Atkins Nutritionals continued its downward slide after the company disclosed weaker numbers on two lender calls. Atkins' $215 million first-lien loan dipped to the 73 1/2-75 1/2 range while the $78.5 million second-lien tranche was seen quoted in the 53 1/2-57 1/2 context. Prior to the calls, the first-lien was quoted in the low 80s and the second-lien was trading in the low 60s. "It is quoted widely because no one really knows where it is valued," one trader noted.
As the financial health of the dieting company continues to concern lenders, traders and investors are offering contrasting opinions. Some have started to question Atkins' ability to stay afloat by itself and suggest it could be bought by a consumer products company such as Unilever, which could be a positive for lenders. Another view is that Atkins could even declare bankruptcy, leaving lenders significantly impaired. However, other market participants believe Atkins' aches are not that serious and the company could still recover. A Unilever spokesman did not return calls. Calls to an Atkins spokesman were referred to a Parthenon Capital spokeswoman who did not return calls.
Atkins debt was put in place last November, when Parthenon and GS Capital Partners bought the company (LMW, 11/10). UBS led the financing, which also includes a $30 million revolver. Atkins revolver and "B" loan are priced at LIBOR plus 3 1/2% and LIBOR plus 3 1/4%, respectively. The second-lien is priced at LIBOR plus 5 3/4%.