Debt

12 Months Ended

Dec. 31, 2019

DEBT

Our long-term debt as of December 31, 2019 and December 31, 2018 consisted of the following:



	December 31, 2019						December 31, 2018
	Amount			Interest Rate			Amount			Interest Rate
	(In thousands, except percentages)
Dean Foods Company debt obligations:
Senior secured debtor-in-possession credit facility	258,800			9.11	%	*	$	—		—	%
Senior secured revolving credit facility	—			—			19,300			4.65		*
Senior notes due 2023	700,000			6.50			700,000			6.50
	958,800						719,300
Subsidiary debt obligations:
Receivables securitization facility	180,000			3.50		*	190,000			3.54		*
Finance lease and other	6,255			—			1,618			—
	186,255						191,618
Subtotal	1,145,055						910,918
Unamortized debt issuance costs	—						(4,574		)
Less liabilities subject to compromise	(700,000		)				—
Total debt	445,055						906,344
Less current portion	(440,385		)				(1,174		)
Total long-term portion	$	4,670					$	905,170


*	Represents a weighted average rate, including applicable interest rate margins.

The scheduled debt maturities at December 31, 2019 were as follows (in thousands):



2020	$	440,519
2021	1,340
2022	1,058
2023	873
2024	400
Thereafter	865
Total debt	$	445,055

Senior Secured Revolving Credit Facility — On February 22, 2019, we entered into an agreement, by and among the Company, Coöperatieve Rabobank U.A., New York Branch, as administrative agent, and the lenders party thereto (the “Credit Agreement”), pursuant to which the lenders party thereto provided us with a senior secured revolving borrowing base credit facility with a maximum facility amount of up to $265 million (the “Credit Facility”). Borrowings under the Credit Facility were limited to the lower of the maximum facility amount and borrowing base availability. The borrowing base availability amount was equal to 65% of the value of certain of our equipment and real property. We elected to include real estate and equipment with appraised values sufficient to support a borrowing base of $265 million. Our ability to access the full borrowing base was limited by the requirement under the Credit Agreement to maintain liquidity (defined to include available commitments under the Credit Facility and unrestricted cash on hand and/or cash restricted in favor of the lenders in an aggregate amount of up to $25 million for all such cash) in an amount equal to the lesser of 50% of the borrowing base under the Credit Facility and $175 million at any time when the Company's fixed charge coverage ratio was less than 1.05 to 1.00. The Credit Facility was set to mature on February 22, 2024, with a September 15, 2022 springing maturity date in the event we didn't repay or refinance the 2023 Notes on or prior to July 15, 2022. A portion of the Credit Facility was available for the issuance of up to $25 million of standby letters of credit and up to $10 million of swing line loans.

Loans outstanding under the Credit Facility bore interest, at our option, at either: (i) the Base Rate (as defined in the Credit Agreement) or (ii) the Adjusted Eurodollar Rate (as defined in the Credit Agreement), plus a margin of between 1.25% and

1.75% (in the case of Base Rate loans) or 2.25% and 2.75% (in the case of Eurodollar Rate loans), in each case based on our total net leverage ratio.

On June 28, 2019, we amended the Credit Agreement to, among other things, permit our borrowing base to equal 65% of the appraised value of the real property and equipment included in the appraisal report delivered to the administrative agent (up to the maximum facility amount).

One August 27, 2019, we entered into supplements to the Credit Agreement and elected our right to increase the aggregate principal amount of the commitments under the Credit Agreement by $85 million to an aggregate principal amount of $350 million.

In connection with the execution of the Credit Agreement, including the amendment and supplements thereof, as well as post-closing appraisal work, we paid certain arrangement fees of approximately $11.9 million to lenders and other fees of approximately $3.2 million, which were capitalized and amortized to interest expense over the term of the facility. In connection with our bankruptcy filing, we wrote off the full $13.8 million of unamortized debt issuance costs.

