Tren Griffin @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Jan. 08, 2020 1 min read

1/ There is nothing like an impending or actual bankruptcy to focus management or investor attention on the fact that cash (not profit) is oxygen for a business. That Borden is EBITDA positive isn't remotely similar. Borden isn't CAPEX light. CREAM.  https://www.omaha.com/news/trending/one-of-america-s-oldest-and-largest-milk-producers-borden/article_e84829ca-f3d4-57df-b0c6-c44d3db06db1.html 

2/ Borden reported a net loss of $42.4M for 2019 through Dec 7, widening from 2018’s $14.6M deficit on net sales of $1.18B. To continue operating in bankruptcy Borden wants access to $26.6M set aside in 2017 to pay for a settlement with two pension funds. https://s.wsj.net/public/resources/documents/borden_dairy_cfo_declaration.pdf?mod=article_inline 

3/ "Access to the cash and securities in that account are absolutely critical to the Debtors’
reorganization efforts. Without access to the Reserve Account, the Debtors will be unable to
continue operating." CREAM.

4/ Buffett understands the problems Borden faces: "When you're going toe to toe with Walmart or Costco. You've got the weaker bargaining hand than you did 10 years ago. House brands, private label, are getting stronger. It varies by country, but it's gonna keep getting bigger.”

5/ Borden has almost no pricing power with milk suppliers and retail (i.e., transfer pricing squeeze from both directions).

"2,730 U.S. dairy farms have gone out of business in the last 18 months alone. ...Walmart opened its own milk processing plant in Indiana in 2018."

6/ "The brand was asleep," Sarsam said last summer. the CEO Sarsam said when he joined. But even if it was awake, its just milk. Milk products like yogurt are super competitive.  https://www.fooddive.com/news/borden-files-for-bankruptcy/569837/  Rza: "‘C.R.E.A.M.’ really says what we went through to get this money."

7/ 25iQuiz: Is anyone at Borden or its investors saying right now:

"When can Borden become GAAP profitable? How can we make profit happen sooner?"

Anyone? Anyone? Bueller"

Might they instead be focused on first, second and third on cash?


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