Metabolife, who along with Cytodyne (makers of Xenadrine) was one of the largest epehdra based supplement provider. However, with the loss of ephedra and lots of lawsuits, it is declaring bankrupcy, and selling it's assets (but not its lawsuits or liabilities) to Ideasphere, who also owns Twinlabs (conicidently bought the same style and way). While there will be an auction for Metabolife's name, product, and two facilities (in Utah and Tenessee), most likely it will go to Ideasphere.
Metabolife, in 1999, made $350 million dolalrs, with a paper profit of over $24 million. It's owners - all living in San Diego - Michael Ellis, Michael Blevins, and William Robert Bradley - made over $146 million dollars in three years (1999-2001). Not bad for a drug felon (Ellis) who started it in 1995. However, with no ephedra comes a loss of sales. Somehow, they posted an $11 million dollars loss on $47 million dollars of revenue in 2004.
So how many lawsuits did they have against them. Well, a crazy amount - over 360. Yes, three hundreds and sixty cases. With a bankruptcy, all these lawsuits become unsecured creditors, making getting anything from the company almost nothing. With the IRS saying they are owed more than a million dollars, and 650 other creditors, very few people will get any money.
And what about the founders, each making more than $50 millions plus. Well, the founder Ellis is probably going to face federal charges of lying about Metabolife products, and the other two along with Ellis are under investigation on skimming millions of dollars and hiding money in offshore accounts.
Metabolife Announces Chapter 11 Bankruptcy and Proposed Sale of Assets (from PRNewswire)
Metabolife International Inc., http://www.metabolife.com, a San Diego based industry leader in the manufacture and sale of herbal-based dietary supplements used for weight control, today filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court, Southern District of California in San Diego. Metabolife offers METABOLIFE ULTRA, along with other weight management products in grocery, drug and mass retail locations nationwide. Along with the filing, Metabolife announced a potential sale of its assets for $23.5 million to IdeaSphere Inc, a health and wellness concern, subject to competitive bidding at an auction proposed for September 2005. Christopher R. Barclay of Mack | Barclay, an experienced insolvency and turnaround expert, has been retained to lead the company through the Chapter 11 process. David Osias and Deb Riley, of Allen Matkins, have been retained as bankruptcy counsel.
Metabolife's filing is for the purpose of maximizing the value of its assets through the bankruptcy sale process and to utilize bankruptcy procedures to determine the validity and amount of claims asserted by past users of weight-loss products containing ephedra. Ephedra was the primary ingredient in what once was Metabolife's flagship product, Metabolife 356. Metabolife successfully transitioned its business to ephedra-free products by December 2003, but has had to commit inordinately large resources and time to defending lawsuits filed by ephedra product users, which costs have been a substantial burden on the company's operations. Although Metabolife has been largely successful in avoiding significant adverse judgments, the costs of the litigation process and the uncertainty surrounding the large number of remaining lawsuits makes bankruptcy a suitable mechanism for obtaining a prompt, fair and cost effective resolution of these disputed claims.
Metabolife's assets will be sold under Section 363 of the Bankruptcy Code, which allows sales to be free and clear of liens, encumbrances and claims, including liabilities related to the pending litigation. A public auction will be held to determine if higher bids emerge, currently proposed for September 2005, with a sale closing shortly thereafter. New York based Carl Marks Advisory Group LLC has been retained as financial advisor to Metabolife, and to promote the auction opportunity and solicit overbidding. It is anticipated that all of the proceeds from the Section 363 sale will be utilized to satisfy creditor claims and to resolve the pending litigation.
Ideasphere Intends to Acquire Non-Ephedra Metabolife Assets (from PRNewswire)
Ideasphere, Inc., (ISI) owner of the Twinlab, Nature's Herbs and Alvita Teas brands and Rebus Publishing, announced today it has entered into a purchase agreement to acquire certain assets of Metabolife International Inc., a maker of diet and nutritional supplements, which has filed for Chapter 11 bankruptcy protection.
