Le-Nature's receives court approval of settlement agreement that resolves Latrobe plant bidding dispute

By Reshmi Basu

New York, Sept. 25 - Le-Nature's, Inc. obtained court approval Tuesday of a settlement under which original stalking horse bidder Giant Eagle, Inc. will ultimately take control of Le-Nature's Latrobe, Pa., bottling plant and Giant Eagle will withdraw its motion to reconsider the order revoking its bid, according to a person familiar with the company's bankruptcy case.

As previously reported, after the court revoked Giant Eagle's high bid for the Latrobe property on the grounds that it attempted to chill bidding, backup bidder Cadbury Schweppes Bottling Group, Inc. said it did not want to buy the property and that it intended to either designate Giant Eagle as the buyer under the Cadbury asset purchase agreement or resell the property to Giant Eagle.

However, Chapter 11 trustee R. Todd Neilson said he would oppose Cadbury's attempt to turn the property over to Giant Eagle.

As a result, the two companies and Neilson agreed to a settlement under which Cadbury or its designee will indeed buy the property from Le-Nature's for $19 million and then sell to Giant Eagle either the Latrobe property or Cadbury's equity interest in another designated buyer.

In addition, Giant Eagle has agreed to withdraw its motion to reconsider the portion of the court's order that allows Neilson to keep Giant Eagle's original $2 million deposit for the benefit of Le-Nature's estates.

However, Giant Eagle will pay $2.25 million to Neilson to settle any tort claims he may have against the company in connection with the auction.

Le-Nature's, a Latrobe, Pa., manufacturer of flavored bottled water and other beverages, had an involuntary Chapter 7 bankruptcy case filed against it on Nov. 1, 2006 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The case was converted to Chapter 11 on Nov. 3, 2006, and the case number is 06-25454.

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