UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (date of earliest event reported): January 24, 2019 (January 17, 2019)
Dean Foods Company
(Exact name of registrant as specified in its charter)
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Delaware |
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1-12755 |
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75-2559681 |
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(State or other jurisdiction of |
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(Commission |
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(IRS Employer |
2711 North Haskell Avenue, Suite 3400
Dallas, Texas 75204
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (214) 303-3400
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 1.01 Entry into a Material Definitive Agreement
Dean Foods Company, a Delaware corporation (the “Company”), and certain of its subsidiaries previously entered into a Seventh Amended and Restated Receivables Purchase Agreement, dated as of March 26, 2015, by and among Dairy Group Receivables, L.P. and Dairy Group Receivables II, L.P., as sellers (each of which is a subsidiary of the Company), the financial institutions party thereto, the Company, as provider of certain performance undertakings on behalf of its subsidiaries, and the other subsidiaries of the Company party thereto, as servicers, as amended by Amendment No. 1 to Seventh Amended and Restated Receivables Purchase Agreement and Reaffirmation of Performance Undertakings, dated as of January 4, 2017 (as so amended, the “Existing RPA,” and as further amended from time to time, the “Receivables Purchase Agreement”).
On January 17, 2019, the Company and certain of its subsidiaries that are party to the Existing RPA entered into Amendment No. 2 to Seventh Amended and Restated Receivables Purchase Agreement, Waiver and Reaffirmation of Performance Undertakings (“Amendment No. 2”). Pursuant to Amendment No. 2, among other matters the lenders under the Existing RPA (the “RPA Lenders”) agreed to waive (i) compliance with the financial covenant in the Existing RPA requiring the Company to maintain a Total Net Leverage Ratio (as defined in the Existing RPA) of less than or equal to 4.25 to 1.00 for the test period ended December 31, 2018 (the “Financial Covenant”) and (ii) any cross default under the Existing RPA arising from non-compliance with the Financial Covenant under the Revolving Credit Facility (as defined below). The waiver is subject to termination upon the earliest to occur of (a) March 1, 2019, (b) the date, if any, on which any Seller Party (as defined in the Existing RPA) breaches its obligations under Amendment No. 2 and (c) the date, if any, on which the Collateral Agent (as defined in the Existing RPA) enters into a forbearance agreement with the Company relating to (x) the Credit Agreement, dated as of March 26, 2015, by and among the Company and the lenders and other parties from time to time party thereto (as amended, the “Revolving Credit Facility”) and (y) the exercise of remedies with respect to the Revolving Credit Facility.
The Company is actively engaged in negotiations to amend or replace the Receivables Purchase Agreement and the Revolving Credit Facility to provide liquidity and financial flexibility. We expect the new capital structure to include a revolving credit facility secured by our real estate and fixed assets as well as a securitization facility similar to our existing Receivables Purchase Agreement. The Company currently believes that it will complete this recapitalization no later than March 1, 2019, although it can offer no assurances that it will be able to complete such recapitalization on acceptable terms or at all.
The Company currently has no outstanding borrowings under its Revolving Credit Facility.
In connection with Amendment No. 2, the Company paid certain fees to the RPA Lenders.
The foregoing description of Amendment No. 2 does not purport to be complete and is qualified in its entirety by reference to Amendment No. 2, which is attached as Exhibit 10.1 to this Current Report on Form 8-K (the “Current Report”) and incorporated by reference herein.
