Thread regarding Dean Foods Co. layoffs

Wow! What a blatant lie by Deans/DFA about the DOJ antitrust concerns. The judge would have to be a complete id–t to let that slide. If he approves this sale knowing very well that Deans/DFA lied he's in trouble.

Highlights/paraphrasing/my rough interpretation of the Dean Foods written response (filed this morning) to the bond and shareholder objections:

• Bondholders and shareholders are a bunch conspiracy theorists and crybabies who haven’t presented an opposing plan with specifics and keep asking for more and more information that we keep providing to them, but enough is enough. We’ll work with them day and night, we really will, but we’re tired of their complaining and they should just shut up and be happy with the nothing that this deal offers because it’s the best deal they or we are going to get.
• Time is running out if we want to sell and keep operations running and people working.
• This is all due to people drinking less milk and not anything we did. Borden’s is bankrupt too and they used the same excuse, so it’s not just us.
• We don’t like everything that DFA is demanding any more than you guys do, but what choice did we have. They refused to compromise.
• DFA isn’t asking for anything more than any other buyer would ask.
• We really did explore other options like we said we were doing, but the pension plan liability was just too much to make any of those options viable. [Comment: so it wasn’t people drinking less milk, it was pension? If you’re going to make excuses, at least be consistent.]
• Despite the allegations otherwise, DFA really was the only real bidder.
• Well, OK. There are other bidders. Lots of them. But they’re not serious bidders. You’ll see when you approve this DFA stalking horse deal. Approving this is the only way we’ll know if they are really serious bidders.
• A bunch of language defending the one-sidedness in favor of DFA in the proposed bidding process that basically amounts to “yeah, but it’s all legal”.
• Dean Foods side of some of the bondholder complaints is: yeah you offered DIP financing but not the $850 million we got so it’s dishonest to say that you offered DIP financing; you say we manipulated dates but we changed some dates you asked us to change and what you’re calling manipulation is perfectly legal manipulation; bondholders wanting us to sell to regional bidders doesn’t make sense because regional bidders are all competitors of ours or those regional bidders are only interested in the plants for the real estate [Comment: DFA is a competitor too, so this argument makes no sense]; we’re not even asking the court to approve our deal with DFA, we’re asking the court to approve bidding procedures, of which the DFA deal is an integral part.
• The crybabies are saying that we’re taking a long time to provide them with information, well, not all of their requests have asked the right questions and when we’ve pointed that out to them they’ve taken a few days to re-ask the questions the right way.
• The allegations that Dean Foods is in collusion with DFA are ridiculous. DFA is a lowly dairy co-op owned by some stupid farmers and not a big evil corporation like us…I mean they’re a lowly dairy co-op owned by some stupid farmers and not a big evil corporation like we used to be. The fact that we colluded with DFA in the past and paid to settle lawsuits doesn’t mean that we’re colluding with them now. [OK, some of that was me reading between the lines, but they really do say “DFA is a cooperative of dairy farmers, not some giant for-profit corporation intent on world domination…”]
• Antitrust issues raised are no real concern or reason to delay. Issues the DOJ has raised have been minor, limited to a couple of regions only, and Dean Foods and DFA are working hand-in-hand with DOJ to resolve these issues. Nothing to see here. Move along. [This totally contradicts the letter that the DOJ sent to the bondholders lawyer yesterday.]

That’s all from reading the first 40 pages of over 250.

Supplemental objection filed by the Official Committee of Unsecured Creditors yesterday. States in part:
On March 11, 2020, Committee counsel received the attached letter from the Department of Justice (the “DOJ Letter”). The DOJ Letter includes, among others, the following statements:
• “Although the Antitrust Division’s review is at an early stage, we wish to advise you that an acquisition of Dean by DFA appears to pose a serious risk of anticompetitive harm that would likely need to be addressed either through divestitures or an injunction enjoining the transaction if DFA and Dean are unwilling or unable to agree to appropriate remedies needed to protect American farmers and consumers.”
• “The Antitrust Division has sought to engage with Dean and DFA about the potential problems and how to address those problems within the time before liquidity issues overtake Dean ... So far, however, DFA has shown little willingness to engage or fully acknowledge the significant antitrust issues raised by the proposed transaction or consider effective solutions to resolve those issues. Unless and until that changes, there remains a significant risk that the Antitrust Division may conclude that the transaction violates the antitrust laws and may need to initiate a lawsuit in the United States District Court seeking to enjoin the transaction.”

