Borden Dairy Company has filed for Chapter 11 bankruptcy amid rising milk prices and because of what the US-based milk processor described as an “unsustainable” debt pile.
The Dallas-based firm founded in 1857 said it will seek to use the court process to “pursue a financial restructuring designed to reduce its current debt load, maximise value and position the company for long-term success”.
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Borden Dairy now joins national US peer Dean Foods to enter into bankruptcy proceedings. Dean Foods filed for voluntary Chapter 11 in November, citing falling milk consumption and rising competition.
Chief executive Tony Sarsam, who became CEO in early 2018, said: “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. These challenges have contributed to making our current level of debt unsustainable.
“For the last few months, we have engaged in discussions with our lenders to evaluate a range of potential strategic plans for the company. Ultimately, we determined that the best way to protect the company, for the benefit of all stakeholders, is to reorganise through this court-supervised process.”
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In the meantime, Borden Dairy will continue to operate. The company said it employs 3,300 people across 12 milk processing plants. It was acquired in 2017 by US private-equity firm ACON Investments for an undisclosed sum and manufactures products under its namesake brand such as cream, buttermilk, cottage cheese, dips and flavoured drinks.
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By GlobalDataSarsam said: “Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure. This reorganisation will strengthen our position for future prosperity.”
