Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • April 2020
  • Teaching Note
  • HBS Case Collection

Oaktree: Pierre Foods Investment

By: Victoria Ivashina, Michael Harmon and Terrence Shu
  • Format:Print
  • | Language:English
  • | Pages:9
ShareBar

Abstract

Teaching Note for HBS No. 219-018. This case is a setting to discuss “loan to own” investment strategy that is often pursued by distressed investors. The aftermath of the 2007 financial crisis left many companies with poor liquidity and limited ability to obtain credit. One of these companies was Pierre Foods, a producer and distributor of processed and precooked protein products that had experienced several years of promising sales growth and held a leading market position. Despite this, 2007 saw Pierre foods adversely affected by a spike in production costs and unsustainably high leverage. This made Pierre Foods an attractive opportunity for Oaktree Capital Management, allowing them to employ its strategy of investing in distressed debt securities with the goal of leading a restructuring during which their debt investment would be converted into a controlling equity stake. The challenge of executing “loan to own” strategy is being able to identify ahead of the restructuring the debt layer that stands to become equity (the so called “fulcrum security”). Overall, this case can be used to understand unique elements of a representative distressed investment. It can also be used as a platform for discussing sources of value and risks associated with distressed investing.

Keywords

Distress Investing; Investment; Debt Securities; Strategy; Restructuring

Citation

Ivashina, Victoria, Michael Harmon, and Terrence Shu. "Oaktree: Pierre Foods Investment." Harvard Business School Teaching Note 220-083, April 2020.
  • Purchase

About The Author

Victoria Ivashina

Finance
→More Publications

More from the Authors

    • December 2020
    • Journal of Finance

    Monetary Policy and Global Banking

    By: Falk Bräuning and Victoria Ivashina
    • November 2020
    • Faculty Research

    Ver de Verdad: I Can See Clearly Now

    By: Nori Gerardo Lietz and Terrence Shu
    • October 2020
    • Faculty Research

    TowerBrook: ESG in Action (A)

    By: Victoria Ivashina, Brian Trelstad and Meaghan Conway
More from the Authors
  • Monetary Policy and Global Banking By: Falk Bräuning and Victoria Ivashina
  • Ver de Verdad: I Can See Clearly Now By: Nori Gerardo Lietz and Terrence Shu
  • TowerBrook: ESG in Action (A) By: Victoria Ivashina, Brian Trelstad and Meaghan Conway
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College