US milk giant Borden files for bankruptcy amid rising dairy prices and debt strain
06 Jan 2020 --- US milk processor and distributor Borden Dairy has filed for bankruptcy in lieu of rising dairy prices and market headwinds currently impacting the local industry. The Dallas-based company has since initiated a reorganization through a court-supervised process, with assets and liabilities listed between US$100 to 500 million in its filing. The company expects it will sustain its “business as usual” operations following the downturn.
“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,” explains Tony Sarsam, CEO of Borden.
“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 reorganize through this court-supervised process,” he adds.
Borden has since initiated voluntary reorganization proceedings in the District of Delaware under Chapter 11 of the US Bankruptcy Code. The company intends to use the court process to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the company. Borden further plans to continue operating in the ordinary course of business, under the court’s supervision.
Stressing that it is “business as usual” at Borden, Sarsam notes that the company had proactively filed expected motions as part of the court-supervised process, which allow it to pursue day-to-day operations. Borden will be seeking court approval for these requests during the coming days and intends to work closely with creditors, customers and employees to identify value-maximizing restructuring plans that will benefit all stakeholders.
“Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure. This reorganization will strengthen our position for future prosperity. We will continue serving our customers, employees and other stakeholders and operating business as usual throughout this process,” asserts Sarsam.
Last year marked several major milestones for the company, including the revival of Borden's “spokescow” mascot Elsie, the brand’s reintroduction in Ohio and the launch of several innovative products, such as State Fair-inspired milk flavors, Gingerbread Eggnog and children’s flavored milk product Kid Builder. In light of its bankruptcy filing, company growth last year increased in year-over-year sales.
“We have a very tenured workforce of 3,300 people who live and breathe our values of teamwork and creative problem solving. I am extremely confident and optimistic about our continued success in the future,” Sarsam concludes.
By Benjamin Ferrer