On November 14, 2019, the United States Bankruptcy Court for the Southern District of Texas ("the Court") entered an order approving, on an interim basis, a new Senior Secured Debtor-in-Possession Credit Facility that, among other things, refinanced and effectively replaced the Credit Agreement. A final order approving the agreement was entered by the Court on December 23, 2019.

During the existence of the Credit Facility, our average daily balance for the year ended December 31, 2019 was $56.2 million.

Senior Secured Debtor-in-Possession Credit Facility — On November 14, 2019, the Bankruptcy Court entered an order approving, on an interim basis, the financing to be provided pursuant to the DIP Credit Agreement. The DIP Credit Agreement was entered into by and among the Company, as borrower, the DIP Lenders and the DIP Agent. A final order approving the agreement was entered by the Court on December 23, 2019.

The DIP Credit Agreement provides for a senior secured superpriority debtor-in-possession credit facility in the aggregate principal amount of up to $425 million consisting of (i) a new money revolving loan facility in an aggregate principal amount of approximately $236.2 million, which may be in the form of revolving loans or, subject to a sub-limit of $25 million, the form of letters of credit and (ii) term loans refinancing the aggregate principal amount of all outstanding loans under our prepetition Credit Agreement as of the Petition Date.

In connection with the execution of the DIP Credit Agreement, we paid certain arrangement fees of approximately $14.0 million, which were capitalized and will be amortized to interest expense over the remaining term of the facility.

As of December 31, 2019, we had total outstanding borrowings of $258.8 million under the DIP Credit Agreement, consisting of $188.8 million outstanding for our term loans portion and $70.0 million outstanding for our revolving loan facility portion. Our average daily balance under the DIP Credit Agreement during the year ended December 31, 2019 was $200.9 million. There were no letters of credit issued under the DIP Credit Agreement as of December 31, 2019.

Our obligations under the DIP Facility are guaranteed by all of our subsidiaries that are debtors-in-possession in the Chapter 11 Cases. In addition, subject to the terms of the Final Order entered on December 23, 2019, the claims of the DIP Lenders are (i) entitled superpriority administrative expense claim status and (ii) subject to certain customary exclusions in the credit documentation, secured by (x) a perfected first priority lien on all property of the Loan Parties not subject to valid, perfected and non-avoidable liens in existence on the Petition Date, (y) a perfected first priority priming lien on collateral under the Senior Secured Revolving Credit Facility and (z) a perfected junior lien on all property of the Loan Parties and the proceeds thereof that are subject to valid, perfected and non-avoidable liens in existence on the Petition Date or valid and non-avoidable liens in existence on the Petition Date that are perfected subsequent to the Petition Date to the extent permitted by Section 546(b) of the Bankruptcy Code, in each case subject to a carve-out for the debtors-in-possession’s professional fees and certain liens permitted by the terms of the DIP Credit Agreement.

The scheduled maturity date of the DIP facility is August 14, 2020. However, we may elect to extend the scheduled maturity date by an additional three months subject to the satisfaction of certain conditions, including the payment of an extension fee of 0.50% of the aggregate principal amount of the DIP loans and commitments outstanding. The DIP loans bears interest at an interest rate per annum equal to, at the Company's option (i) LIBOR plus 7.0% or (ii) the base rate plus 6.0%. In addition, borrowings under the DIP revolving facility are limited to the lower of the maximum facility amount and borrowing base availability. The borrowing base availability amount is equal to 65% of the appraised value of certain of our real property and equipment less the carve-out amount referenced above and the aggregate principal amount of DIP term loans. Our ability to borrow is also limited

by the condition that our unrestricted cash (less budgeted disbursements for the immediately succeeding week and the carve-out) does not exceed $30 million after giving effect to such borrowing.