This Current Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are predictions based on our current expectations and our projections about future events, and are not statements of historical fact. Forward-looking statements include statements concerning anticipated recapitalizations involving amendments to, or replacements of, our Receivables Purchase Agreement and Revolving Credit Facility. In some cases, you can identify these statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” and “continue,” the negative or plural of these words and other comparable terminology. All forward-looking statements included in this Current Report are based upon information available to us as of the filing date of this Current Report, and we undertake no obligation to update any of these forward-looking statements for any reason. You should not place undue reliance on these forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, and our other filings with the Securities and Exchange Commission. You should carefully consider the risks and uncertainties described in those filings.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
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Exhibit |
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Description |
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10.1 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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January 24, 2019 |
DEAN FOODS COMPANY | ||
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By: |
/s/ Russell F. Coleman | |
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Name: |
Russell F. Coleman |
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Title: |
Executive Vice President, General Counsel, Corporate Secretary, & Government Affairs |
EXECUTION COPY
AMENDMENT NO. 2 TO
SEVENTH AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT,
WAIVER
AND
REAFFIRMATION OF PERFORMANCE UNDERTAKINGS
This Amendment No. 2 to Seventh Amended and Restated Receivables Purchase Agreement, Waiver and Reaffirmation of Performance Undertakings (this “Amendment”) is entered into as of January 17, 2019, among Dairy Group Receivables, L.P., a Delaware limited partnership (“Dairy Group”), and Dairy Group Receivables II, L.P., a Delaware limited partnership (“Dairy Group II” and, together with Dairy Group, the “Sellers” and each, a “Seller”), each of the parties listed on the signature pages hereof as a Servicer (each, a “Servicer” and collectively, the “Servicers”), each of the parties listed on the signature pages hereof as a Financial Institution (each, a “Financial Institution” and collectively, the “Financial Institutions”), each of the parties listed on the signature pages hereof as a Company (each, a “Company” and collectively, the “Companies”), Coöperatieve Rabobank U.A., New York Branch, as Agent (the “Agent”), PNC Bank, National Association, as LC Bank, and Dean Foods Company, as Provider (“Provider”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Seventh Amended and Restated Receivables Purchase Agreement, dated as of March 26, 2015, among the Sellers, the Servicers, the Financial Institutions, the Companies, the LC Bank and the Agent, as amended by Amendment No. 1 to Seventh Amended and Restated Receivables Purchase Agreement and Reaffirmation of Performance Undertakings dated as of January 4, 2017 (as so amended, the “Existing Agreement,” and as further amended from time to time, the “Receivables Purchase Agreement”).
R E C I T A L S:
WHEREAS, the parties hereto wish to amend the Existing Agreement in certain other respects, upon and subject to the terms and conditions set forth in this Amendment;
WHEREAS, in connection with the Existing Agreement, Provider entered into each of (i) the Third Amended and Restated Dean Performance Undertaking Agreement, dated as of June 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Dean Performance Undertaking”), made by the Provider in favor of the Agent and Dairy Group II, and (ii) the Fourth Amended and Restated Performance Undertaking, dated as of June 12, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Suiza Performance Undertaking” and, together with the Dean Performance Undertaking, the “Performance Undertakings”, each, a “Performance Undertaking”), made by the Provider in favor of the Agent and Dairy Group;
WHEREAS, Provider desires to reaffirm its obligations under the Performance Undertakings after giving effect to the amendments and waivers set forth herein, all as more fully described herein.
NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments to Receivables Purchase Agreement. Subject to the terms and conditions set forth herein and upon satisfaction of the conditions precedent set forth in Section 4 hereof, the Receivables Purchase Agreement is hereby amended as follows:
(a) Section 1.10(a)(i) of the Receivables Purchase Agreement is amended and restated as follows:
(i) pursuant to, but without duplication of, Sections 2.3 and 2.4, from and after the Facility Termination Date, the amount necessary to cash collateralize the LC Participation Amount with respect to all outstanding Letters of Credit until the amount of cash collateral held in the LC Collateral Account equals 100% of the LC Participation Amount plus the amount of all LC Fees and all “LC Participant Fees” (as defined in the Fee Letter) to accrue thereon through the scheduled expiration of the related Letters of Credit, in each case, as reasonably estimated by the LC Bank;
Section 2. Waivers. During the period from and including the date hereof to and including the Waiver Termination Date (as defined below), (a) no Potential Amortization Event or Amortization Event shall be deemed to arise or have arisen under the Receivables Purchase Agreement pursuant to Section 9.1(n) of the Receivables Purchase Agreement solely as a result of the Total Net Leverage Ratio as of the end of the fiscal quarter ended December 31, 2018 being greater than 4.25 to 1.00 and (b) no Potential Amortization Event or Amortization Event shall be deemed to arise or have arisen under the Receivables Purchase Agreement pursuant to Section 9.1(c) of the Receivables Purchase Agreement solely as a result of the Total Net Leverage Ratio as of the end of the fiscal quarter ended December 31, 2018 being greater than 4.25 to 1.00 and resulting in a default or event of default under and pursuant to the Dean Credit Agreement.
As used herein, “Waiver Termination Date” shall mean the earliest of (a) March 1, 2019, (b) the date, if any, on which any Seller Party breaches its obligations under this Amendment and (c) the date, if any, on which the Collateral Agent shall enter into a forbearance agreement with Dean Foods Company relating to (x) the Dean Credit Agreement and (y) the exercise of remedies with respect thereto. For the avoidance of doubt, on the Waiver Termination Date the waivers set forth in this Amendment shall terminate and any actual Potential Amortization Event or Amortization Event previously waived shall be reinstated.
