Thursday, 1 July 2010

Dean Foods Completes Amendment and Extension of Senior Secured Credit Agreement

Back to all newsroom
Thursday, 1 July 2010

Extensions Lengthen Maturity and Amortization Profile
Amendment Recasts Leverage Ratio Covenant Requirements

DALLAS, July 1, 2010 /PRNewswire via COMTEX/ —

Dean Foods Company (NYSE: DF) today announced the successful completion of an amendment and extension of its Senior Secured Credit Agreement, lengthening its maturity profile, reducing near-term amortizations, and providing the Company greater flexibility in its financial leverage ratio covenant.

“We are very pleased with the execution of this transaction as it provides longer term financing at a very reasonable cost of capital,” said Gregg Engles, Chairman and CEO. “This deal is important to the future of Dean Foods as it puts in place a capital structure that facilitates our ability to make necessary and attractive investments to transform our supply chain and enhances our ability to weather potential dairy industry volatility.”

The amendment and extension transaction was strongly supported by the Company’s lenders, with 86% of the Revolving Credit Facility and Term Loan A extending. Approximately $1.3 billion of the Company’s Revolving Credit Facility and $1.1 billion of its Term Loan A that were set to mature in April of 2012 will now mature on April 2, 2014.

The extension of the Term Loan B also received strong support as 60% has been extended. $492 million of the Term Loan B will now mature on April 2, 2016. An additional $561 million has been extended until April 2, 2017, subject to the Company meeting certain leverage, debt, cash or credit rating conditions further detailed in today’s Form 8-K filing. If the Company does not meet at least one of the specified conditions, this portion of the Extended Term Loan B will mature on April 2, 2016.

As a result of this transaction, nearly 40% of the Company’s total debt outstanding matures in 2016 or later. Term loan amortizations from 2011 to 2013 have been significantly reduced, from $1.2 billion to approximately $850 million under the amended facility. Following the amendments, the Company has over $1.3 billion of available liquidity under its Revolving Credit Facility and Accounts Receivable Asset Securitization Facility.

As summarized in the attached Exhibit 1, pricing adjustments, which are applicable only to the extended portions of the debt, include increases of the undrawn cost of the Extended Revolving Credit Facility from 15 basis points to 50 basis points. Drawn costs on the Extended Revolving Credit Facility and Extended Term Loan A have increased from LIBOR plus 75 basis points to LIBOR plus 300 basis points, subject to the pricing grid detailed in Exhibit 1.

On the Extended Term Loan B maturing in 2016, drawn costs have increased from LIBOR plus 137.5 basis points to a cost of LIBOR plus 300 basis points. The Extended Term Loan B maturing in 2017 (subject to the conditions described above) carries an initial rate of LIBOR plus 325 basis points. All costs are subject to leverage-based pricing grids detailed in the attached Exhibit 1.

Commitments held by lenders who did not agree to extend their loans will continue at their existing pricing and maturity. This includes an aggregate principal amount of approximately $225 million in respect of the revolving credit facility, $173 million in respect of the Term Loan A and $692 million in respect of the Term Loan B.

Under the terms of the Restated Credit Agreement, the leverage covenant of funded debt to EBITDA applicable to all lenders has been amended as follows:

          Period                Maximum Leverage Ratio
          ------                ----------------------
    6/30/2010 - 3/31/2011              5.50x
    6/30/2011 - 9/30/2012              5.00x
    12/31/2012 - thereafter            4.50x

“Dean Foods has always enjoyed a very strong relationship with its bank group,” added Jack Callahan, Chief Financial Officer. “We are extremely pleased with their overwhelming support of this transaction. With this deal in place, we will continue on the path toward our goal of deleveraging the balance sheet to 3.50x funded debt to EBITDA, balancing continued debt reduction against high-return capital investments targeted at extending our low cost position.”

Inclusive of the effects of this transaction and based on the current forward curve for LIBOR rates, the Company now expects full year 2010 interest expense of approximately $240-$245 million.

Additional information regarding today’s announcement is available in the attached exhibit and in a Form 8-K filed with the SEC.

Joint lead arrangers on the amendment and extension of the Credit Agreement included J. P. Morgan Securities, Inc., Banc of America Securities, LLC, and Wells Fargo Securities, LLC.


Dean Foods is one of the leading food and beverage companies in the United States and a European leader in branded soy foods and beverages. The Company’s Fresh Dairy Direct-Morningstar segment is the largest U.S. processor and distributor of milk, creamer, and cultured dairy products. These offerings are marketed under more than 50 local and regional dairy brands, as well as through private labels. The WhiteWave-Alpro segment produces and sells an array of branded dairy, soy and plant-based beverages and foods. WhiteWave brands, including Silk(R) soy and almond milk, Horizon Organic(R) milk and dairy products, International Delight(R) coffee creamers, and LAND O’LAKES(R) creamers, are category leaders and consumer favorites. Alpro is the pan-European leader in branded soy food products.


