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Borden becomes second big U.S. milk producer to file for bankruptcy

Conventional milk producers have struggled amid rising milk prices and competition from almond, rice and soy milk.

By Shannon D. Harrington

Borden Dairy Co. filed for bankruptcy late Sunday, becoming the second major U.S. milk producer to do so in recent months as rising milk prices and other challenges made its debt load unsustainable.

The Dallas-based company listed assets and liabilities of between $100 million and $500 million in its Chapter 11 filing in Delaware. The company, founded more than 160 years ago, said in a statement that operations will continue as normal during the reorganization.

“Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure,” Chief Executive Officer Tony Sarsam said in the statement, referring to the widely followed profit measure of earnings before interest, taxes, depreciation and amortization. “This reorganization will strengthen our position for future prosperity.”

The bankruptcy filing comes less than two months after larger rival Dean Foods Co. filed for Chapter 11 in Houston. Conventional milk producers have struggled amid rising milk prices and competition from almond, rice and soy milk.

“The company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,” Sarsam said in the statement. “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.”

Private equity firm ACON Investments LLC and affiliates acquired Borden in 2017. ACON said in a statement at the time that the company received debt facilities from GSO Capital Partners and PNC Bank.

The case is Borden Dairy Holdings LLC, 20-10011, U.S. Bankruptcy Court for the District of Delaware

To contact the reporter on this story:
Shannon D. Harrington in New York at sharrington6@bloomberg.net
To contact the editors responsible for this story:
Shannon D. Harrington at sharrington6@bloomberg.net
Andrew Monahan
© 2020 Bloomberg L.P.
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