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NEW YORK -- Low carb has hit a new low. Atkins Nutritionals, Inc. (ANI), manufacturer of the Atkins line of low-carbohydrate products and an outgrowth of the late Dr. Robert Atkins' once wildly popular low-carb diet, has filed for Chapter 11 bankruptcy protection here as consumer interest in counting carbs wanes.
Industry watchers betrayed little surprise at the news. "The low-carb fad has gone," London-based Morgan Stanley consumer goods analyst Michael Steib told Bloomberg.com. "Dieting habits are very short-lived. It came very quickly and disappeared very quickly."
In papers filed with the U.S. Bankruptcy Court in Manhattan, the Ronkonkoma, N.Y.-based company revealed assets of $301 million and liabilities of $325 million. The company's chief restructuring officer, Rebecca Roof, noted in court papers that "aggressive" marketing campaigns launched by Unilever, Kraft, and General Mills for their respective low-carb products cut deeply into ANI's 2004 profits.
ANI spokesman Richard Rothstein said the filing represents the final step in the company's efforts to reorganize. In September, ANI began laying off 40 percent of its employees, streamlined its product line to 80 items from 150, slashed its marketing budget by nearly half, and hired AlixPartners, a turnaround firm whose financially troubled partners include Kmart and the American businesses of Italian dairy company Parmalat, The New York Times reported.
"In connection with the filing, the company confirmed it has reached agreement with the overwhelming majority of its lenders on a prearranged plan to restructure its debt and, as a result, will be seeking the Bankruptcy Court's approval of its Plan of Reorganization, which will be filed shortly," added Rothstein. "The lenders will receive the equity of the company in exchange for a substantial reduction of its outstanding debt."
"ANI will focus its energy on driving profitable growth within its core nutrition bar and shake portfolio," said ANI president and c.e.o. Mark S. Rodriguez, who further noted, "We expect to proceed quickly and will emerge from these proceedings with a significantly improved balance sheet and greater operating flexibility."
ANI stressed that the filing will not affect day-to-day operations. Additionally, the company has secured debtor-in-possession (DIP) financing of $25 million from members of its lending group.
According to the company, ANI, which was founded by Dr. Atkins in 1989, has consumer products in more than 30,000 stores in North America.