Borden Dairy announced June 26 the start of a new chapter with Capitol Peak Partners and its affiliates acquiring substantially all Borden assets for $340 million, following completion of a court-supervised sale process. Capitol Peak will assume majority ownership of the new company, and KKR, an existing lender to Borden, will be a minority investor. Following the transaction, Borden will be appropriately capitalized, and the business will remain intact, including all plants, branches, routes and the Borden brand. The newly reorganized Borden will be able to continue employment for approximately 3,300 Borden employees and service for Borden customers.
"Borden received strong investor interest and multiple bids throughout this sale process, which is a testament to the terrific work the people of Borden have done to build a valuable and enduring, 163-year-old brand," Borden chief executive officer Tony Sarsam said. "Despite being in the midst of Chapter 11 and a global pandemic, our team managed to generate positive cash flow, grow our customer footprint and maintain an uninterrupted food supply to nourish American families. We are exiting Chapter 11 as a thriving company that is meeting and exceeding its performance forecasts, making our outlook very promising."
Borden initiated voluntary reorganization proceedings on Jan. 5 to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the company for long-term success. Upon closing of the transaction, Borden's former controlling and majority equity holders, ACON Investments and Grupo Lala, respectively, will no longer have ownership interest in the business. Capitol Peak and KKR will establish a new board of directors.
"Borden has a rich history of partnering with America's dairy farmers and leading retailers to provide wholesome nutrition for American consumers and families," said Capitol Peak founder and managing partner Gregg Engles, who brings extensive dairy industry experience as the former chairman and CEO of both Dean Foods and WhiteWave Foods. "The Capitol Peak team is excited by this unique opportunity to work alongside KKR and build this iconic dairy company."
Throughout its reorganization process and the COVID-19 pandemic, Borden said it has upheld its high level of service to customers. Last month, the U.S. Department of Agriculture awarded Borden the largest contract through its Farmers to Families Food Box Program as part of the Coronavirus Farm Assistance Program. The contract enables Borden to supply 700 million servings of fresh fluid milk for free to qualifying 501(c)3 organizations across the country.
"Borden has a long and proud history as a dairy industry leader. We are pleased to join Capitol Peak in supporting Borden and its many dedicated employees through a restructuring that cleans the slate for Borden to start a new chapter," KKR managing director Lauren Krueger said.
The transaction, which is subject to certain closing conditions, including the entry of a final order, is expected to be finalized in mid-July. KKR's investment is held by business development companies co-managed by KKR Credit.