Le-Nature's bonds and bank debt tanked last week after a judge ruled the company engaged in potentially criminal conduct. Its bonds fell 60-70 points to 30-40, while its Wachovia-led term loan also fell 60-70 points to 30-40 Wednesday last week. "The company is in a total mess," said one buyside trader who said his firm does not invest in the credit. He said the term loan had bounced back 15 points to the mid-50s by Thursday last week. The Pa.-based company, which produces flavored bottled waters, ice teas and fruit juices, has a $285 million credit facility, consisting of a $265 million term loan and a $20 million revolver.
On Oct. 27, Judge Leo Strine of the Court of Chancery in Delaware fired three of Le Nature's senior managers and appointed a custodian to run the company after its preferred shareholders presented evidence of fraud, breaches of fiduciary duty and potentially criminal conduct by one or more of the management team, according to a Moody's Investors Service release. The court has appointed Kroll Zolfo Cooper to manage the company. The ratings agency downgraded Le-Nature's corporate family rating to Caa1 from B1, its secured bank loan ratings to B2 from Ba2 and its senior subordinated notes to Caa2 from B3. Officials at Le-Nature's did not return calls.