Capitol Peak and KKR have taken the US dairy company out of Chapter 11 in a transaction worth $340 million

Photo as seen on Borden Facebook page

Capitol Peak Partners and KKR have teamed up to take Borden out of bankruptcy. The US-based dairy company filed for Chapter 11 in January this year. Capitol Peak will assume majority ownership of the new company, and KKR, an existing lender to Borden, will be a minority investor. 

“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,” said Borden chief executive Tony Sarsam. 

The investors have taken on the company in a court-supervised transaction for approximately $340 million. 

Following the transaction, Borden will be appropriately capitalised, and the business will remain intact, including all plants, branches, routes and the Borden brand. 

Borden employs approximately 3,300 people who will continue work under the new ownership.

Sarsam said that despite being in the midst of Chapter 11 and a global pandemic, its team managed to generate positive cash flow, grow customer footprint and maintain an uninterrupted food supply across the US.

“We are exiting Chapter 11 as a thriving company that is meeting and exceeding its performance forecasts, making our outlook very promising,” he said.

Business overhaul

Borden initiated voluntary reorganisation proceedings on 5 January this year to pursue a financial restructuring designed to reduce its current debt load, maximise value and position the company for long-term success. 

Gregg Engles, Capitol Peak’s founder and managing partner, commented: “Borden has a rich history of partnering with America’s dairy farmers and leading retailers to provide wholesome nutrition for American consumers and families.” 

Engles has a longstanding experience in the industry, including chairman and chief executive roles at 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,” added Engles.

Borden: business as usual

Last month, the US 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,” said KKR Managing director Lauren Krueger. “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.”

The transaction is expected to finalised in mid-July. KKR’s investment is held by business development companies co-managed by KKR Credit.

Upon closing of the transaction, Borden’s former controlling and majority equity holders, ACON Investments and Grupo Lala, respectively, will no longer have an ownership interest in the business. 

Capitol Peak and KKR will establish a new board of directors.  

Date published: 29 June 2020

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