Rebecca Wright03.10.08
Leiner Health Products Inc. today announced that in order to continue its operations and enhance the value of its business, the company and certain of its U.S. affiliates have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in Delaware. Leiner intends to use the Chapter 11 process to restructure its debt obligations and explore the sale of the business.
In conjunction with the filing, a group of pre-petition lenders has agreed to provide Leiner with $74 million in debtor-in-possession financing that, together with the company's existing cash flow, will enable Leiner to fulfill obligations associated with operating its business, including payments to suppliers and other business partners for goods delivered and services provided on or after today's filing. This financing arrangement is subject to court approval.
Leiner emphasized that it will continue to manufacture, market and distribute its vitamins, minerals and nutritional supplements (VMS) and provide customer service and support for those products during the sale process.
President and chief executive officer Rob Reynolds said, "After a thorough analysis of Leiner's financial condition, the company concluded that today's court filings by our U.S. operations were both prudent and necessary. Although we have already taken many steps to address the challenges that arose following our March 2007 decision to voluntarily suspend OTC operations by streamlining our operations and manufacturing footprint, these actions were not enough to offset the cost of our substantial debt obligations. Filing for Chapter 11 allows Leiner to enhance its liquidity and to initiate a formal process for restructuring our debt and exploring the company's sale in a timely manner.
"From an operational standpoint, we intend to continue to provide our customers with the quality and service on which they depend and to meet our post-petition obligations to suppliers and other business partners."
The company's filing does not include its Canadian subsidiary.
In conjunction with the filing, a group of pre-petition lenders has agreed to provide Leiner with $74 million in debtor-in-possession financing that, together with the company's existing cash flow, will enable Leiner to fulfill obligations associated with operating its business, including payments to suppliers and other business partners for goods delivered and services provided on or after today's filing. This financing arrangement is subject to court approval.
Leiner emphasized that it will continue to manufacture, market and distribute its vitamins, minerals and nutritional supplements (VMS) and provide customer service and support for those products during the sale process.
President and chief executive officer Rob Reynolds said, "After a thorough analysis of Leiner's financial condition, the company concluded that today's court filings by our U.S. operations were both prudent and necessary. Although we have already taken many steps to address the challenges that arose following our March 2007 decision to voluntarily suspend OTC operations by streamlining our operations and manufacturing footprint, these actions were not enough to offset the cost of our substantial debt obligations. Filing for Chapter 11 allows Leiner to enhance its liquidity and to initiate a formal process for restructuring our debt and exploring the company's sale in a timely manner.
"From an operational standpoint, we intend to continue to provide our customers with the quality and service on which they depend and to meet our post-petition obligations to suppliers and other business partners."
The company's filing does not include its Canadian subsidiary.
