By Lynda Kiernan, Global AgInvesting Media

After filing for bankruptcy in the early days of January, Borden Dairy Co., one of the largest and oldest dairy companies in the U.S., has been acquired by Capitol Peak Partners, who will assume majority ownership, and KKR, an existing lender to Borden, which will assume a minority position in the company.

Dallas-based Borden announced on January 5 its intention to navigate the court process to pursue a financial restructuring for the reduction of debt and to reposition the company for long-term growth – marking the second major dairy company to file bankruptcy in a matter of months, following Deal Foods declaration in November 2019.

“Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,” said Tony Sarsam, CEO of Borden at the time. “These challenges have contributed to making our current level of debt unsustainable.” 

Following the close of the $340 million deal, Borden will be appropriately capitalized, allowing the business to remain intact, including all factories, branches, and routes, and the Borden brand will remain active. The newly reorganized company also will continue to employ its 3,300 employees, and to service its customer base. 

“Borden received strong investor interest and multiple bids throughout this sale process, which is a testament to the terrific work the people of Borden have done to build a valuable and enduring 163-year-old brand,” said Sarsam.

“Despite being in the midst of Chapter 11 and a global pandemic, our team managed to generate positive cash flow, grow our customer footprint and maintain an uninterrupted food supply to nourish American families. We are exiting Chapter 11 as a thriving company that is meeting and exceeding its performance forecasts, making our outlook very promising.” 

The close of the deal will also mean that former majority stakeholders ACON Investments and Grupo Lala will no longer have ownership interest in Borden, leaving Capitol Peak and KKR to re-establish a new Board of Directors.

Throughout the reorganization process and ongoing pandemic over the past months Borden has continued to operate, even securing the largest contract from the U.S. Department of Agriculture (USDA) through its Farmers to Families Food Box Program as part of the Coronavirus Farm Assistance Program. This contract gives Borden the ability to supply 700 million servings of fresh fluid milk to qualifying 501(c)3 organizations across the U.S. for free.

“Borden has a long and proud history as a dairy industry leader,” said Lauren Krueger, managing director, KKR. “We are pleased to join Capitol Peak in supporting Borden and its many dedicated employees through a restructuring that cleans the slate for Borden to start a new chapter.”

 

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.