Monday, March 16, 2009

Creamery Suspends More Payments

Posted By on Mon, Mar 16, 2009 at 3:44 PM

The Humboldt Creamery just issued a press release announcing that it will suspend payments to its noteholders and owners of the "preferred equity shares" it was selling in January and February.

"While we continue to talk with our lenders, we feel that the interest and principal payments on the Notes you hold must be suspended at least for a time until those discussions are concluded," interim CEO Len Mayer is quoted as saying in the release.

In addition, the Creamery announced that it will be selling its ice cream factory in Los Angeles so as to "focus on its core operations."

"Today, the Board made a decision that we believe will help strengthen the Creamery's business," said Jim Renner (in the release). "It is our intention to focus on our strongest operations as we rebuild the business and ensure a profitable, sustainable future for the Creamery. We know our business is fundamentally viable and that is where all of our efforts will be focused in the coming months."

Apart from those two details, the release is pretty short on specifics. It does not detail what the business' internal audit has dicovered in the wake of the sudden resignation and abscondance of former CEO Rich Ghilarducci. It does say that the problems uncovered in the audit are "significant" but not insuperable, and that more information will be forthcoming at a later date.

"The report we have received from our financial consultant is that the Creamery's business is fundamentally viable," says Mayer. "Our customers remains loyal. Our banks are working with us. Our vendors, while concerned, are by and large supporting us. The Creamery intends to continue to do whatever it takes to keep operating and strengthen and rebuild its business."

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