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Vitamin firm seeks bankruptcy protection

March 11, 2008|Andrea Chang | Times Staff Writer

Leiner Health Products Inc., a leading maker of vitamins and nutritional supplements, filed for bankruptcy protection Monday, a year after the Food and Drug Administration found problems at one of its manufacturing plants, prompting a product recall.

Carson-based Leiner, which supplies store-brand products to major retailers including Costco and CVS, listed assets and debt of $500 million to $1 billion in a Chapter 11 petition filed in U.S. Bankruptcy Court in Delaware. Three company affiliates also filed for protection from creditors.

The company stressed that it would continue its normal business operations, including manufacturing and distributing its products, while in bankruptcy.

Leiner said it planned to restructure its debt and explore a sale of the company.

The company cited last year's FDA inspection as one of the reasons for its financial troubles. The deficiencies at the Fort Mill, S.C., plant, which related to product quality and inadequate compliance with good manufacturing practices, led Leiner to suspend production of over-the-counter drugs and issue a recall last spring.

"After a thorough analysis of Leiner's financial condition, the company concluded that today's court filings . . . were both prudent and necessary," Chief Executive Rob Reynolds said in a statement.

Despite the company's efforts "to address the challenges" that arose from the plant's problems, "these actions were not enough to offset the cost of our substantial debt obligations," Reynolds said.

Monday's filing included a list of the company's 30 largest unsecured creditors. The largest, U.S. Bank National Assn., filed a claim for $150 million.

In conjunction with the petition, which does not include Leiner's Canadian subsidiary, a group of lenders agreed to provide Leiner with $74 million in financing that would enable the company to continue operations while in bankruptcy.

The company didn't specify who the lenders were and must get court approval before it can tap the loan.

In November, Leiner reported a loss of $26.3 million for the quarter ended in September, compared with net income of $6.1 million for the same period a year earlier. The company's revenue fell $72.4 million to $125.6 million.

Leiner, which also operates facilities in Valencia and Garden Grove, supplies retailers with more than 2,000 products. Last year, the company distributed more than 21 billion doses of its products.

Attorneys and a spokeswoman for Leiner declined to comment on the filing Monday.

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andrea.chang@latimes.com

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