Dean Foods Company, America’s largest milk producer, has filed for Chapter 11 bankruptcy protection and is considering the sale of its assets. Dean Foods intends to use this process to protect and support its ongoing business operations and address debt and unfunded pension obligations while it works toward an orderly and efficient sale of the company.
Dean Foods also announced that it is engaged in advanced discussions with Dairy Farmers of America regarding a potential sale of substantially all assets of the company. If the parties ultimately reach agreement on the 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.
In a statement to Michigan Farm Bureau, DFA confirmed interest in purchasing Dean Foods. “Today, Dean Foods announced it has filed for Chapter 11 bankruptcy protection and is engaged in discussions with DFA regarding the purchase of Dean Foods’ assets,” Monica Massey, executive vice president and chief of staff of DFA, said in a statement. “As Dean Foods is DFA’s largest customer, our focus is ensuring we have secure markets for our members’ milk. Thanks to the strategic planning and management by our farmer Board of Directors and management team, the Cooperative is in a financial position to withstand a situation like this.”
With a shift to dairy alternatives and Walmart creating their own processing store, this is not coming as shock to some. Reuters reported, “Dean Foods, which has a market valuation of about $74 million, had a net debt of about $968 million at the end of June.”
Dean Foods is operating in the ordinary course of business and remains focused on providing its customers with wholesome, great-tasting dairy products and the highest levels of quality, service, and value. Dean Foods has received a commitment of approximately $850 million in debtor-in-possession (“DIP”) financing from certain of its existing lenders, led by Rabobank. Following court approval, the company expects to use the DIP financing, together with cash on hand and operating cash flows, to support its continued operation throughout this process, including payment of employee wages and benefits without interruption and payment to suppliers and vendors in full under normal terms for goods and services provided on or after the filing date.