The stalking horse bid for the Metabolife assets is part of a strategic plan to build the ISI portfolio of nutritional and natural products and brands dedicated to supporting and promoting healthy lifestyles. Key assets being acquired include the company's core non-ephedra brands, Metabolife Ultra, Metabolife Complete, Metabolife Ultra Caffeine Free and Metabolife Green Tea Formula; a state-of-the-art powder and tablet manufacturing facility located in Orem, Utah; and a distribution center in Memphis. The products will continue to be marketed under the Metabolife brand, which will operate as a separate division within ISI.
"This deal would be a major strategic acquisition for ISI in three important ways -- additional manufacturing, distribution and customer service capacity; expansion in the mass retail channel with a dedicated line of strong, established brands; and the addition of an international platform on which we can expand our entire wellness offering on a global scale," said Mark Fox, president of ISI. "We were able to offer a premium bid for these assets because they can be leveraged very efficiently within our existing structure and immediately integrated with our current operations."
The addition of Metabolife's state of the art Alpine laboratory and process engineering facilities significantly increases ISI's capabilities and speed of new product development. The added capacity of the Alpine plant in Orem, located within minutes of the existing Twinlab plant in American Fork, will increase ISI's production capacity by billions of dose forms of tablets and powders. The Alpine facility is producing in excess of 80 million tablets a month with a single shift, and with the combined capacity ISI becomes a leading producer of dietary supplements in all of the major dose forms of capsules, tablets and powders.
"A continuous stream of safe and effective exciting new products is a fundamental element of ISI's commitment of excellence and leadership in the health and wellness market, and the Alpine facilities give us a tremendous boost in our capacity to develop new products," said Fox.
"Despite their recent ephedra-related legal and financial problems, Metabolife has built up a strong customer following and tremendous brand equity in their products," said Fox. "The company is entrenched in the mass channel, and the addition of these lines will be a great complement to our current business with our health and natural product retail customers," Fox said. "Plus, the addition of their distribution facility in Memphis will give ISI a central distribution center for all our brands, and fits with our ongoing strategic initiative to streamline operations and create efficiencies with shared services."
Fox said Ideasphere is planning to enter the Asian market later this year, and the Metabolife brands will be a valuable addition to that platform. The Asian market entry will be led by Tony Robbins, an owner and vice chairman of ISI. Robbins is founder and chairman of the Anthony Robbins Companies, and is one of the leading motivational and performance business consultants in the world. Robbins will be developing complimentary motivational programs to leverage Metabolife in Asia, creating a broad platform on which to expand the entire ISI health and wellness offering across Asia, including China and India. Details of that expansion will be announced later in the year.
Ideasphere, Inc. was launched in 2001 to create a company that offers consumers "a one-stop wellness solution" through an integrated combination of nutritional products, science-based content and information, and healthy lifestyle programs and services. ISI is currently comprised of several SBUs:
* Twinlab Corporation, a leading manufacturer and distributor of high
quality, science based nutritional supplements and performance products.
* Nature's Herbs and Alvita Teas, one of the nations most established and
respected herb providers and a manufacturer of herbal teas for more than
* Rebus LLC, a leading consumer health and science content developer and
ISI acquired the Twinlab and Nature's Herbs and Alvita Teas brands through acquisitions in 2003. Over the past year ISI has re-capitalized and re- structured both companies from top-to-bottom, focusing on product development, manufacturing, sales and operations planning, facilities rationalization, retail and distributor relationships, and marketing and sales. The outcome of these ongoing processes can be measured in improved manufacturing output, increased sales, streamlined planning that balances customer demand, production activity and inventory levels, and continuously improving fill rates across all major SKUs to meet increased demand.
"The acquisition of these Metabolife assets is another positive step in a year that has seen tremendous growth in our business," said Fox. "Our year- to-date sales are running 20% ahead of last year, and our trend line is even better as our Q2 run rate is more than 25% ahead of last year. This momentum is going to carry us forward as we pursue other new ventures in the coming months through strategic acquisitions, partnerships and organic innovation, including the launch of new health and fitness publications to assist with the entry into Asia."
"We are starting to hit our stride and the company is now positioned to take its place as the major driver of the wellness revolution that is sweeping the world," said Bill Nicholson, CEO of Ideasphere. "We now have in place the talent, the infrastructure, the brand portfolio and the leadership to realize our vision to combine science-based intellectual content with world class natural products and innovative total health and fitness programs to capture the market potential of the wellness industry."