Under the DIP Credit Agreement, we may make optional prepayments of the DIP Loans, in whole or in part, without penalty (other than applicable breakage and redeployment costs and the payment of certain other fees as more fully set forth in the DIP Credit Agreement). In addition, subject to certain exceptions and conditions described in the DIP Credit Agreement, we are obligated to prepay the obligations thereunder with the net cash proceeds of certain asset sales and with casualty insurance proceeds. Furthermore, we are required to prepay obligations to the extent (i) revolving exposure under the DIP revolving facility exceeds the greater of the revolving commitments and the borrowing base or (ii) our unrestricted cash (less budgeted disbursements for the immediately succeeding week and the carve-out) exceeds $30 million for a period of 5 consecutive business days.

The DIP Credit Agreement also contains customary representations, warranties and covenants that are typical and customary for debtors-in-possession facilities of this type, including, but not limited to, specified restrictions on indebtedness, liens, guarantee obligations, mergers, acquisitions, consolidations, liquidations and dissolutions, sales of assets, leases, payment of dividends and other restricted payments, voluntary payments of other indebtedness, investments, loans and advances, transactions with affiliates, sale and leaseback transactions and compliance with case milestones. The DIP Credit Agreement also contains customary events of default, including as a result of certain events occurring in the Chapter 11 Cases. Furthermore, the DIP Credit Agreement requires us to comply with a variance covenant that compares actual operating disbursements and receipts and capital expenditures to the budgeted amounts set forth in the DIP budgets delivered to the DIP agent and DIP lenders on or prior to the closing date and updated periodically thereafter pursuant to the terms of the DIP Credit Agreement.

In addition, on February 10, 2020, the Company entered into the first amendment to the DIP Credit Agreement (the “First DIP Amendment”) to extend several of the milestone dates set forth in the DIP Credit Agreement, including extending from February 10, 2020 to February 24, 2020 the date by which the Company must elect whether it intends to pursue a sale of its assets under Section 363 of Title 11 of the U.S. Code or a plan of reorganization, and if it elects a sale to file a motion seeking approval thereof.

Dean Foods Receivables Securitization Facility — We have a $425 million receivables securitization facility pursuant to which certain of our subsidiaries sell their accounts receivable to two wholly-owned entities intended to be bankruptcy-remote. The entities then transfer the receivables to third-party asset-backed commercial paper conduits sponsored by major financial institutions. The assets and liabilities of these two entities are fully reflected in our Consolidated Balance Sheets, and the securitization is treated as a borrowing for accounting purposes.

On January 4, 2017, we amended the purchase agreement governing the receivables securitization facility to, among other things, (i) extend the liquidity termination date to January 4, 2020, (ii) reduce the maximum size of the receivables securitization facility to $450 million, (iii) replace the senior secured net leverage ratio with a total net leverage ratio to be consistent with the amended leverage ratio covenant under the January 4, 2017 amendment to the Credit Agreement described above, and (iv) modify certain pricing terms such that advances outstanding under the receivables securitization facility will bear interest between 0.90% and 1.05%, and the Company will pay an unused fee between 0.40% and 0.55% on undrawn amounts, in each case based on the Company's total net leverage ratio.

On January 17, 2019, we amended and restated the existing receivables purchase agreement ("Existing RPA") governing our receivables securitization facility to, among other things, (i) waive 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 prior Credit Facility. 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 prior 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 (y) the exercise of remedies with respect to the prior Credit Facility.

On February 22, 2019, we amended and restated the Existing RPA to, among other things, (i) extend the liquidity termination date to February 22, 2022 and (ii) replace the leverage ratio covenant with a springing fixed charge coverage ratio covenant that requires us to maintain a fixed charge coverage ratio of at least 1.05 to 1.00 at any time that our liquidity (defined to include available commitments under the Credit Facility and unrestricted cash on hand and/or cash restricted in favor of the lenders in an aggregate amount of up to $25 million for all such cash) is less than 50% of the borrowing base under the Credit Facility (or, at any time prior to inclusion of certain equipment and real property, less than $100 million).