Part of a brief filed yesterday:
"The Court may not be aware; DFA murdered Dean. Granted Dean should not
have been hanging around with mobsters. Based on our observations of this Courts’
behavior, it appears to be prepared to reward the murderer with the victim’s house,
car, boat and bank account."

Not very long, but it goes on to outline how Dean Foods agreements with DFA helped contribute to Dean Foods downfall. Not in legal language that will carry weight with the court, but kind of funny.

There are a lot of objections submitted by multiple parties. Plus it looks like the corporate clowns are giving everyone the middle finger. If this court approves this deal then the judge is really dumb or Dean's paid him a ton of money. The deal still has to go through the DOJ.

This court was picked because it tends to lean heavily towards companies in decisions, so I'd lean towards thinking objections will be dismissed.

All this being said does it look like guys were going to be 100% bought by DFA? Or is the whole thing just going to get shut down

Some interesting stuff from exhibits in the bondholders objection to the DFA deal:

• A couple of weeks before the Chapter 11 filing the bondholders approached Dean Foods with a restructuring proposal that they allege would have kept the company out of bankruptcy and provided Dean Foods with an additional $215 million. Proposal was rejected without a counter proposal.
• Once it became apparent to the bondholders group that Dean Foods wasn’t interested in any restructuring and were going to file bankruptcy, the bondholders presented their own DIP proposal. The reason for the bondholder DIP proposal was the concern that the company would only focus on an asset sale and not consider restructuring.
• Whatever happened next is redacted.
• Allegations that Dean Foods has been manipulating deadlines throughout this whole process to make it so that nothing other than the proposed sale to DFA can even be considered.
• There is something in the DFA proposal that must be pretty fishy as it seems to be mentioned in several places in the arguments regarding why the $425 million offer is really much less than $425 million, but whatever it is is redacted.
• Bondholders had an expert analysis done of the DFA proposal and that analysis showed [whatever it showed is redacted] followed by the conclusion that the bondholders and most creditors won’t get any money if this deal happens.
• Bondholders still want opportunity to have a restructuring proposal considered instead of an asset sale, are still willing to put up money as part of that plan, and they allege that Dean Foods currently has enough money to continue operating through May while that plan is considered.
• But the bondholders allege that Dean Foods has refused to provide info that they need to complete a new restructuring proposal. Allegations are that when Dean Foods has been asked for information they have either provided records that are months or even years old or made promises to provide info and then haven’t followed through. There are expert witness statements that all say Dean Foods has to have the info being requested because they are mandated to report most of it the gov’t and therefore Dean Foods is lying when they say they don’t have more current records or they don’t have the info that is being requested. A long statement that appears as if it might be a list of examples of these alleged lies is almost totally redacted.

___________________________
Keep in mind with all of these objections that whatever it is that they are arguing is being argued as what’s best for them and may not be what’s best for employees. Personally I think a bunch of bondholders making decisions and not really knowing anything about the dairy business as evidenced by some of the dairy experts they had to hire to learn about some of the basic reporting requirements of the industry would be a disaster. But that doesn’t mean that they don’t make some good points about Dean Foods shady attempts to steer everything in DFA’s favor and not really considering other alternatives.

Highlights from some of the objections to the DFA sale.

