Borden Dairy files for Chapter 11 protection

BY Richard Summerfield

One of the largest and oldest dairy companies in the US, Borden Dairy, has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware.

The company, founded in 1856, listed estimated debts and liabilities, both in a range from $100m to $500m. Amid rising milk prices and the increasing popularity of dairy-free equivalents including almond, rice and soy milk, Borden’s debt load became unsustainable. The company was also unable to meet its pension obligations. Borden has around 3300 employees, 22 percent of which are covered by a collective bargaining agreement.

The dairy market has experienced a number of significant challenges of late, with Borden becoming the second largest dairy producer to file for bankruptcy in recent months, after its larger rival, Dean Foods Co, filed in November 2019.

However, while Dean Foods reported a net loss in seven of its last eight quarters, Borden’s growth last year outpaced the wider industry, despite a 6 percent drop in overall US milk consumption since 2015. The company recorded revenue of $1.2bn in 2019. Part of the company’s increased sales result from other products it produces, including sour cream, cottage cheese, teas and orange juice.

“Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure,” said Borden chief executive Tony Sarsam in a statement announcing the filing. “This reorganisation will strengthen our position for future prosperity. Over the past 163 years, we have earned the distinction of being one of the most well-recognised and reputable national brands. We remain committed to ‘The Borden Difference’, which is our promise to be the most service-oriented dairy Company that puts people first. We will continue serving our customers, employees and other stakeholders and operating business as usual throughout this process.

“Despite our numerous achievements during the past 18 months, the Company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,” he continued. “These challenges have contributed to making our current level of debt unsustainable. For the last few months, we have engaged in discussions with our lenders to evaluate a range of potential strategic plans for the Company. Ultimately, we determined that the best way to protect the Company, for the benefit of all stakeholders, is to reorganise through this court-supervised process.”

News: Borden Becomes Second Big U.S. Milk Producer to File for Bankruptcy

Melinta files for Chapter 11 protection

BY Richard Summerfield

Antibiotics maker Melinta Theraputics has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware.

The company, which has four antibiotic treatments on the market, has been sounding the alarm about the state of its finances since November. In a quarterly filing Melinta said that limited liquidity and insufficient revenues would likely make a Chapter 11 necessary. Melinta listed $500m in assets and up to $500m in liabilities in its bankruptcy petition.

The drug maker has reached a restructuring agreement with secured lenders from Deerfield Private Design Fund III LP and Deerfield Private Design Fund IV LP, which would acquire 100 percent of the equity in the reorganised company in exchange for $140m of secured claims under a senior credit facility, according to a regulatory filing and company statement.

“While we have successfully conserved cash and enhanced revenue over the past several quarters, we nevertheless anticipate challenges in meeting the Company’s obligations, including near-term compliance with certain covenants,” said Jennifer Sanfilippo, interim chief executive officer. “We are confident that this process will secure new ownership of the business with the financial resources to support the Company’s antibiotics portfolio and ensure these potentially life-saving products continue to get to patients in need. We sincerely thank our employees and partners for their commitment to the antibiotics space, our business, and the patients we serve.”

Melinta is the latest firm in the antibiotics space to experience financial difficulty in recent years. In April 2019, biopharmaceutical company Achaogen filed for bankruptcy less than a year after the FDA approved a new antibiotic seen as an important weapon against carbapenem-resistant Enterobacteria infections, which are among the most difficult bacterial infections to treat.

Many new antibiotics have struggled to generate financial returns in recent years, which has caused several larger drug manufacturers to abandon antibiotic development altogether, in turn creating an opportunity for smaller companies. Unfortunately, many of these firms, Melinta included, have struggled.

News: Antibiotics maker Melinta files for Chapter 11 bankruptcy

Fiat Chrysler and PSA agree automotive merger

BY Richard Summerfield

Fiat Chrysler and rival PSA Group – the owner of Vauxhall and Peugeot – have reached a $50bn merger agreement which will see the companies remake the global automobile industry.

The merged company will employ around 400,000 people worldwide, with combined sales of 8.7 million vehicles. The firms say they have not decided which car production facilities the company will use. post-merger.

The deal, a 50-50 all-share merger, will create the world’s fourth-largest automaker when it closes. The parties expect the deal to be completed in around 12-15 months, pending shareholder and regulatory approval. The combination of Europe’s second and third biggest car manufacturers may attract significant antitrust scrutiny in the coming months, particularly as politicians and trade unions have vowed to resist any move to cut jobs.

Despite these concerns, the merger has the blessing of the French government, which owns 12 percent of PSA. The agreement “is very good news for France, for Europe and for our automotive industry”, said Bruno Le Maire, the French minister of the economy and finance in a statement. “It represents an important step in the creation of a European champion,” he added.

“Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services,” said Carlos Tavares, chairman of the managing board of Groupe PSA. “I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximised performance with vigour and enthusiasm.”

