Largest milk processor in US files for bankruptcy
Dean Foods, the milk processor in the US, has filed for bankruptcy in Texas, and is also in “advanced discussions” with Dairy Farmers of America about a potential sale.
In an announcement earlier today, Tuesday, November 12, Dean Foods revealed that both the firm and all of its subsidiaries have initiated “voluntary Chapter 11 reorganisation proceedings in the Southern District of Texas”.
The processor – which employs about 15,000 people in the US and owns a number of brands including DairyPure, TruMoo and Berkeley Farms – said that it intends to use the bankruptcy process to “protect and support its ongoing business operations and address debt and unfunded pension obligations while it works towards an orderly and efficient sale”.
It was noted that, should agreement be reached with Dairy Farmers of America on terms of a sale, such transaction would be subject to regulatory approval and would be subject to higher or otherwise better offers in the bankruptcy.
The company has received a commitment of approximately $850 million in debtor-in-possession financing from certain of its existing lenders, led by Rabobank.
Dean Foods outlined that it expects to use the granted financing with operating cash-flows to support continued operation during the process including paying suppliers and employees.
Eric Beringause, Dean Foods president and CEO, said:
“The actions we are announcing today are designed to enable us to continue serving our customers and operating as normal as we work toward the sale of our business.
Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption.
“Importantly, we are continuing to provide customers with an uninterrupted supply of high-quality dairy products, as well as supporting our dairy suppliers and other partners,” the CEO said.