Creditors SAC Capital Advisors LP and Z Capital Partners LLC are poised to take control of Golden Gate Capital Corp.’s Neways in a restructuring that would allow it to avoid bankruptcy, said people with knowledge of the talks.
Golden Gate will keep an equity stake in the company through an out-of-court financial restructuring, said the people, who asked not to be named because the talks are private. Neways, which makes personal and household products that don’t use so-called controversial ingredients, defaulted on about $235 million of second-lien loans last year and was weighing a bankruptcy filing, people familiar with the matter said Nov. 17.
Neways distributes health and beauty products in nearly 30 countries through a global network of about 500,000 independent distributors, according to its website. It was acquired by San Francisco-based Golden Gate for an undisclosed price in 2006. The Springville, Utah-based company has struggled with operations, including at its business in Japan, according to the people.
“The company remains in active and constructive discussions with its lenders regarding an out-of-court resolution and looks forward to reaching a mutually agreeable solution,” said Meaghan Repko, a spokeswoman for Neways.
Peter J. Solomon Co. is advising Neways, said the people.
Spokesmen for Golden Gate, SAC Capital and Z Capital declined to comment. Golden Gate, which manages about $12 billion, raised $3.5 billion for its Opportunity Fund last year, a person familiar with that investment said in November.
SAC Capital, the $14 billion hedge fund, is run by billionaire Steve Cohen and based in Stamford, Connecticut.
Z Capital, a private-equity firm based in Chicago, is among the creditors that took control of cookie chain Mrs. Fields Famous Brands LLC last year.
Neways formulates its products excluding more than 3,000 ingredients that it says should be avoided because, while legal, they are “scientifically controversial.” These include formaldehyde, a chemical byproduct of some preservatives, and phthalates, a common fragrance additive, according to the company’s website.