Last updated on June 13th, 2024 at 11:52 am
Waukesha, Wis.-based milk processor Golden Guernsey, a portfolio company of private investment and acquisition firm OpenGate Capital, has filed for Chapter 7 bankruptcy in Delaware. This action follows the Jan. 5 closing of Golden Guernsey’s facility.
OpenGate Capital acquired Golden Guernsey in September 2011 from Dean Foods after the U.S. Department of Justice required Dean Foods to sell the business in order to resolve antitrust concerns that Dean Foods’ share of the school milk supply business was too large.
When OpenGate Capital acquired Golden Guernsey, the acquisition terms included an exclusive and fixed-price milk supply agreement and the assumption of a legacy union contract. During the investment period, OpenGate Capital and its management team implemented new sales and operations strategies that, according to a news release, created a seamless transition of Golden Guernsey from the former owner’s organization and yielded an increase in sales of 20 percent. However, Golden Guernsey was unable to successfully reduce its expenses in a way to achieve a state of financial viability, a difficulty OpenGate Capital attributes to some of its legacy relationships.
Since being acquired by OpenGate Capital, Golden Guernsey tried to reduce its expenses through discussions with suppliers, vendors and the labor union and raised the prospect of closing the plant and the potential for bankruptcy, OpenGate says in the release. Golden Guernsey’s efforts were rejected, which OpenGate says led to the closure of the business.
“We have to make realistic decisions about our investments, and the reality is that the Golden Guernsey business was unable to achieve financial autonomy given the pressure to lower prices and seemingly non-negotiable operating expenses,” says Andrew Nikou, OpenGate Capital’s CEO. “This was a very difficult decision given the loss of jobs and disruption to milk delivery service, yet it had to be made. The closure of the plant is not a reflection of the hard work contributed by the Golden Guernsey family of employees. Unfortunately, when expenses overwhelm revenue for too long, and we are unable to achieve cooperation from the people with whom we do business, the business cannot be sustained.”
For more information, visit www.opengatecapital.com.
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