Nordmilch – Recapitalisation
http://www.nordmilch.de
Business Case:
In mid 2007, the DAM Capital group was approached by Rabobank to help finance the operational restructuring of Nordmilch, one of the top ten milk processors in Europe with close to €2 billion in revenues. Nordmilch is owned by the farmers who produce the milk it processes. As a cooperative operating in a commodity business, Nordmilch had been tremendously affected by changes in milk prices, resulting in revenues with a high degree of volatility. Nordmilch undertook a strategic review, hiring a major consulting firm to develop a new plan. Nordmilch's banks were willing to support the plan, but insisted on more capital sitting behind them in the business. As a co-operative with thousands of shareholders, equity capital was difficult for Nordmilch to raise.
Tailoring the Solution:
Given the time and complexity involved in a co-operative raising additional equity from thousands of shareholders, the DAM Capital group's investment professionals devised a solution wherein €30m of junior debt sits behind the banks providing the senior debt that supports their new strategic initiative.
Accelerating Results:
DAM Capital group's specialised and localised approach facilitated the improvement of liquidity in a very local situation. Nordmilch is now able to continue its operational restructuring with a stable capital structure.