In order to induce the Required Purchasers to enter into this Amendment, (a) the Servicers agree that, upon written request from any Purchaser, the Servicers will prepare and deliver to the Agent and each Financial Institution a Weekly Report each Wednesday of each of week after the delivery of such request until the Waiver Termination Date, (b) the Seller Parties agree that the proceeds of any purchase or any issuance of any Letter of Credit under the Receivables Purchase Agreement will be used for corporate purposes, and (c) the Provider represents and warrants that there are no amounts outstanding under the Dean Credit Agreement
and covenants that, after the date hereof, neither it nor any of its Subsidiaries will make any borrowing under the Dean Credit Agreement.
Section 3. Reaffirmation of Performance Undertakings. Provider acknowledges the amendments to the Receivables Purchase Agreement and the waivers effected hereby. Provider reaffirms, after giving effect to such amendments and waivers, that its obligations under each of the Performance Undertakings and each other Transaction Document to which it is a party continue in full force and effect and are hereby ratified, reaffirmed and confirmed.
Section 4. Conditions to Effectiveness of Amendment. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”) upon the satisfaction of the following conditions precedent:
(a) Amendment. The Agent shall have received executed counterparts of this Amendment duly executed by each Seller, each Servicer, the Provider, the Agent and the Required Purchasers.
(b) Fee. Each Financial Institution (or its designee) shall have received a non-refundable, fully-earned fee equal to (i) fifteen basis points (0.15%) multiplied by (ii) the Company Purchase Limits of the Companies in such Financial Institution’s Purchaser Group as of the date hereof.
(c) Representations and Warranties. As of the date hereof, after giving effect to this Amendment, all of the representations and warranties contained in the Receivables Purchase Agreement and in each other Transaction Document (except representations and warranties which relate to a specific date, which were true and correct as of such date) shall be true and correct as though made on and as of the date hereof (and by its execution hereof, each Seller Party shall be deemed to have represented and warranted such).
(f) No Amortization Event or Potential Amortization Event. As of the date hereof, after giving effect to this Amendment, no Amortization Event or Potential Amortization Event shall have occurred and be continuing (and by its execution hereof, each Seller Party shall be deemed to have represented and warranted such).
Section 5. Miscellaneous.
(a) Effect; Ratification. The amendments and waivers set forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to any amendment, waiver or modification of any other term or condition of the Receivables Purchase Agreement or of any other instrument or agreement referred to therein; or (ii) prejudice any right or remedy which the Companies, the Financial Institutions or the Agent may now have or may have in the future under or in connection with the Receivables Purchase Agreement or any other instrument or agreement referred to therein. Each reference in the Receivables Purchase Agreement to “this Agreement,” “herein,” “hereof” and words of like import and each reference in the other Transaction Documents to the “Receivables Purchase Agreement” or to the “Purchase Agreement” or to the Receivables Purchase Agreement shall mean the Receivables Purchase
Agreement, as modified hereby. This Amendment shall be construed in connection with and as part of the Receivables Purchase Agreement and all terms, conditions, representations, warranties, covenants and agreements set forth in the Receivables Purchase Agreement and each other instrument or agreement referred to therein, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
(b) Transaction Documents. This Amendment is a Transaction Document executed pursuant to the Receivables Purchase Agreement and shall be construed, administered and applied in accordance with the terms and provisions thereof.
(c) Costs, Fees and Expenses. Each Seller agrees to reimburse the Agent and the Purchasers upon demand for all costs, fees and expenses (including the reasonable fees and expenses of counsel to the Agent and the cost of affirming the rating of the Commercial Paper by independent financial rating agencies) incurred in connection with the preparation, execution and delivery of this Amendment.
(d) Counterparts. This Amendment may be executed in any number of counterparts, each such counterpart constituting an original and all of which when taken together shall constitute one and the same instrument.
(e) Severability. Any provision contained in this Amendment which is held to be inoperative, unenforceable or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions of this Amendment in that jurisdiction or the operation, enforceability or validity of such provision in any other jurisdiction.
(f) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.
