Farmer Brothers announces close of sale of its direct ship business and Northlake, Texas facility to TreeHouse Foods

Company uses portion of $100 million proceeds to pay off term loan as it focuses operations on direct store delivery and key account sales channels

NORTHLAKE, Texas, June 30, 2023 (GLOBE NEWSWIRE) -- Farmer Brothers Company (NASDAQ: FARM), a leading roaster, wholesaler, equipment servicer and distributor of coffee, tea and other allied products, announced today it has completed the sale of its direct ship business, including its Northlake, Texas facility to TreeHouse Foods, Inc. for approximately $100 million, subject to customary purchase price adjustments.

The company used the proceeds to pay off its $47 million term loan, as well as a portion of its outstanding debt associated with its asset-based lending (ABL). The amended ABL agreement will provide more flexibility with regard to financial covenants, as the fixed charge coverage ratio will no longer be a standing covenant. The covenant will only be subject to testing should the liquidity requirements not be met. The close of the sale marks a significant increase in Farmer Brothers’ balance sheet flexibility and underlines its focus on improving margins through execution and strategic growth in its direct store delivery (DSD) and key account sales channels.

“We’re delighted to have achieved a rapid close to this transaction and are already applying the proceeds to strengthening our balance sheet and preparing for future growth with a clear focus on our DSD business,” said Farmer Brothers President and Chief Executive Officer Deverl Maserang. “In TreeHouse, we found a perfect fit with a valued customer and partner who will provide a good home for our existing direct ship customers and transitioning team members.”

As part of the terms of the sales agreement, Farmer Brothers and TreeHouse Foods will continue to manufacture certain products for one another for a period of time to ensure a successful transition. As of today, approximately 180 Farmer Brothers team members have transitioned to TreeHouse Foods and Farmer Brothers has agreed to provide certain additional transition services for at least the next nine months as TreeHouse Foods begins to move a portion of its operations to the newly acquired Northlake, Texas facility.

In addition, Farmer Brothers will begin transitioning the entirety of its DSD production operations to its Portland, Oregon roasting and production facility and will continue existing relationships with third-party roasters for additional capacity as needed. The company’s corporate headquarters will remain in Northlake, Texas where it will continue to lease office space from TreeHouse Foods at its current location.