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Press release from PR Newswire

Dean Foods Completes Amendment and Extension of Senior Secured Credit Agreement

Thursday, July 01, 2010

Dean Foods Completes Amendment and Extension of Senior Secured Credit Agreement08:00 EDT Thursday, July 01, 2010Extensions Lengthen Maturity and Amortization Profile Amendment Recasts Leverage Ratio Covenant RequirementsDALLAS, July 1 /PRNewswire-FirstCall/ -- 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 Ratio6/30/2010 ? 3/31/20115.50x6/30/2011 - 9/30/20125.00x12/31/2012 ? thereafter4.50x?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. ABOUT DEAN FOODSDean 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� soy and almond milk, Horizon Organic� milk and dairy products, International Delight� coffee creamers, and LAND O'LAKES� creamers, are category leaders and consumer favorites. Alpro is the pan-European leader in branded soy food products. FORWARD-LOOKING STATEMENTSSome 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 1Dean Foods CompanySummary Debt Profile (as of 6/30/2010)DrawnMaturity DateCredit FacilitiesAggregate CommitmentPrevious PricingNew Pricing*(millions)4/2/2012Non-Extended Revolving Credit Facility $225 L + 75 bps1No ChangeNon-Extended Term Loan A $173 L + 75 bps1No Change4/2/2014Extended Revolving Credit Facility $1275 L + 75 bpsL + 300 bps2Extended Term Loan A $1102 L + 75 bpsL + 300 bps2Non-Extended Term Loan B$692 L + 137.5 bps3No Change4/2/2016Extended �Term Loan B - 2016$492L + 137.5 bpsL + 300 bps44/2/2017Extended �Term Loan B - 2017$561L + 137.5 bpsL + 325 bps5Other Debt OutstandingAnnual RenewalAsset Securitization$600CP + 140No Change6/29/2011 Maturity6/1/20167% Senior Notes $5007.00%No Change10/15/20176.9% Senior Notes$1426.90%No Change1. �Pricing Grid For Non-Extended �Revolver and Term Loan A3. �Pricing Grid for Non-Extended Term Loan B (2014 Maturity)Leverage RatioLibor SpreadCommitment Fee Leverage RatioLibor Spread</= 4.00.6250%0.1250%</= 4.51.3750%> 4.0 but </= 4.50.7500%0.1500%> 4.5 but </= 5.751.5000%> 4.5 but </= 5.01.0000%0.2000%> 5.75 1.7500%> 5.0 but </= 5.51.2500%0.2500%> 5.5 but </= 6.01.5000%0.3000%> 6.0 1.7500%0.3750%2. �Pricing Grid For Extended Revolver and Term Loan A4. �Pricing Grid for Extended Term Loan B (2016 Maturity)Leverage RatioLibor SpreadCommitment Fee Leverage RatioLibor Spread</= 3.02.0000%0.3750%? 5.03.0000%> 3.0 but </= 3.52.2500%0.5000%> 5.0 3.2500%> 3.5 but </= 4.02.5000%0.5000%> 4.0 but </= 4.52.7500%0.5000%5. �Pricing Grid for Extended Term Loan B (2017 Maturity)> 4.5 but </= 5.03.0000%0.5000%Leverage RatioLibor Spread> 5.0 3.2500%0.5000%</= 5.03.2500%* No Libor Floor on any tranches> 5.0 3.5000%*Term Loan A and Revolver grid locked at LIBOR + 3.00% through Q3 - 2010Summary Amortization Schedule of Term Loans and Notes(in millions)Term Loan ATerm Loan BNotesTotal:2010$107$15$1222011$169$18$1872012$297$18$3152013$331$18$3482014$427$676$1,1032015$11$112016$471$500$9712017$525$142$667Quarterly Amortization (2010- 2011)Quarter 1Quarter 2Quarter 3Quarter 4Total2010$61$9$26$26$1222011$26$54$54$54$187Existing Libor Interest Rate SwapsThe following table summarizes our various interest rate agreements in effect as of June 30, 2010Fixed Interest RatesExpiration DateNotional Amounts ($ millions)4.07% - 4.27%December 2010$450 4.91%AJune 2010 - 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, 2012SOURCE Dean Foods CompanyFor further information: Corporate Communications, Marguerite Copel, +1-214-721-1273, or Investor Relations, Barry Sievert, +1-214-303-3438, both of Dean Foods Company