US: Dairy firm Golden Guernsey files for bankruptcy
US milk processor Golden Guernsey, once owned by Dean Foods, has gone into administration.
Owner OpenGate Capital yesterday (8 January) announced the Wisconsin-based firm had filed for Chapter 7 bankruptcy in Delaware bankruptcy court. This followed the closing of Golden Guernsey's facility on 5 January.
OpenGate acquired Golden Guernsey from Dean Foods in September last year after the US Department of Justice required the firm to sell the business in order to resolve antitrust concerns that its share of the school milk supply business was too large.
Since taking ownership, OpenGate Capital said it had made "vigorous efforts" to reduce its expenses through discussions with its various suppliers, vendors, and the labour union.
"We have to make realistic decisions about our investments, and the reality is that the Golden Guernsey business was unable to achieve financial autonomy given the pressure to lower prices and seemingly non-negotiable operating expenses," said OpenGate CEO Andrew Nikou. "This was a very difficult decision given the loss of jobs and disruption to milk delivery service, yet it had to be made."
LOS ANGELES, CA - January 8, 2013 - OpenGate Capital, LLC, a private investment and acquisition firm, announced today that one of its portfolio companies, Waukesha, Wisconsin-based milk processor Golden Guernsey, LLC, has filed for Chapter 7 bankruptcy in Delaware bankruptcy court. This action follows the closing of Golden Guernsey's facility on January 5th.
OpenGate Capital acquired Golden Guernsey in September 2011 from Dean Foods after the United States Department of Justice required Dean Foods to sell the business in order to resolve antitrust concerns that Dean Foods' share of the school milk supply business was too large.
When OpenGate Capital acquired Golden Guernsey the acquisition terms included an exclusive and fixed-price milk supply agreement, and the assumption of a legacy union contract. During the investment period, OpenGate Capital and its management team successfully implemented new sales and operations strategies which created a seamless transition of Golden Guernsey from the former owner's organization and yielded an increase in sales of 20 percent However, as Golden Guernsey was suffering under the pressure to meet demands for lower cost products, it was unable to successfully reduce its expenses in a way to achieve a state of financial viability given some of its legacy relationships.
Since being acquired by OpenGate Capital, Golden Guernsey made vigorous efforts to reduce its expenses through discussions with its various suppliers, vendors, and the labor union. The prospect of closing the plant and the potential for bankruptcy was raised on several occasions with these groups, all of which were provided with a clear picture of Golden Guernsey's fragile financial condition. Despite this, Golden Guernsey's efforts were rejected, leading to the closure of the business.
Andrew Nikou, OpenGate Capital's CEO stated, "We have to make realistic decisions about our investments, and the reality is that the Golden Guernsey business was unable to achieve financial autonomy given the pressure to lower prices and seemingly non-negotiable operating expenses. This was a very difficult decision given the loss of jobs and disruption to milk delivery service, yet it had to be made. The closure of the plant is not a reflection of the hard work contributed by the Golden Guernsey family of employees. Unfortunately, when expenses overwhelm revenue for too long, and we are unable to achieve cooperation from the people with whom we do business, the business cannot be sustained."
Original source: OpenGate Capital
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