Capitol Peak will assume majority ownership of the new company, and KKR, an existing lender to the US-based dairy company, will be a minority investor. Following the transaction, Borden will be appropriately capitalized, and the business will remain intact, including all plants, branches, routes and the Borden brand.
The newly reorganized Borden will be able to continue employment for approximately 3,300 Borden employees and service for Borden customers.
"Borden received strong investor interest and multiple bids throughout this sale process, which is a testament to the terrific work the people of Borden have done to build a valuable and enduring 163-year-old brand," said Borden CEO Tony Sarsam.
"Despite being in the midst of Chapter 11 and a global pandemic, our team managed to generate positive cash flow, grow our customer footprint and maintain an uninterrupted food supply to nourish American families. We are exiting Chapter 11 as a thriving company that is meeting and exceeding its performance forecasts, making our outlook very promising."
Borden initiated voluntary reorganization proceedings on Jan. 5, 2020, to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the company for long-term success.
The court granted approval of the approximately $340m sale. Upon closing of the transaction, Borden's former controlling and majority equity holders, ACON Investments and Grupo Lala, respectively, will no longer have ownership interest in the business. Capitol Peak and KKR will establish a new board of directors.
"Borden has a rich history of partnering with America's dairy farmers and leading retailers to provide wholesome nutrition for American consumers and families," said Capitol Peak's Founder and Managing Partner Gregg Engles, who was formerly chairman and CEO of both Dean Foods and WhiteWave Foods.
"The Capitol Peak team is excited by this unique opportunity to work alongside KKR and build this iconic dairy company."
Last month, the U.S. Department of Agriculture awarded Borden the largest contract through its Farmers to Families Food Box Program as part of the Coronavirus Farm Assistance Program. The contract enables Borden to supply 700m servings of fresh fluid milk for free to qualifying 501(c)3 organizations across the country.
The transaction, which is subject to certain closing conditions, including the entry of a final order, is expected to be finalized in mid-July. KKR's investment is held by business development companies co-managed by KKR Credit.