Posted on 11/26/2024 2:02:25 PM PST by EBH
Hearthside Food Solutions, a major manufacturer of various snack and food products for distributors such as Mondelez Global, Kraft Heinz Foods, and Pepsico, on Nov. 22 filed for Chapter 11 bankruptcy protection with a restructuring support agreement that will hand 100% ownership of the company to its first-lien lenders.
The debtor's largest unsecured creditors include U.S. Bank NA, owed $364.8 million in 8.5% unsecured notes; Mondelez, owed $15.2 million; Kraft Heinz Foods, owed $3.6 million; and Pepsico, owed $3.4 million.
Hearthside cited operational challenges for its filing, including wage increases and inflation, industry headwinds, certain labor issues and transitions, and adverse publicity likely from the U.S. Department of Labor's investigation into alleged child labor law violations in 2023.
The debtor, owned by private equity firms Charlesbank Partners and Partners Group, executed a restructuring support agreement with its first-lien lenders and second-lien term lenders to deleverage its capital structure to eliminate $1.9 billion of its debt and secure $200 million in exit capital, according to a statement.
Hearthside seeks to obtain $300 million in debtor-in-possession financing from its first-lien lenders, which includes $150 million in new money and $150 million in converted first-lien loans on a dollar-for-dollar basis. The company has $212.9 million in cash on hand, which it hopes to tap during its bankruptcy case through approval of cash collateral use.
(Excerpt) Read more at thestreet.com ...
But, the economy is great they said
/S
U.S. Bank NA, owed $364.8 million in 8.5% unsecured notes
that might be enough to cause a problem for the bank.
Price “gauging”!! - KamaLOL
Bet they’re victims of substantial shoplifting as well
Because.....
When you owe the bank $360 million, you own the bank. Or something like that.
$364 million at 8.5%! Fire the CEO, the CFO, and the Board. Yeah, they unwittingly own the bank. Sheesh.
But, "adverse publicity likely from the U.S. Department of Labor's investigation into alleged child labor law violations in 2023." -- That's different. Is that where all those illegal alien children went?
Or did they try to skimp on the 10% to the Big Guy?
Kraft?! Heinz?! Pepsi-co?! You couldn’t make money with those brands?!
It's a screw-job by the private-equity owners. I've been through these before.
they either bought it with too much debt, or saddled it with too much debt. No doubt they have milked large management fees from it. They will screw the banks, unsecured creditors, and any pension funds the company is holding.
Assets will be bought out under a different name, with brand new capital structure, and factories will continue to produce whatever it is producing.
If I had to guess, they are probably also employing illegals with Biden-DHS temporary work permits at minimum wage - and putting them on WIC, Section 8, medicaid, etc...so taxpayers can subsidize their labor force.
Hearthside makes a lot of snack foods - granola bars, cookies, packaged foods like bowls, etc. They’re a food manufacturer not a distributor.
Concur, that’s the most likely scenario, but company managers sailed that ship right to the bottom. Somebody said “yes” to the vultures. As you suggest, my fear is they raid the pension fund.
As of December 31, 2023 US Bank had $663 Billion in assets, and $28 Billion in annual revenue.
The $364.8 Million loss will put a dent in their 2024 numbers but they can probably weather the storm.
https://www.usbank.com/about-us-bank/fact-sheet.html
They’ll spin it off to private equity.
Private equity is what caused the problem in the first place.
Lol.
Obviously under-leveraged. For some reason they don’t want to restructure or put more capital. So, someone with bigger pockets will pick it up for debt value. Obviously they aren’t selling enough or charging enough.
that bites...
Oh that one annoyed the hell out of me. Anyone can check on line the net profits of grocery store chains which is about 3%.
While pharmaceutical companies and tech are in the 30% range.
SMH.
I have not heard one news anchor fact check her on that.
If I owe $10,000 to you, it’s my problem. If I owe you $10,000,000, then that’s YOUR problem.
They don’t own those brands they distribute to them.
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