Dean Foods Company (NYSE: DF) Tuesday filed for bankruptcy. The company has initiated a reorganization of the business and is in talks with dairy farmers for the sale of its assets. Due to the latest developments, the release of Dean Foods’ third-quarter results, which was due Tuesday before the opening bell, has been delayed. The management is unlikely to hold the earnings conference call as per the schedule.
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The country’s largest milk producer has been facing a slump in demand due to customers’ changing tastes, with more and more people shifting to new brands and non-dairy milk. Statistics show that consumption of natural milk declined significantly in the US in recent years. Meanwhile, a statement from the company said it would ensure an uninterrupted supply of dairy products during the bankruptcy process.
The finances of Dean Foods have been under severe stress due to mounting debt and unfunded pension obligations. For the planned restructuring, the management has secured $850 million in financing from existing lenders. The fund will be used for continuing the operations, paying wages and settling the dues of suppliers and vendors.
Earlier, the management had conducted a review of the business under the new CEO Eric Beringause and decided not to sell the company.
Commenting on the Chapter-11 filing, Beringause said, “Since joining the company just over three months ago, I’ve taken a hard look at our challenges, as well as our opportunities, and truly believe we are taking the best path forward. In recent months, we have put in place a new senior management team that not only has considerable experience in the dairy and consumer product industries but also in executing major turnarounds. I am confident we have the right people in place to lead us through this process.”