“This is a union of two companies with incredible brands and a skilled and dedicated workforce,” said Mike Manley, chief executive of FCA. “Both have faced the toughest of times and have emerged as agile, smart, formidable competitors. Our people share a common trait - they see challenges as opportunities to be embraced and the path to making us better at what we do.”

News: Fiat Chrysler, Peugeot owner reach binding $50 billion merger deal

Truckload shipping giant Celadon Group files for Chapter 11

BY Fraser Tennant

Following a federal investigation which incurred significant costs, truckload shipping company Celadon Group, along with its 25 affiliates, has filed for Chapter 11 bankruptcy.

While Celadon intends to use Chapter 11 proceedings to wind down its global business operations, this shutdown does not include the Taylor Express business headquartered in North Carolina, which will continue to operate in the ordinary course while the company explores a going concern sale of its operations.

“We have diligently explored all possible options to restructure Celadon and keep business operations ongoing,” said Paul Svindland, chief executive of Celadon. “However, a number of legacy and market headwinds made this impossible to achieve.”

Among the headwinds and uncertainties impacting Celadon was the multiyear federal investigation into the actions of former management, including the restatement of financial statements. The investigation charged two former Celadon executives with fraud and lying to auditors by concealing losses.

“When combined with the enormous challenges in the industry, and our significant debt obligations, Celadon was unable to address our significant liquidity constraints through asset sales or other restructuring strategies,” continues Mr Svindland. “Therefore, in conjunction with our lenders, we concluded that Celadon had no choice but to cease all operations and proceed with the orderly and safe wind down of our operations through the Chapter 11 process."

Furthermore, to support the wind down of Celadon’s operations, the company’s lenders have agreed to provide incremental debtor-in-possession financing (DIP).

Founded in 1985, Celadon began its operations as a small, dry van carrier with just 50 leased trucks and 100 leased trailers. Over the course of the last 34 years, Celadon vastly expanded its footprint to offer point-to-point shipping, warehousing, supply chain logistics, tractor leasing and other transportation and logistics services across the US, Canada and Mexico.

At the date of its shutdown, Celadon was operating a fleet of approximately 3300 tractors and 10,000 trailers with nearly 4000 employees.

Mr Svindland concluded: "I would like to thank our vendors, customers and lenders, and most importantly, I would like to thank our dedicated administrative employees and drivers whose efforts should not be seen as a reflection of this Chapter 11 filing. They have sacrificed so much of their time and effort for Celadon, and for that, the company is eternally grateful."

News: Trucker Celadon Group Files for Bankruptcy

Oil giant Saudi Aramco valued at $1.88 trillion following IPO

BY Fraser Tennant

In what ranks as the world’s biggest initial public offering (IPO), the Saudi Arabian Oil Company (Saudi Aramco) has officially listed on the Saudi Stock Exchange (Tadawul), its stock jumping 10 percent in market value to $1.88 trillion.

Shares closed at 35.2 riyals each, up from the IPO price of 32 riyals and at the daily limit of price moves allowed by the Tadawul exchange. Furthermore, the IPO process, which concluded on 4 December 2019, generated more than five million subscriptions by institutional and individual subscribers.

Saudi Aramco’s listing and share trading debut was marked by a symbolic ringing of the Tadawul bell by his Excellency Yasir Othman Al-Rumayyan, chairman of the board of directors, and Amin H. Nasser, president and chief executive.

“This is a proud and historic moment for Saudi Aramco and our majority shareholder, the Kingdom,” said His Excellency. “Saudi Aramco is beginning life as a listed company on Tadawul, together with all our new individual and institutional shareholders here in the Kingdom, in the region and around the world.

“My focus, and that of our board of directors, is to work in the interests of all shareholders, guiding Saudi Aramco as it continues to fulfil its vital role in global energy supply, while striving to create long-term value to benefit all shareholders,” he continued. “Our approach is underpinned by a disciplined capital allocation process and a highly experienced senior management team.”

A state oil company with a rich history, Saudi Amarco’s presence in the Kingdom dates back to 1933.

“Our success since that time is based on the strong foundation and values created by our pioneers and reinforced by subsequent generations of Aramcons,” said Mr Nasser. “Today, that foundation, those values and this legacy are being carried forward by my colleagues around the world.”

Going forward, by building on its low-cost production and reliable supply of low carbon-intensity crude oil to its customers, Saudi Amarco has pledged to remain focused on providing its shareholders with resilient value creation through crude oil price cycles.

His Excellency added: “The IPO underlines the Kingdom’s commitment to nurturing a strong capital market and demonstrates further significant progress in delivering Vision 2030 – the Kingdom’s transformation, economic growth and diversification programme that continues with pace and determination.”

News: Aramco Shares Rise 10% After World’s Biggest IPO