Irvine-based Gardenburger Inc., which only three months ago said it was up for sale, has filed for bankruptcy protection and plans to go private.
The maker of meat-substitute patties said it plans to keep operating as it has as it works through bankruptcy.
Gardenburger’s stock, which trades on the low-profile over-the-counter exchange after being delisted from Nasdaq in 2001, is set to be cancelled. After that, Gardenburger would be privately held.
Shareholders include Gruber & McBaine Capital Management LLC and Rosewood Capital LLC, both of San Francisco, and other private equity firms.
Some $27 million in debt held by New York-based Annex Capital Partners LLC is set to be converted into shares of the reorganized company, according to Gardenburger.
Private equity investor Annex is Gardenburger’s largest unsecured creditor and “supports the plan,” according to a Gardenburger statement.
The company promises “full compliance” with debt held by secured lenders, it said.
As part of the reorganization, Gardenburger said it plans to pay debts owed to vendors in installments.
In July, Gardenburger hired Piper Jaffray & Co. to find a buyer for the company.
A sale still could be in the offing, with bankruptcy as a way to clean up Gardenburger’s balance sheet and make it more attractive to suitors.
As of June 30, Gardenburger had about $11 million in short-term, long-term and accounts payable debt. It’s biggest liability is Annex’s $27 million in convertible debt.
For the nine months through June 30, Gardenburger had $34 million in sales, down 10% from the year-ago period.
The company posted a net loss of $7.8 million for the period, up from $3.8 million a year earlier.
Gardenburger’s operating loss for the nine months was $1.9 million, versus an operating profit of $876,000 a year earlier.
