(Bloomberg) -- Snack maker Hearthside Food Solutions is preparing to file for bankruptcy as soon as this week, according to people with knowledge of the matter, who asked not to be identified discussing a private matter.
The company, a contractor that makes and packages food such as granola bars and frozen burritos for well-known brands, has been negotiating a restructuring plan in which its private equity owners would hand over the keys to creditors, Bloomberg previously reported.
The workout talks come as Hearthside, which is owned by Charlesbank Capital Partners and Partners Group Holding AG, needs to tackle around $2 billion of debt maturing in 2025 and repay what it borrowed from a credit facility this week.
Representatives for Hearthside and Charlesbank didn’t respond to requests for comment. A representative for Partners Group declined to comment on Hearthside’s plans.
Hearthside came under scrutiny last year after the New York Times reported the processor employed migrant children in plants in Grand Rapids, Michigan, for work ranging from tending ovens to making Nature Valley granola bars and moving heavy pallets of Lucky Charms cereal, all in violation of child labor laws.
In response, Chief Executive Officer Darlene Nicosia said it was taking steps to meet its workforce requirements, including a minimum age of 18 policy, according to its website. The US Department of Labor also launched an investigation into the company following the report, according to the Times.
The company, run by a slew of different private equity firms over the past decade, has been throwing off cash since its 2018 buyout by Charlesbank and Partners Group, according to a June report by S&P Global Ratings. S&P downgraded Hearthside’s credit rating, which it said reflected an “increased likelihood of a debt default or restructuring.”
Hearthside’s roughly $1 billion term loan due in 2025 is quoted around 66 cents on the dollar as of Wednesday afternoon, down from 75.5 cents on Oct. 3, according to data compiled by Bloomberg. The company also has $350 million of senior unsecured notes.
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