MVDA (a dairy coop owned by dairy farmers)- objection based on antitrust concerns- allege sale to DFA would create a monopoly in many areas that would prevent MVDA’s member owners from having a processor to sell their milk to.
Committee of Unsecured Creditors (shareholders?)- Emphasize that the $425 million DFA bid is really much less than $425 million. Want everything split up and sold to highest bidder. Mention a rejected bid “submitted for the Debtors’ frozen businesses by a sophisticated and well-represented industry player” without naming who that bidder was. Majority of objection attempts to make arguments that Dean Foods has been too focused on selling to DFA, made too many concessions that will only benefit DFA, and have refused to pursue other options. Pertinent to employees:
“Employee Matters. DFA is not assuming any collective bargaining agreements, single or multiemployer pension plans, other post-employment benefits or any other seller benefit plan (or liabilities related to any of the foregoing). The Debtors also will have to pay all termination costs for those employees not hired by DFA (and later terminated by the Debtors). While DFA will assume certain accrued but unpaid liabilities for the employees that they do hire, such payments and liabilities would be deducted from the purchase price through the working capital adjustment.”
Translation: We’re concerned that under the proposed DFA deal that whatever money might otherwise be left over for us after the sale will instead go to the pension plan.

Teamsters- Argue that Dean Foods is obligated to bargain in good faith and that Dean Foods isn’t due to the proposed agreement with DFA that states all CBAs can be made null and void after the sale. Dean Foods made a proposal to Teamsters International on March 6, 2020 that allegedly called for the elimination of insurance benefits and pension plans. Teamsters argue that any proposals have to be presented to and negotiated with each individual local and the proposal in question didn’t include enough specifics to even be considered a proposal. Objection also emphasizes that Teamster contracts all have clauses that require new owners to recognize existing Teamsters agreements.

SMI (milk hauler owned over $7 million)- Argue that DFA proposal favors DFA to the point that it will discourage other bidders

Stop & Shop and Food Lion- argue against agreement for antitrust reasons and that the one-sided nature of the DFA proposal will discourage other bidders.

Ad hoc committee of Dairy Co-ops (8 different co-ops that joined together to file an objection)- argue against DFA agreement for antitrust reasons.

Normally I don't buy into conspiracy theories, but epiq site down again. It's like someone really doesn't want interested parties to be informed about what's going on. Maybe court will reject all of the ojections to the DFA deal, but reading the ojections casts doubt on the Company narrative that it's a done deal, all is well, and there's nothing to worry about.

So that 850 million DIP financing was just a gift. The bank doesn't want it back.

Once again, too many uninformed posters spreading falsehoods (says a lot about Deans workforce doesn't it). Even including pensions, DF liabilities do NOT exceed 1.8 billion:

1. Unsecured debt $700 million
2. Secured revolver $189 million
3. AR securitization facility $180 million
4. CS unfunded pensions $726 million

================================
Total = $1.795 billion

If offset by $37 million cash on hand as of Dec 2019, the debt net of pensions is just $1.032 billion. Cash on hand may have increased in the 2 months since then.

A deal with redacted parts is always a shady deal .

What is the purpose of this CEO just to sale as fast as he can to get his bonuses

Well I figure the creditors and lenders would be up in arms. Dean's owes more than 2 billion. 320 million ain't gonna cut it.

Some of the objectors might not hold much weight with the court but I found this one interesting-
short objection that basically states it agrees with the bond holders objections from Pension Benefit Guaranty Corporation (“PBGC”), an agency of the United States Government.

Site working better now. Still reading and there are a lot of blacked out parts, but my interpretation of some of the allegations by the bondholders group that are being made in an attempt to stop the DFA deal from happening:

• Dean Foods execs are in a hurry to complete a deal, never had a plan for reorganization, and didn’t really consider any other offers other then DFA because if the deal doesn’t happen by a certain date then the execs are in danger of losing their multi-million dollar bonuses.
• Dean Foods refused to provide information to bond holders who were trying to come up with alternatives to the sale to DFA.
• At least one of the big wigs at DFA that Dean Foods has been negotiating with just recently left Dean Foods to go to work at DFA.
• $425 million purchase price is really $322 million- other $103 million is what Dean Foods owes DFA and would be taken off the purchase price.
• Quote found in arguments regarding why DFA’s offer is too one sided in favor of DFA:

“DFA also has no obligation to close unless the Debtors successfully reject or otherwise modify their Collective Bargaining Agreements in a manner acceptable to DFA and subject to section 1113 of the Bankruptcy Code. The Debtors do not control whether such rejections or modifications will both pass muster under section 1113 and satisfy DFA, and the Ad Hoc Group anticipates that the applicable unions will vigorously assert their rights and protect their interests in a manner adverse to DFA.”