Atkins Nutritionals' bank debt plummeted to its lowest levels ever last week and lenders are divided on what to do about it. The company's $215 million first lien was quoted in the high 60s-low 70s, while the $78.5 million second lien was quoted at 20-30 after hitting the low teens at the beginning of last week.
Some lenders want Parthenon Capital and GS Capital Partners to contribute more equity, while one lender within the group is said to have lost patience waiting for an improvement and could be pushing the others to force a sale, a restructuring of the company or a bankruptcy filing, said a buysider. There are also some investors interested in owning the company through the second-lien. An Atkins spokesman did not return calls.
The investor added that the private-equity firms, which bought Atkins in 2003, do not really need to act right now. "It's really the bank group, that's trying to force them to clean up their balance sheet," he said. The debt has been falling since last summer, but took a big hit two weeks ago following a negative call between the bank group and the sponsors (LMW, 3/21). "Many loan guys want to be distressed guys so that's the problem. They all think they are workout guys so they want to put on their cowboy hats and try to work something out that probably doesn't really need to be worked out right now," the lender concluded.
UBS leads Atkins bank debt and 10-12 other lenders participate in the credit. Atkins' first and second lien are priced at LIBOR pus 3 1/4% and LIBOR plus 5 3/4%, respectively. The financing also includes a $30 million revolver which is priced at LIBOR plus 3/2%.