Borden Announces Closures of Charleston, SC and Miami, FL Milk Plants

April 6, 2022

Borden Dairy, Inc. has confirmed that it will be closing two of its milk plants in the southeast, one located at Charleston, SC, and the other in Miami, FL.

Closures are anticipated to be complete by May, 2022.

Borden Dairy Company has provided the following statement:

One plant is located at Charleston, SC, and is often referred to as “the Coburg Dairy,” still referencing and going back to the plant’s founding as Coburg Dairy in 1920. The Coburg Cow is a popular regional landmark, and even has her own Facebook page.

Borden’s Charleston Operation is said to generate approximately $81 Million in annual sales, and has a total workforce of 265 staff members.

The second plant is located at Miami, FL, and the South Florida Business Journal is reporting the property may have already been sold for $21.75 million, almost double what New Dairy Opco paid for the property it purchased through the Borden bankruptcy proceedings of 2020. Approximately 154 employees will be affected by the closure.

These closures will have a ripple effect across the southeast and beyond, as farms will likely incur additional transport costs for getting milk to other markets, and milk haulers (those who haul milk from dairy farms to processing plants) will have to adjust delivery routes.

The Borden company is known to source milk from both independently contracted farms and from milk co-ops, although it is not known how that mix was proportioned at either Charleston or Miami.

School systems and food retailers served by these plants, largely on the southeast coast and in coastal states, will have to find other sources for fresh milk on their shelves.

In the extended circle of the milk supply chain, school systems who are sourced by the Charleston plant are in the process of being notified; farmers and co-ops who supplied milk to these plants, as well as milk haulers who conveyed milk into these delivery destinations have been notified.

Borden Dairy, Inc. is headquartered at Dallas, TX. The company is led by Chairman and Chief Executive Officer Gregg Engles, a former owner of Dean Foods. Pat Boyle is the company’s President.

Borden Dairy operations nationally involve over 3000 employees, 12 milk plants, and over 90 branches in the processing and distribution of milk and dairy products. Borden’s Dutch Chocolate Whole Milk is deemed to be one of the best commercially processed chocolate milks on the market.

This is an evolving story; additional information will be posted as it becomes available.

Borden Dairy Sale: New Dairy Opco, LLC (Engles/Capitol Peak & KKR) wins bid, received Court approval June 26

15_Borden_Sale_New_Dairy_Opco_LLC_Engles

UPDATE – June 26 2020: US Bankruptcy Court, District of Delaware, Approves Sale to Capitol Peak and KKR

Engles, (Capitol Peak, Previous Dean CEO) partners with KKR & Co. for Successful Bid

Borden Dairy, and its beloved icon, Elsie, have new owners.
Early on the afternoon of June 15, 2020, New Dairy Opco, LLC, was announced as the winning bidder for Borden Dairy Company and its assets, 5 months after Chapter 11 was filed on January 5, 2020.  A notice was posted on the website filing the Borden Chapter 11 Documents for the US Bankruptcy Court of Delaware, and is included below.
A Sale Hearing has been scheduled for Thursday, June 18, 2020 by the Bankruptcy Court. A series of hearings and court activity, dictated by Rules of Federal Court, will take place in the following weeks before a sale is final.
New Dairy Opco, LLC, is an entity comprised of  KKR and Co., a US-based global investment firm, and Capitol Peak Partners, founded by Gregg Engles, a previous Dean Foods CEO.  A Declaration entered on the Court’s docket on June 20, Docket #879, lists that Colin Murphy is the secretary of New Dairy Opco, which is commonly referred to as New Dairy.
GH Acquisition, LLC, and Prairie Farms Dairy, LLC, were announced as the next highest bidders.
This is a breaking news story, and more details will emerge going forward.
This change in ownership will set a new stage for dairy co-ops and independent dairy farms selling milk to the Borden plants, and hopefully provide more certainty to farmers of markets going forward.
 

The Sale Notice as it appeared on the Court’s Docket:

15_Borden_Elsie_New_Dairy_Opco_Court_1
15_Borden_Elsie_New_Dairy_Opco_Court_2
New Dairy Opco, LLC, became official as a Delaware corporation on June 1, 2020.
According to a Bloomberg report by Jeremy Hill and Isis Almeida, which doesn’t name sources, New Dairy Opco, LLC, is a joint effort of Capitol Peak Partners, headed by Gregg Engles (a previous CEO of Dean Foods), and KKR, said to be the world’s 2nd largest private equity firm.  KKR had been prominently mentioned in the Borden bidding per the filings on the court docket.
In the late stages of the Dean Foods Chapter 11 process, KKR and Borden, along with some other financial entities, offered an alternative plan to the sale of Dean Foods to Dairy Farmers of America (DFA).

The Bloomberg story in its entirety, as first published at 2:20 pm on June 15th (the story has since been updated – see link above):

15_Borden_Elsie_Bloomberg_Report_Engles

Background & Additional Resources:

General: Borden Fact Sheet – Summary: Borden has 12 plants, 91 branches, has 3,300 employees. The plants operate mostly in the southeast, somewhat in a crescent from Charleston, SC to Florida to Texas.  The Fact Sheet also lists plants in Cleveland, OH, and London, KY.

17 June 2020, 2:30 pm: KKR, Former Dean Foods CEO win bid to buy Borden Dairy Co. in Bankruptcy Court;  by Colleen Kotke for the Wisconsin State Farmer,
15 June 2020, 6:01 pm:  Capitol Peak Partners, KKR Win Bankruptcy Auction for Bordenposted at Morningstar, provided by Dow Jones
15 June 2020, 6:29 pm:  KKR, Former Dean Foods CEO win Auction for Borden Dairy Five Months After Bankruptcy Filing, by Natalie Walters for the Dallas Morning News
26 May 2020, 7:00 am: For a Second Time in Borden’s 163-year History, A Government Contract Could Propel it Through Crisis, by Natalie Walters, for the Dallas Morning News

Look for new developments as the story evolves.

