Merisant files for bankruptcy
Merisant said in a statement that the company and its US affiliates have filed for protection under Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in order to restructure its balance sheet.
The aim, it claims is to strengthen the company’s financial health and long-term growth prospects.
Merisant, whose brands include the sweeteners Equal and Canderel, has faced stiff competition in recent years from rival sweeteners such as Splenda, which is said to have eaten into its market share.
Paul Block, Merisant CEO, said: “Through this balance sheet restructuring, we anticipate converting a significant amount of our debt to equity, which will be positive for Merisant, our customers and employees.
“The restructuring will free up more cash to invest in our business and support PureVia, our exciting all-natural, zero-calorie sweetener, which we launched last month with PepsiCo.”
Block added that this was in addition to advancing its plans to introduce natural sweeteners in other markets.
He said: "I want to assure our customers, vendors and employees that this restructuring will not disrupt daily operations - our US and global businesses will function normally throughout this process.
“This balance sheet restructuring is about reducing the company's debt, not disposing assets, reducing the workforce or reconfiguring our operations."
Merisant was one of two applicants (the other being Cargill) that notified the Food and Drug Administration (FDA) that rebiana (Reb A), which is made from the stevia leaf, should have GRAS (generally recognized as safe) status for use in food and beverages.
And in December, Merisant and Cargill, both received official notification of no objection from the FDA, opening up the stevia market.
Last year the Whole Earth Sweetener Company (a subsidiary of Merisant), along with PepsiCo, and PureCircle, launched the PureVia brand of Reb A.
Block said that despite aggressive cost-cutting and efficiency drives, the current “turmoil in the financial and credit markets has made it impossible for us to refinance our debt, without which we cannot complete the restructuring of our business”.
Meanwhile Merisant also announced today that it has secured a $20m debtor-in-possession (DIP) financing facility from Wayzata Investment Partners in order to ensure that it has adequate liquidity to operate while it restructures its debt.
According to Moody's Investors Service Merisant sales were approximately $277m for the twelve months ended September 30, 2008.
But Moody’s said global competition from the sucralose sweetener brand Splenda (produced by a subsidiary of Johnson & Johnson) has eroded sales and market share over the past several years.
However, it added that Merisant, headquartered in Chicago, does have growth prospects with PureVia.
It said it anticipates that recovery levels in any default would be average “given the potential for PureVia to offset the decline in Merisant's aspartame-based sweeteners”.