UPDATE 2-Nature’s Gate shampoo, soap maker seeks bankruptcy

* Natural Products Group files prepackaged bankruptcy

* Expects to emerge from bankruptcy in 60 days or less

* Assets of $286 million, liabilities of $804 million
(Adds details about new ownership, company history)

By Tom Hals

WILMINGTON, Del., Jan 27 (BestGrowthStock) – Natural Products
Group, owner of the Nature’s Gate line of organic shampoos and
soap, filed for bankruptcy protection on Wednesday with the
support of its lenders and expects to exit Chapter 11 in two
months.

Lenders holding 90 percent of the bank loans voted in favor
of the restructuring, which will cut the company’s outstanding
debt by 80 percent, the company said in a statement.

The company plans to borrow up to $20 million to fund
operations during its bankruptcy, known as a
debtor-in-possession loan.

Lenders owed approximately $530 million will end up owning
85 percent of the reorganized company’s equity under the
restructuring plan. They will also have a new term loan worth
$125 million.

Lenders owed about $216 million under a separate loan will
be allocated warrants that will allow them to purchase up to 5
percent of the equity in the reorganized company.

Harvest Partners LP, a New York private equity firm, owns
the prebankruptcy equity in Natural Products Group and it will
be wiped out.

Harvest formed Natural Products Group in 2004 to buy
Arbonne International LLC, a direct marketer of personal care
products, and Levlad Inc, which owns the Nature’s Gate line.

Harvest, with other investors, provided $93 million of
equity for the acquisitions.

Natural Products Group, based in Irvine, California, said
in court documents that it grew rapidly in 2005 and 2006 as
Arbonne added a large number of direct marketing contractors,
providing an unsustainable boost to revenue.

The company’s net sales began to fall in 2007-2009 due to a
loss of direct marketers and downturn in the economy.

While the bankruptcy wipes out the initial investors,
Natural Products Group paid them $200 million in dividends in
2005, according to a company statement dated Jan. 4, 2006.

Natural Products Group’s annual revenue consists of $378
million from Arbonne and $73 million from the Levlad
businesses.

Natural Products Group employs 867 people worldwide,
according to court documents.

Arbonne has a direct sales network of 750,000 independent
contractors and the company said they would receive their pay
and compensation as usual during the bankruptcy.

The case is In re Natural Products Group LLC, U.S.
Bankruptcy Court, District of Delaware, No. 10-10239.

Stock Basics

(Reporting by Tom Hals; Additional reporting by Santosh Nadgir
in Bangalore)

UPDATE 2-Nature’s Gate shampoo, soap maker seeks bankruptcy