 

15_Borden_Sale_New_Dairy_Opco_LLC_Engles

Borden Files Chapter 11; Moves to Protect Farmer Payments for Pre-Petition Milk; Interim Motion Approved on Jan. 8th

6837_Borden_Chap_11_Motion_Vendors_Header

UPDATE: Jan. 9th:  The Court issued an Order, posted late on Jan. 8th, which did indeed authorize Borden to pay independent farmers and co-ops, but there is some leeway as to the amount those producers and handlers might be paid.  Independent producers especially are encouraged to read the full 7 pgs. of the Order found here (you may also download and print), and perhaps consult with an attorney for interpretation and clarification.  Some situations may differ per state laws and milk bonding statutes.

Dave Natzke, Progressive Dairyman, has also published a report of the hearing with added information from the courtroom, which may be read here.

 

Borden Dairy Company, et al.,  now becomes the 2nd major dairy company within two months to file for Chapter 11 Bankruptcy to reorganize their financial structure.  Dean Foods, the nation’s largest processor of fluid milk, filed for Chapter 11 protection in November.

The Borden Chapter 11 filing caught many grass-roots dairy farmers off guard, especially due to renewed optimism due to recent new product introductions under the leadership of Tony Sarsam.

Progressive Dairy published an informative report written by Dave Natzke, Editor.

Borden Dairy  issued the following press release about the filing, which can also be accessed on the web:

5_Borden_Chapter_11_Presser_3

When a milk-purchasing company announces bankruptcy, the first question that grass-roots farmers and rural communities is concerned with is “Will those farmers get paid for ‘pre-petition’ milk?”  (That is the milk delivered in the period prior to the filing for which the farmer has not received payment.)   Payment for milk delivered from the day of filing forward is generally protected by the Court.

Normally, independent farmers, those who sell milk directly to a plant or company, and who are not members of a milk cooperative, are left holding the bag, and don’t get paid, because they are generally considered ‘unsecured creditors.’  Some states, but not all, have ‘milk bonding’ statutes, which protect payments to farmers to some degree; some states may protect payment for all or a significant portion of the milk delivered, while others may have bonding statutes which cover only a tiny portion.

In this Borden Dairy Chapter 11 process, the company has filed a Motion with the Court to ask that the Company be allowed to complete those payments to those independent farmers and five milk cooperatives. This Motion was scheduled to be heard as part of the “First Day Hearings” on January 7th, but at the writing of this blogpost, (midnigh/early am, Jan 8th) an Order has not been entered which will actually permit that to happen.  An Order must be entered on the Court’s Docket which will finalize payment.

The documents below, on page 3, paragraphs 7 and 8, note that Borden purchases raw milk from ‘approximately 262 independent family dairy farms’ and ‘five farmers’ cooperatives; collectively, those farmers and cooperatives are called ‘Milk Vendors.’  They also detail the normal times of payment.

The Borden Chapter 11 proceeding is legally known as Case 20-10010-CSS, and is being heard in the United States Bankruptcy Court for the District of Delaware.    Below are the 7 pages of Document 11 in the above captioned case, titled “Declaration of Jason Monaco in Support of Debtors’ Motion for Authorization to Pay Critical Vendors,” which is the Motion asking for payment to farmers.

Affected parties residing in or operating farms in the states of Mississippi or Texas likely need to pay special attention to a Footnote (3)  at the bottom of Page 3. Such parties may need to have this Document 1, along with other documents in this case reviewed by an attorney for interpretation, and have such a qualified attorney determine how this footnote may affect their farming operations.

NOTE:  The author of this blog is not an attorney, and any information posted SHOULD NOT be considered legal advice, only observations. These public documents are posted for information purposes only; it will be up to individual farms affected in this matter to consult attorneys to review their legal rights.

 

Here are the pages of Document 11, the Motion requesting payment to farmers:

 

Microsoft Word - 25812857_1.docx

Microsoft Word - 25812857_1.docx

 

Microsoft Word - 25812857_1.docx

 

Microsoft Word - 25812857_1.docx

 

Microsoft Word - 25812857_1.docx

 

Microsoft Word - 25812857_1.docx

 

Microsoft Word - 25812857_1.docx

 

Any updates of significant events and/or official rulings by the Court will be added or noted when they are available, as will additional information related to this process.

NOTE:  The AUTHOR of this blog IS NOT AN ATTORNEY, and any information posted SHOULD NOT be considered legal advice. These public documents are posted for information purposes only; it will be up to individual farms affected in this matter to consult attorneys to review their legal rights per their individual situations.  The author has experienced a milk company bankruptcy as a producer, so therefore is familiar with the process from a farmer/producer perspective

 

ON A PERSONAL NOTE:  As Borden now joins Dean Foods in Chapter 11 proceedings, this is the second Financial Reorganization/Bankruptcy filing of a major purchaser of fluid milk in the United States within two months.  Many, many family farms will be affected to some degree by these proceedings, no matter if a farm is an ‘independent’ or a member of a cooperative. In turn, the rural communities across the country in which those farms are located will be affected as well.  May I ask that anyone who is a Believer in a Higher Power please join me in keeping the entire US Dairy Farm industry in your collective prayers?  Thank you for doing that!

May God Bless our Dairy Farms, and our Farming Communities!!

 

6837_Borden_Chap_11_Motion_Vendors_Header