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Pilgrim's Pride Corp. (PGPDQ) has agreed to sell 64% of new common stock to Brazilian beef giant JBS SA (JBSS3.BR) for $800 million as the chicken processor disclosed its bankruptcy reorganization plan.

The Wall Street Journal reported earlier this month that a deal was in the works for the second-largest U.S. chicken company.

The deal announced Wednesday calls for proceeds from the stock sale to fully fund cash distributions to allowed claims, either in cash or notes. Current Pilgrim's Pride shareholders will own 36% of the reorganized company. That is a victory for the shareholders, who typically get nothing when a company files for bankruptcy.

Pilgrim's Pride current shares rose 10% to $5.52. The stock fell as low as 14 cents in the wake of December's bankruptcy filing, which took place as falling meat demand and prices made the ability to deal with its more than $2 billion of debt more difficult.

The plan needs bankruptcy court approval. Pilgrim's Pride hopes to leave bankruptcy by year's end.

JBS has been increasing its U.S. presence in recent years, buying Swift & Co. for $225 million in 2007 and the U.S. beef-processing operations of Smithfield Foods Inc. (SFD) last year.

-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; kevin.kingsbury@dowjones.com