Atkins Trims the Fat

Low-carb leader files bankruptcy

Published in CSP Daily News

RONKONKOMA, N.Y. -- Atkins Nutritionals Inc., founded by the late diet guru Dr. Robert Atkins, filed for bankruptcy protection in New York as consumer interest in low-carbohydrate foods faded, according to a Bloomberg report.

The company listed assets of $301 million and liabilities of $325 million in papers filed with the U.S. Bankruptcy Court in New York. Atkins owes UBS Securities LLC and other lenders roughly $301 million under a 2003 loan, according to the papers filed yesterday.

The low-carb fad has gone, Michael Steib, [image-nocss] a consumer-goods analyst for Morgan Stanley in London, told Bloomberg. Dieting habits are very short-lived. It came very quickly and disappeared very quickly.

Food-makers including Unilever and Kraft Foods Inc. were hurt in 2003 and 2004 as U.S. consumers began to monitor their weight by limiting their sugar intake, as is advocated by Atkins' diet plan. The companies retaliated by introducing their own lines of low-sugar foods, such as Unilever's Carb Options line and Kraft's South Beach diet meals, and the competition hurt Atkins' company.

Mainstream companies such as Unilever, Kraft and General Mills broke into the controlled-carbohydrate market in 2004 with well-funded, aggressive product launches, Rebecca Roof, Atkins' chief restructuring officer, said in court papers. As a result, Roof said, sales in 2004 were dramatically less than forecast.

The Atkins diet, which has enjoyed periodic bursts of popularity since the 1970s, was pioneered by the cardiologist Robert Atkins, who died in 2003. It advocates shedding pounds by boosting protein intake and avoiding carbohydratesenergy-supplying sugars and starches. Foods generally high in carbohydrates include potatoes, pasta, breads and cereals. Even vegetables and fruits have carbohydrates.

Atkins Nutritionals produces a range of convenience foods, supplements, snacks and condiments. It also made it easier for consumers to stick to their diets by placing the foods at delicatessens and gas stations.

The Ronkonkoma, N.Y.-based company has reached an agreement with UBS and other lenders under the 2003 loan on the basic terms of a plan to restructure the business and repay creditors, Roof said in court papers. Atkins intends on completing the agreement and filing a plan in the near term.

UBS has also agreed to provide a $25 million loan. Atkins will use the financing to pay expenses during its bankruptcy case. The company hired Weil Gotshal & Manges LLP as bankruptcy counsel.