New equity investments from Z Capital Partners LLC and SAC Capital Advisors LP have thrown a lifeline to a dietary supplements maker that defaulted on $250 million in loans last May, the company said Thursday.
Neways Enterprises Inc., a Utah-based manufacturer of nutritional products that was majority-owned by Golden Gate Capital Management LLC, emerges from an out-of-court restructuring that began last spring.
The company's second-lien lenders – including Z Capital, SAC and Golden Gate – swapped their debt for equity in the company.
The moves reshuffled the stakes and leave Z Capital and SAC Capital with majority ownership of the company. Golden Gate, which owned 51 percent of the company, maintains an minority stake. Market value of the company is listed at $150 million.
The deal also renegotiated the company's $50 million first-lien loan from Silver Point Capital Management LLC, which was also in default, according to Joshua Sussberg, the Kirkland & Ellis LLP partner who represented Neways. The new loan matures in 2014.
“By eliminating a substantial portion of our debt, we have built a solid financial foundation that will allow us to significantly enhance our operating flexibility and further grow our business,” Neways CEO Scott St. Clair said.
San Francisco-based Golden Gate bought Neways in 2009, seeing potential in the wave of consumer awareness and desire for healthier, toxin-free products. Neways does not use ingredients like phthalates; DEA, a skin irritant; and sulfates, which can damage hair.
Neways' “core mission — creating products with 100 percent non-harmful ingredients — is at the heart of consumers' desire to live longer, healthier lives and has driven more than a decade of consecutive, annual revenue growth,” Prescott Ashe, a Golden Gate managing director, said at the time of the acquisition.
Financial details of the transaction were not disclosed. Golden Gate listed $12 billion in assets under management, with a diverse portfolio that includes California Pizza Kitchen restaurant chain, Rocket Dog footwear, and sizable semiconductor and IT holdings.
Details on Neways' financial troubles were not released. In November, the company announced that it was in active discussions with its lenders, a process that wrapped up this week.
Neways has manufacturing facilities in Utah and New Zealand and sells its products in 23 countries, the company said. The company, which makes household and beauty products free of potentially harmful ingredients, expanded into Korea last year and said it plans to launch in Thailand in 2012.
Neways was represented by partners Richard Cieri, Joshua Sussberg, Steve Oetgen, Jeremy Veit, Yongjin Im and Brian Schartz of Kirkland & Ellis.
SAC Capital was represented by White & Case LLP.
Z Capital was represented by Latham & Watkins LLP.
Silver Point was represented by Paul Weiss Rifkind Wharton & Garrison LLP.
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