On November 14, 2019, we amended and restated the Existing RPA to continue the receivables securitization facility during the Chapter 11 cases. The amendment and restatement had been previously approved by the Bankruptcy Court on November

13, 2019. The amendment and restatement, among other things, (i) modifies certain covenants, representations, events of default and cross defaults arising as a result of the commencement of the Chapter 11 Cases, (ii) modifies the other rights and obligations of the parties to the facility in order to give effect to, and in certain instances be subject to, orders of the Court from time to time, (iii) reduces the total size of the facility from $450 million to $425 million, with a corresponding reduction to availability thereunder, (iv) modifies certain pricing terms and fees payable under the facility, (v) makes certain other amendments, including in order to give effect to future issuances of letters of credit and (vi) grants superpriority administrative expense claim status to certain indemnification, performance guaranty and other obligations of certain of the debtors-in-possession under the receivables securitization facility documents. It also adjusted the maturity date to August 14, 2020. The Bankruptcy Court approved this amendment and restatement pursuant to a final order on December 23, 2019.

On February 10, 2020, we further amended the receivables purchase agreement to give effect to the First DIP Amendment for purposes of our compliance with the covenants under receivables securitization facility.

In connection with certain of the amendments to the receivables purchase agreement during the year, we paid certain arrangement fees of approximately $10.8 million to lenders and other fees of approximately $0.6 million, which were capitalized and will be amortized to interest expense over the remaining term of the facility. Additionally, we wrote off $2.2 million of unamortized deferred financing costs in connection with the amendments.

The receivables purchase agreement contains covenants consistent with those contained in the prior Credit Agreement.

Based on the monthly borrowing base formula, we had the ability to borrow up to $425.0 million of the total commitment amount under the receivables securitization facility as of December 31, 2019. The total amount of receivables sold to these entities as of December 31, 2019 was $530.1 million. During the year ended December 31, 2019, we borrowed $0.7 billion and repaid $0.7 billion under the facility with a remaining balance of $180.0 million as of December 31, 2019. In addition to letters of credit in the aggregate amount of $236.7 million that were issued but undrawn, the remaining available borrowing capacity was $8.3 million at December 31, 2019. Our average daily balance under this facility during the year ended December 31, 2019 was $246.0 million. The receivables securitization facility bears interest at a variable rate based upon commercial paper and one-month LIBO rates plus an applicable margin based on our total net leverage ratio.

Dean Foods Company Senior Notes due 2023 — On February 25, 2015, we issued $700 million in aggregate principal amount of 6.50% senior notes due 2023 (the "2023 Notes") at an issue price of 100% of the principal amount of the 2023 Notes in a private placement for resale to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and in offshore transactions pursuant to Regulation S under the Securities Act.

In connection with the issuance of the 2023 Notes, we paid certain arrangement fees of approximately $7.0 million to initial purchasers and other fees of approximately $1.8 million, which were deferred and netted against the outstanding debt balance, and were amortized to interest expense over the remaining term of the 2023 Notes. In connection with the bankruptcy filing, we wrote off $3.6 million of unamortized deferred financings costs.

The 2023 Notes are our senior unsecured obligations and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by our subsidiaries that guarantee obligations under the Credit Facility.

The 2023 Notes were scheduled to mature on March 15, 2023. However, as a result of the Bankruptcy Petitions, the payment obligations under the 2023 Notes were accelerated.

The carrying value under the 2023 Notes at December 31, 2019 was $700.0 million. Due to the unsecured nature of the 2023 Notes, the full amount outstanding was reclassified as Liabilities Subject to Compromise on the Consolidated Balance Sheet and is no longer included as part of long-term debt. See Note 2 for additional information.

See Note 12 for information regarding the fair value of the 2023 Notes as of December 31, 2019 and 2018.

Capital Lease Obligations and Other — Capital lease obligations of $6.3 million and $1.6 million as of December 31, 2019 and 2018, respectively, were primarily comprised of our leases for information technology equipment. See Note 20.

DEAN FOODS CO 10-K