Some of the statements in this press release are “forward-looking” and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These “forward-looking” statements include statements relating to, among other things, debt covenant compliance and expected financial performance. These statements involve risks and uncertainties that may cause results to differ materially from the statements set forth in this press release. The Company’s ability to meet targeted leverage, financial and operating results, including targeted cost reductions and debt covenant compliance, depends on a variety of economic, competitive and governmental factors, including raw material availability and costs, the demand for the Company’s products, and the Company’s ability to access capital under its credit facilities or otherwise, many of which are beyond the Company’s control and which are described in the Company’s filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based.

CONTACT: Corporate Communications, Marguerite Copel, +1-214-721-1273; or Investor Relations, Barry Sievert, +1-214-303-3438

                                  (Exhibit to follow)

                                                       Exhibit 1

                                                   Dean Foods Company
                                                  Summary Debt Profile
                                                   (as of 6/30/2010)

     Maturity Date  Credit Facilities          Commitment
     -------------  -----------------          ----------
                     Non-Extended Revolving
     4/2/2012        Credit Facility                     $225
                     Non-Extended Term Loan
                     A                                   $173

                     Extended Revolving Credit
     4/2/2014        Facility                       $1275
                    Extended Term Loan A              $1102
                     Non-Extended Term Loan
                     B                                $692

                     Extended  Term Loan B -
     4/2/2016          2016                            $492

                     Extended  Term Loan B -
     4/2/2017          2017                            $561

                    Other Debt Outstanding
     Annual Renewal Asset Securitization               $600

     6/1/2016       7% Senior Notes                    $500

     10/15/2017     6.9% Senior Notes                  $142

      Maturity Date        Pricing            New Pricing*
      -------------       ---------           ------------

      4/2/2012             L + 75 bps(1)      No Change
                           L + 75 bps(1)      No Change

                                               L + 300
      4/2/2014            L + 75 bps           bps(2)
                                               L + 300
                          L + 75 bps           bps(2)
                           L + 137.5
                           bps(3)             No Change

                                               L + 300
      4/2/2016            L + 137.5 bps        bps(4)

                                               L + 325
      4/2/2017            L + 137.5 bps        bps(5)

      Annual Renewal      CP + 140            No Change

      6/1/2016                      7.00%     No Change

      10/15/2017                    6.90%     No Change

    1.  Pricing Grid For Non Extended  Revolver
     and Term Loan A
     Ratio         Libor Spread    Commitment Fee
    --------       ------------    --------------
    </= 4.0              0.6250%            0.1250%
    -------              ------             ------
    > 4.0 but </=
     4.5                 0.7500%            0.1500%
    -------------        ------             ------
    > 4.5 but </=
     5.0                 1.0000%            0.2000%
    -------------        ------             ------
    > 5.0 but </=
     5.5                 1.2500%            0.2500%
    -------------        ------             ------
    > 5.5 but </=
     6.0                 1.5000%            0.3000%
    -------------        ------             ------
    > 6.0                1.7500%            0.3750%
    -----                ------             ------

    2.  Pricing Grid For Extended Revolver and
     Term Loan A
     Ratio         Libor Spread    Commitment Fee
    --------       ------------    --------------
    </= 3.0              2.0000%            0.3750%
    -------              ------             ------
    > 3.0 but </=
     3.5                 2.2500%            0.5000%
    -------------        ------             ------
    > 3.5 but </=
     4.0                 2.5000%            0.5000%
    -------------        ------             ------
    > 4.0 but </=
     4.5                 2.7500%            0.5000%
    -------------        ------             ------
    > 4.5 but </=
     5.0                 3.0000%            0.5000%
    -------------        ------             ------
    > 5.0                3.2500%            0.5000%
    -----                ------             ------

    3.  Pricing Grid for Non-Extended Term Loan
     B (2014 Maturity)
    Leverage Ratio               Libor Spread
    --------------               ------------
    </= 4.5                                 1.3750%
    -------                                 ------
    > 4.5 but </= 5.75                      1.5000%
    ------------------                      ------
    > 5.75                                  1.7500%
    ------                                  ------

    4.  Pricing Grid for Extended Term Loan B
     (2016 Maturity)
    Leverage Ratio               Libor Spread
    --------------               ------------
    <= 5.0                                  3.0000%
    -----                                   ------
    > 5.0                                   3.2500%
    -----                                   ------

    5.  Pricing Grid for Extended Term Loan B
     (2017 Maturity)
    Leverage Ratio               Libor Spread
    --------------               ------------
    </= 5.0                                 3.2500%
    -------                                 ------
    > 5.0                                   3.5000%
    -----                                   ------

    * No Libor Floor on any tranches
    *Term Loan A and Revolver grid locked at L + 300 through Q3 - 2010

          Summary Amortization Schedule of Term Loans and Notes
                              (in millions)

                       Term Loan       Term Loan
                           A               B          Notes       Total:
                       ---------       ---------      -----       ------

