Dean Foods Now For Sale After Bankruptcy Filing
USAgNet - 11/13/2019
The nation's largest milk producer has filed for bankruptcy. Dean Foods said Tuesday that it has filed for Chapter 11 protection and that it plans to continue to operate its business as it tries to deal with its debt and unfunded pension obligations while trying to
find a buyer.
The company's bonds traded down by more than 50% to a record low of just 15 cents on the dollar. The bonds were selling for as much as 55 cents on the dollar as recently as mid-October, according to Bloomberg.
The news of the filing came as the company disclosed its third- quarter earnings. Dean Foods said that on an adjusted basis, it had a loss of 92 cents a share, while the mean forecast among Wall Street analysts surveyed by FactSet was for a loss of 36 cents.
To help it keep running its business, the Dallas-based company said it had received $850 million in financing. Dean Foods also said that it is "engaged in advanced discussions" with Dairy Farmers of America, a cooperative representing more than 8,500 farms
across the U.S. A deal with the company's creditors that would leave Dean Foods as an independent company is also a possibility.
Wells Fargo's John Baumgartner said in a note to clients Tuesday that the company's "pension and fundamental challenges [have proven] too much to overcome."
Americans have been drinking less milk, and are increasingly choosing store brands. Dean's largest customer, Walmart (WMT), has started its own milk-processing businesses.