO - U.S. hog and pork producer Smithfield Foods Inc on Thursday priced a $250 million stock offering below the closing price of the previous day, sending shares lower.
Smithfield priced 21.7 million shares at $13.85, compared with Wednesday's close of $14.18.
Such a discount is common and may help in the sale of the shares, said Tim Ramey, an analyst with D.A. Davidson.
It is not unusual. No one would buy it if you didn't put some kind of discount on it, Ramey said.
Smithfield's shares fell almost 2 percent to $13.90 in early trading on the New York Stock Exchange.
The offering led to the resignation on Tuesday of director Paul Fribourg, who did not support the move.
Fribourg, who is also CEO of Continental Grain Co that owns about 8.8 percent of Smithfield's common shares, did not believe the offering was necessary as he was confident about the future performance of the company, Smithfield said at the time. He also cited the dilution to existing shareholders.
Michael Zimmerman, chief financial officer of Continental Grain, also resigned as an advisory director of Smithfield due to the offering.
The company previously said proceeds of the offering would go toward working capital and strengthening its balance sheet, which might include reducing debt. During Smithfield's annual meeting last month, shareholders approved increasing the number of common shares to 500 million from 200 million.
Smithfield, like other meat companies, is recovering from a rough 2008 and early 2009 when high feed and fuel prices increased costs, and the recession and H1N1 flu hurt meat sales. (Additional reporting by Ben Klayman in Chicago and Dhanya Skariachan in Bangalore; Editing by Maureen Bavdek, Dave Zimmerman) (Reporting by Bob Burgdorfer)