NEW YORK (Reuters) – Merisant Worldwide Inc, a maker of low-calorie tabletop sweeteners such as Equal and Canderel, filed for Chapter 11 bankruptcy protection on Friday, weighed down by increased competition and too much debt.
The closely held, Chicago-based company and five affiliates filed for protection from creditors with the U.S. Bankruptcy Court in Wilmington, Delaware.
Merisant had seen market share decline in recent years amid competition from rival sweeteners, including Splenda, which is made by Tate & Lyle Plc (TATE.L) and marketed by McNeil Nutritionals, a unit of Johnson & Johnson (JNJ.N).
Merisant sought bankruptcy protection after being unable to refinance debt maturing on Jan. 11, Moody’s Investors Service said. Sales totaled $277 million in the year ended Sept. 30, but Merisant’s debt load was “unsustainable,” Moody’s said.
Merisant said it had $137.1 million of debts as of Nov. 30, 2008, while its Merisant Co unit had $331.1 million of assets and $560.7 million of debts on that date, court filings show.
Paul Block, Merisant’s chief executive, in a statement said the company plans to convert a “significant amount” of debt to equity in the bankruptcy process, and plans no job cuts.
The filing came less than a month after federal regulators cleared the way for Coca-Cola Co (KO.N) and PepsiCo Inc (PEP.N) to begin using natural, calorie-free sweeteners derived from the stevia plant.
PepsiCo moved to launch drinks with PureVia, a stevia-based sweetener it developed with Merisant, while Coca-Cola developed its own sweetener, Truvia, with Cargill Inc [CARG.UL].
Beverage makers had long sought a natural alternative to chemical sweeteners such as Equal, Splenda and Sweet’N Low to boost U.S. soft drink sales, which have come under pressure as consumers have sought drinks they consider healthier.
Moody’s said Merisant creditors can expect “average” recoveries, given the potential for PureVia sales to offset lower volume in aspartame-based sweeteners such as Equal.
Merisant was formed in March 2000 from the sale of Monsanto Co’s (MON.N) tabletop sweetener business to a group of private investors.
According to court filings, Wells Fargo & Co (WFC.N), as trust agent, is Merisant’s largest unsecured creditor, with $362.1 million of debt claims.
(Reporting by Jonathan Stempel; Additional reporting by Martinne Geller; Editing by Lisa Von Ahn and Andre Grenon)