Global Health Sciences Files Bankruptcy

Global Health Sciences Files Bankruptcy

ORANGE, Calif.--In the wake of filing a lawsuit Nov. 9, 2000,against Herbalife, Global Health Sciences Inc. has filed a voluntary petitionfor Chapter 11 protection in U.S. Bankruptcy Court in Santa Ana, Calif., andsaid it would sell its business to the highest bidder. Under Section 363 of theBankruptcy Code, Global, a privately held company that includes AmericanIngredients, can begin a competitive bidding process to maximize the company'svalue.

Global's chief financial officer (CFO), Don Lewis, said the company wouldmotion the court to begin what is effectively an auction for the company'sassets as soon as possible. "Our best guess is that this whole process willbe wrapped up by the end of our second quarter or as early as April, 2001,"he stated.

According to Howard Simon, president of American Ingredients, each subsidiaryof Global Health has a separate bankruptcy filing, and American Ingredientscould be sold separately from Global. Lewis noted that Global is up for sale asa whole group, but because American Ingredients is substantially different fromGlobal's other businesses, it would consider selling that subsidiary separately.

Until any sale of Global is confirmed, the company and its subsidiaries willcontinue to conduct business as usual. In fact, Simon said his company would,until further notice, maintain its involvement in the supplement industry,including upcoming trade shows. As for the future of Simon and AmericanIngredients, he stopped short of speculation. "That would be a question forany future owners," he said. "We hope that the situation involvingAmerican is resolved soon."

Global was dealt a big blow when Herbalife, which had represented about 50percent of Global's sales, decided to use other suppliers to source itsingredients. This caused Global to file a suit against Herbalife in November,2000. "It was clear to us--Herbalife made public announcements back inAugust and September [2000]--that they were beginning to look for other sourcesfor ingredients," noted Lewis. "So, we underwent a reorganization overthe past six months." It was not enough. He added that the loss of businessto Herbalife was certainly the most significant event in the past year leadingup to the decision to file bankruptcy and sell the company.

As for the sale, Lewis said the company has seen some interest in Global as awhole. But, any party interested in purchasing assets of Global is advised tocall the company's financial advisor Murphy Noell Capital LLC at (805) 373-6900.Additional information on Global can be found at www.globalhealthsciences.com