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DAIRY GROUP RECEIVABLES, L.P., | |
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as Seller | |
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By: Dairy Group Receivables GP, LLC, | |
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Its: General Partner | |
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By: |
/s/ Edgar A. Deguia |
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Name: |
Edgar A. Deguia |
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Title: |
Vice President and Treasurer |
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DAIRY GROUP RECEIVABLES II, L.P., | |
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as Seller | |
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By: Dairy Group Receivables GP II, LLC, | |
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Its: General Partner | |
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By: |
/s/ Edgar A. Deguia |
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Name: |
Edgar A. Deguia |
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Title: |
Vice President and Treasurer |
[Signature Page to Amendment No.2 to Seventh Amended and Restated Receivables Purchase Agreement]
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NIEUW AMSTERDAM RECEIVABLES CORPORATION B.V., as a Company | ||
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By: |
/s/ A. Vink | |
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Name: |
A. Vink | |
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Title: |
Proxy holder | |
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Intertrust Management B.V. | |
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Managing Director | |
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By: |
/s/ H.R.T. Kröner | |
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Name: |
H.R.T. Kröner | |
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Title: |
Proxy holder | |
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COÖPERATIEVE RABOBANK U.A., as a Financial Institution and LC Participant | |
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By: |
/s/ Eugene Van Esveld |
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Name: |
Eugene Van Esveld |
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Title: |
Managing Director |
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By: |
/s/ Jop Vander Sluis |
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Name: |
Jop Vander Sluis |
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Title: |
Executive Director |
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COÖPERATIEVE RABOBANK U.A., New York Branch, as Agent | |
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By: |
/s/ Christopher Lew |
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Name: |
Christopher Lew |
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Title: |
Executive Director |
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By: |
/s/ Stephen G. Adams |
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Name: |
Stephen G. Adams |
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Title: |
Managing Director |
[Signature Page to Amendment No.2 to Seventh Amended and Restated Receivables Purchase Agreement]
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SUNTRUST BANK, as a Financial Institution, LC Participant and Company | |
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By: |
/s/ Emily Shields |
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Name: |
Emily Shields |
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Title: |
First Vice President |
[Signature Page to Amendment No.2 to Seventh Amended and Restated Receivables Purchase Agreement]
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PNC BANK, NATIONAL ASSOCIATION, as a Financial Institution, LC Participant, Company and LC Bank | |
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By: |
/s/ Michael Brown |
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Name: |
Michael Brown |
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Title: |
Managing Director |
[Signature Page to Amendment No.2 to Seventh Amended and Restated Receivables Purchase Agreement]
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FIFTH THIRD BANK, as a Financial Institution, a Company and LC Participant | |
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By: |
/s/ Andrew D. Jones |
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Name: |
Andrew D. Jones |
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Title: |
Director |
[Signature Page to Amendment No.2 to Seventh Amended and Restated Receivables Purchase Agreement]
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DEAN FOODS COMPANY, as a Provider | |
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By: |
/s/ Edgar A. Deguia |
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Name: |
Edgar A. Deguia |
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Title: |
Vice President and Treasurer |
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DEAN DAIRY HOLDINGS, LLC, as a Servicer | |
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SUIZA DAIRY GROUP, LLC, as a Servicer | |
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ALTA-DENA CERTIFIED DAIRY, LLC, as a Servicer | |
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BERKELEY FARMS, LLC, as a Servicer | |
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COUNTRY FRESH, LLC, as a Servicer | |
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DEAN EAST, LLC as a Servicer | |
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DEAN EAST II, LLC as a Servicer | |
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DEAN FOODS NORTH CENTRAL, LLC, as a Servicer | |
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DEAN FOODS OF WISCONSIN, LLC, as a Servicer | |
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DEAN WEST, LLC, as a Servicer | |
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DEAN WEST II, LLC, as a Servicer | |
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FRIENDLY’S ICE CREAM HOLDINGS CORP., as a Servicer | |
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FRIENDLY’S MANUFACTURING AND RETAIL, LLC, as a Servicer | |
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GARELICK FARMS, LLC, as a Servicer | |
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LAND-O-SUN DAIRIES, LLC, as a Servicer | |
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MAYFIELD DAIRY FARMS, LLC, as a Servicer | |
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MIDWEST ICE CREAM COMPANY, LLC, as a Servicer | |
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MODEL DAIRY, LLC, as a Servicer | |
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REITER DAIRY, LLC, as a Servicer | |
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SHENANDOAH’S PRIDE, LLC, as a Servicer | |
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SOUTHERN FOODS GROUP, LLC, as a Servicer | |
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TUSCAN/LEHIGH DAIRIES, INC., as a Servicer | |
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VERIFINE DAIRY PRODUCTS OF SHEBOYGAN, LLC, as a Servicer | |
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By: |
/s/ Edgar A. Deguia |
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Name: |
Edgar A. Deguia |
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Title: |
Vice President and Treasurer |
[Signature Page to Amendment No.2 to Seventh Amended and Restated Receivables Purchase Agreement]