             2010           $107             $15                    $122

             2011           $169             $18                    $187

             2012           $297             $18                    $315

             2013           $331             $18                    $348

             2014           $427            $676                  $1,103

             2015                            $11                     $11

             2016                           $471        $500        $971

             2017                           $525        $142        $667

    Quarterly Amortization (2010- 2011)

          Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
          --------- --------- --------- --------- -----

     2010       $61        $9       $26       $26  $122

     2011       $26       $54       $54       $54  $187

    Existing Libor Interest Rate Swaps
    The following table summarizes our various interest rate agreements
    in effect as of June 30, 2010

                                 Expiration     Amounts ($
     Fixed Interest Rates            Date        millions)
     --------------------    ----------     ----------
        4.07% - 4.27%               2010              $450
                          June 2010 -
         4.91%(A)                 2012            $1,500

    (A)  The notional amounts of the swap agreements decrease by $250
    million on March 31, 2011 and the balance on March 30, 2012

SOURCE Dean Foods Company

All the latest from Dean Foods


Latest news

In May 2020, Dairy Farmers of America (DFA) acquired a substantial portion of Dean Foods' assets. As a family farmer-owned and governed cooperative, no one has a greater interest in preserving and expanding milk markets than DFA.

6 May, 2020
Dean Foods Completes Sale of its Miami, Florida Facility to Mana Saves McArthur, LLC
DALLAS--(BUSINESS WIRE)--Dean Foods today announced that it has completed the previously announced s...
1 May, 2020
Dean Foods Completes Sale of Assets to Dairy Farmers of America
DALLAS--( BUSINESS WIRE )--Dean Foods Company ("Dean Foods" or the "Company") today announced that i...
30 April, 2020
Dean Foods Completes Sales of its Uncle Matt’s Business and the Majority of the Meadow Gold Hawaii...
DALLAS--(BUSINESS WIRE)--Dean Foods ("Dean Foods" or the "Company") today announced that it has comp...
22 April, 2020
Dean Foods Announces Asset Purchase Agreement with MGD Acquisition, LLC for the Sale of the Majority...
MGD Acquisition to Operate Meadow Gold Hawaii as an Ongoing Business to Continue Serving the Hawaiia...
13 April, 2020
Dean Foods Announces Termination of Agreement in Principle with Industrial Realty Group, LLC for the...
Reached Agreement in Principle with an Interested Party for the Sale of Dean Foods’ Hilo Facility ...
4 April, 2020
Dean Foods Receives Court Approval for the Sale of Substantially All of Its Assets
DALLAS--(BUSINESS WIRE)--Dean Foods Company ("Dean Foods" or the "Company") today announced that the...
1 April, 2020
Dean Foods Reaches Agreement in Principle With Industrial Realty Group, LLC for the Sale of Dean Foo...
DALLAS--(BUSINESS WIRE)--Dean Foods Company ("Dean Foods" or the "Company") today announced that it ...
31 March, 2020
Dean Foods Announces Dairy Farmers of America as Winning Bidder for Substantially All of Its Assets
Prairie Farms Dairy, Mana Saves McArthur, LLC, Producers Dairy Foods and Harmoni, Inc. to Purchase A...
17 February, 2020
Dean Foods Enters Into Asset Purchase Agreement with Dairy Farmers of America
Dairy Farmers of America to Serve as Proposed “Stalking Horse Bidder” in a Court-Supervised Sale...
20 December, 2019
Dean Foods Receives Final Court Approval for $850 Million in Debtor-In-Possession Financing
DALLAS --(BUSINESS WIRE)--Dec. 20, 2019-- Dean Foods Company (NYSE: DF) (“Dean Foods” or the “...
14 November, 2019
Dean Foods Company Receives Court Approval of “First Day” Motions to Support Normal Busi...
Obtains Interim Approval to Access DIP Financing Customers Receiving Uninterrupted Supply of Dairy P...
12 November, 2019
Dean Foods Company Initiates Voluntary Reorganization with New Financial Support from Existing Lende...
Company Secures Commitments for $850 Million in DIP Financing to Support Operations In Advanced Disc...
25 October, 2019
Dean Foods Company Announces Date for Third Quarter 2019 Earnings Release and Conference Call
DALLAS , Oct. 25, 2019 /PRNewswire/ --  Dean Foods Company (NYSE: DF) today announced that it will ...
6 September, 2019
Dean Foods Concludes Strategic Alternatives Review; Focuses on Go-Forward Strategy Under New Leaders...
DALLAS , Sept. 6, 2019 /PRNewswire/ --  Dean Foods Company (NYSE: DF) (" Dean Foods " or the "Compa...
6 August, 2019
Dean Foods Announces Second Quarter 2019 Results
DALLAS , Aug. 6, 2019 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today reported second quarter 20...
26 July, 2019
Dean Foods Appoints Eric Beringause as President and CEO
Industry Veteran Brings More Than Three Decades of Experience in Food, Beverage and Consumer Product...
View the newsroom

We’re proud to support national organizations that are nourishing children, promoting animal welfare, and helping in times of disaster.

White papers