Hain Celestial weighs Chapter 11 filing as debt pressures build - Bloomberg

Investing.com -- The Hain Celestial Group Inc (NASDAQ: HAIN) is weighing a Chapter 11 bankruptcy filing as the natural and organic food manufacturer struggles to manage a heavy debt load alongside weakening consumer demand, according to a report from Bloomberg News. The Hoboken, New Jersey-based company could seek court protection as early as next month, though deliberations remain ongoing and no final determination has been made.

The potential restructuring comes after a crucial deadline passed to amend the company's credit agreement, putting a key asset sale in jeopardy. Shares of Hain Celestial plunged 51% following the report, extending a multi-year decline driven by legal troubles and operational headwinds.

The catalyst for the current liquidity strain stems from Hain’s attempt to offload its European and UK business operations to private equity firm Aurelius. The transaction, announced in September, encompassed prominent international labels including baby-food producer Ella’s Kitchen and plant-based beverage makers Joya and Natumi.

Execution of the deal hinged on obtaining a commitment from lenders to extend the maturity of Hain’s debt, due in December, by at least nine months. However, an October 12 deadline passed without securing the requisite amendments to the credit facility, according to a regulatory filing.

The proposed divestiture was projected to generate up to $310 million in fresh capital earmarked specifically to pay down existing obligations. While Hain and Aurelius remain engaged in negotiations to salvage the deal, the inability to amend the credit agreement leaves the company with diminished flexibility to address its obligations.

According to data compiled by Bloomberg, Hain Celestial carries approximately $655 million in unsecured debt. The balance sheet strain has exacerbated broader operational challenges, as the organic food maker has struggled to rebuild market momentum in recent years.

Equity value in the business has plummeted roughly 99% since early 2021. That downturn began when the company was hit with consumer class-action lawsuits over allegations that its Earth's Best baby food contained elevated levels of heavy metals.

In response to the developments, a Hain spokesperson reiterated to Bloomberg that management and the board continue to evaluate strategic and financial options to optimize value while advancing a turnaround strategy focused on simplifying its portfolio and strengthening its capital structure. The spokesperson declined to comment directly on potential bankruptcy proceedings.

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