New York, Feb 29 - Dean Foods Co said on Friday that it would sell 18.7 million shares of common stock in a public offering and use some of the proceeds to reduce its debt.
The largest U.S. dairy processor and distributor said proceeds would also be used for general corporate purposes, including future investments or acquisitions.
Lehman Brothers would underwrite the offering, which Dean said would increase outstanding diluted shares by about 13 percent.
The company reiterated its prior first-quarter earnings forecast range of 15 to 20 cents a share and said it still expects full-year earnings to be at least $1.20 per share.
Analysts, on average, have been expecting first-quarter earnings of 18 cents a share and full-year earnings of $1.30 a share, according to Reuters Estimates.
"We entered 2008 approximately a year behind our original debt reduction expectations," Chief Executive Gregg Engles said in a statement.
"Raising capital at this time allows us to reduce our outstanding debt to levels more consistent with our initial expectations and significantly reduce our interest expense in the years to come."
Dean Foods said it expects the proceeds from the offering to reduce interest expense for the rest of 2008 by about $20 million.
Engles also said several attractive acquisition candidates in its core milk business have become available.
Dean was hammered in 2007 by record prices for raw milk, while excess supplies of organic milk drove prices down in that segment.