Dean Foods chapter 11 filing and $850 million DIP financing
Davis Polk is advising Southern Foods Group, LLC, Dean Foods Company and certain of their affiliates (collectively, “Dean Foods”) in connection with their restructuring under chapter 11 of the United States Bankruptcy Code. Dean Foods intends to use the restructuring process to protect and support its ongoing business operations and address debt and unfunded pension obligations while it works toward an orderly and efficient sale of the business or restructuring under a plan of reorganization.
On November 12, 2019, Dean Foods filed voluntary chapter 11 petitions in the United States Bankruptcy Court for the Southern District of Texas. At the hearing on November 13, 2019, Judge David R. Jones approved Dean Foods’ debtor-in-possession financing on an interim basis and granted Dean Foods all of its requested relief, including the authority to pay a significant amount of prepetition critical vendor obligations and to pay employee wages and benefits in the ordinary course.
In connection with the chapter 11 filings, Dean Foods entered into a $425 million DIP credit facility with certain of its prepetition revolving lenders and Coöperatieve Rabobank U.A., New York Branch as administrative agent. The proposed DIP credit facility includes a $236.2 million new money revolving facility, with a $25 million letter of credit sublimit, and a $188.8 million roll-up term loan facility, of which $50 million of the new money revolving facility was approved and accessible on an interim basis, with the remainder and the roll-up term loan facility to be available after the entry by the Bankruptcy Court of a final DIP order. As part of the financing package with the DIP facility, the court also approved the entry of an amended $425 million securitization facility. The proceeds of the DIP credit facility will be used to support Dean Foods’ business during the reorganization.
With a history dating to 1925, Dean Foods is a leading public food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States. Based in Dallas, Texas, Dean Foods manufactures, markets and distributes a wide variety of branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix, and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. Dean Foods sells its products under dozens of brands, including such household names as TrueMoo, DairyPure, Land O Lakes, Meadow Gold, Lehigh Valley Dairy Farms and Friendly’s.
The Davis Polk restructuring team includes partner Brian M. Resnick, counsel Steven Z. Szanzer and associates Aryeh Ethan Falk, Nate Sokol and Daniel E. Meyer. The finance team includes partner Hilary Dengel and counsel Jon Finelli and Andrei Takhteyev. The litigation team includes partner Elliot Moskowitz. The capital markets team includes partner Nicholas A. Kronfeld. All members of the Davis Polk team are based in the New York office.