Organic and “natural” retailer Planet Organic Health Corp. plans to sell its “underperforming” Sangster’s retail chain, close its largest organic supermarket and lay off two senior managers.
Through these moves the Edmonton-based company, whose lenders have already agreed to a 60-day forbearance period that expires Monday (Nov. 30), aims to cut its corporate debt and “redeploy” capital to its most profitable divisions.
Planet Organic said in a release Monday it’s received an offer to buy its 43 natural health outlets which operates under the Sangster’s Health Centre banner.
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The company said it also plans to close its largest Planet Organic Market store at Vaughan, Ont., in the northwest of the Greater Toronto Area (GTA). The company had just opened the 13,400-square foot store in a new shopping centre development in March last year.
Planet Organic didn’t say when it plans to close the Toronto-area store. Nor did it release the name of the potential buyer for the Sangster’s chain, the dollar amount of the offer or a possible date of sale.
Saskatoon-based Sangster’s, which was founded by Roy and Pat Sangster in Yorkton, Sask. in 1971 and began franchising in 1978, now sells private-label vitamins, minerals, herbs, organic foods and an exclusive line of supplements in 43 stores between Nanaimo, B.C. and Halifax. Planet Organic bought the chain for $4 million in 2004.
“The closure of the (GTA) location and sale of underperforming divisions will enable the corporation to redeploy capital to its most profitable divisions, being (Planet Organic Market) and (U.S. organic retail chain) Mrs. Greens, and reduce corporate debt,” Planet Organic said.
Other assets
The company added that it’s reviewing “all financing options,” including the sale of other “non-core” assets, to reduce its aggregate debt load, which it said is now about $39.3 million.
Planet Organic added that it’s current on all debt, interest and vendor payables and has “sufficient current cash flow to maintain all current obligations.”
However, the company said its lenders, after Monday, will have the legal right to demand debt repayment and “enforce their security” over all Planet Organic assets if the company can’t renegotiate the terms of its loans or arrange other financing.
Apart from its nine other Planet Organic Market stores across Canada and its 11 Mrs. Green’s Natural Markets in the U.S., Planet Organic’s other assets include seven Healthy’s (Planet Organic Living) natural health stores and Trophic Canada, the country’s largest maker of natural supplements.
Planet Organic also said Monday it would “release” Mark Craft, the president of its Planet Organic Market division, and Diane Shaskin, the division’s vice-president of marketing and advertising, effective immediately. Craft, however, still has a seat on Planet Organic’s board of directors.
