Merisant Worldwide Inc., the maker of Equal and PureVia, sought bankruptcy protection from creditors to reorganize its finances.
"This is a financial restructuring of our balance sheet, not an operational restructuring of our business," Merisant Chief Executive Officer Paul Block told Bloomberg News in an e-mailed statement. "We've already taken aggressive steps to cut costs and make Merisant more efficient."
"We anticipate converting a significant amount of our debt to equity, which will be positive for Merisant, our customers and employees," Block said in his statement. "The restructuring will free up more cash to invest in our business." The company employs more than 400 people, though as of now, the company doesn't expect to cut jobs because of the filing.
The restructuring will focus largely on PureVia, the stevia-based Reb-A sweetener that Merisant launched last month immediately following FDA's approval for the once banned sweetener. PepsiCo will also launch two new products in March featuring PureVia?zero-calorie SoBe Lifewater and Trop50, a light orange juice product with 50 per cent less sugar and calories.
Industry speculators say the filing is a result of a combination of two factors: competition in the sweetener market and the current credit market. Sales of Splenda (produced by a subsidiary of Johnson & Johnson) have eroded Equal's market share over the past few years. And, the current tightening of the credit market may have prevented Merisant from refinancing credit agreements and loans that matured in January.
Chicago-based Merisant Worldwide listed $137.1 million in debt as of Nov. 30, according to Bloomberg. A unit, Merisant Co., said it had debt of $560.7 million and assets of $331.1 million in Chapter 11 documents filed in U.S. Bankruptcy Court in Wilmington, Delaware. A total of five subsidiaries filed for protection. Merisant's parent company creditors (30 unsecured) and the units are owed about $368.4 million, Merisant said.