Twinlab Files Chapter 11

HAUPPAUGE, N.Y.--On Sept. 4, Twinlab Corp. (OTCBB:TWLB) announced it filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York. Twinlab also reported it had entered into an asset purchase agreement with Grand Rapids, Mich.-based IdeaSphere Inc., a move INSIDER reported in late August. (For more on that story, visit /sitecore/content/repository/nutrition/news/2003/08/twinlab-purchase-on-deck.aspx.)

Twinlab will sell its assets for a purchase price of $65 million in cash, and IdeaSphere will also assume $3.7 million in employee and related liabilities, in addition to Twinlab's executory contracts and unexpired leases. The sale remains subject to mandatory bankruptcy procedures, the approval of the bankruptcy court and regulatory approvals.

In the meantime, Twinlab filed papers seeking approval from the bankruptcy court for a new $35 million debtor-in-possession financing facility to be provided by The CIT Group/Business Credit Inc. The new facility will provide an immediate source of funds to the company, enabling it to satisfy the post-petition obligations associated with the daily operation of its business, including the timely payment for manufacturing, distribution and shipping costs; raw material purchases; and employee wages. All Twinlab facilities and the manufacturing and distribution plant remain functional.

Ross Blechman, Twinlab chairman, will remain with the company following the transaction. "IdeaSphere not only brings the outstanding financial and manufacturing resources, proven management team and global vision needed to take Twinlab to the next level," he said, "but also shares our unwavering commitment to our people, our customers and our brands."

Neither company reported how the sale would affect other Twinlab executives or employees.