Planet Organic received bankruptcy protection last month under the Companies' Creditors Arrangement Act when more than $31.1 million in debt was called in by Catalyst Capital Group Inc. The Toronto private-equity firm, which invests in distressed companies, had bought the debt from Ares Capital Corp. in April.
"It's sort of a new beginning for Planet, not the end," Darren Krissie, executive vice-president for Planet Organic, said Friday. "They're buying the assets, which are all the stores and the name, so Planet Organic will continue."
Krissie said the deal will keep Planet Organic intact and spoke with optimism about the company's future.
"The business is not forced into a receivership and liquidated, and the remaining stores are sold off individually. ... In this situation, they're buying the business, they're keeping the employees and they're investing money behind us to continue to grow the brands Planet and Mrs. Green's."
Co-founder Diane Shaskin, who opened a single health-food store on Whyte Avenue in 1993 with husband Mark Craft before the company went public in 2001, was pessimistic about its future. Both were released from the company last November and Craft resigned from the board in March.
"Very sad," Shaskin said by e-mail from Victoria where she now lives.
"A new beginning? That's a good one. I don't think Planet will be around in a year. The heart and spirit are gone -- now it's just about $$$$."
Catalyst will acquire Planet Organic and subsidiary Darwen Holdings' Canadian and U.S. assets on or before June 7, pending approval of the TSX Venture Exchange and the Ontario Superior Court of Justice.
Planet Organic will not receive any cash in the sale. "On the closing date, Catalyst will acquire the assets in consequence of the corporation's and Darwen's failure to pay amounts owing to Catalyst under the convertible notes," said a release.
Catalyst did not immediately return a call seeking comment Friday.
After the closing, Planet Organic won't have any operating assets or active business. All stores will operate without disruption to customers, employees or suppliers, it said.
It currently operates nine natural food supermarkets in Canada and 11 in the U.S.
At its height in 2008 it also owned 50 Sangsters Health Centre stores, seven Healthy's Nutrition shops and manufactured natural supplements at its Trophic Canada division.
It expanded as demand for organic food grew and moved into the U.S. by acquiring the 11-store Mrs. Green's Natural Market Inc. chain in 2007.
Krissie has said the company ran into financial difficulties during the recession and by building two new stores in the Toronto area.
In 2008, it cancelled plans to acquire a three-store natural-foods chain in California when it failed to raise capital in weak markets.
The company sold its Trophic Vitamin, Sangsters Health Outlet, and Healthy's divisions this year and closed a Greater Toronto store.
Planet Organic also announced Friday it won a court order extending a stay of proceedings until June 18 so the company can continue restructuring.
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