By Katherine Doherty and Jeremy Hill
December 1, 2019, 3:39 PM PST Updated on December 2, 2019, 5:13 AM PST
Company previously disclosed plan to seek Chapter 11 status
Big clients are handling more of their marketing themselves
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3479214Z
ACOSTA INC
Private Company
CG
CARLYLE GROUP/TH
29.63USD-0.17-0.57%
978325Z
ELLIOTT MANAGEMENT CORP
Private Company
0701266D
CROSSMARK HOLDINGS INC
Private Company
ADV
ADVANTAGE SOLUTIONS INC
Private Company
Acosta Inc., the marketing firm owned by Carlyle Group LP, has gone bankrupt after big consumer-product firms decided to do more of the work themselves to keep up with changing consumer tastes.
The company filed for Chapter 11 bankruptcy in Wilmington, Delaware, with support from creditors on a plan that would hand them ownership of a reorganized company and slash $3 billion of long-term debt. Creditors including Elliott Management Corp., Oaktree Capital Management, Davidson Kempner Capital Management and Nexus Capital Management agreed to the deal, interim Chief Financial Officer Matthew Laurie said in a court declaration.
Acosta had skipped an Oct. 1 bond interest payment and previously said it was working on a plan to hand control over to creditors. The deal provides $325 million in new capital and preserves about 30,000 jobs, Laurie said. Acosta said it has commitments from lenders for a $150 million loan to keep the company operating during the reorganization.
Brand Handlers
The company and its rivals including Crossmark Holdings Inc. and Advantage Solutions Inc. are the brands behind the brands on the shelves of retailers like Walmart Inc., Target Corp. and Kroger Co. They make sure major retailers carry their clients’ products and display them well, and sometimes coordinate with the companies on product promotions.
Acosta, based in Jacksonville, Florida, helps stock shelves for some of the largest U.S. consumer goods companies and offers sales and marketing services to brands including Campbell’s, Kellogg’s and Coca-Cola.
The business has been squeezed as customers handle more of the marketing tasks in-house. They’re dealing with changing consumer behavior, including a shift from packaged goods to fresh foods, and to private label rather than traditional brands, leaving less demand for outside marketing firms.
The bankruptcy filing listed total liabilities of $1 billion to $10 billion, and no more than $1 billion in assets.
The case is Anna Holdings, 19-12551-CSS, U.S. Bankruptcy Court for the District of Delaware.
http://www.bloomberg.com/news/articles/2019-12-01/carlyle-s-acosta-files-bankruptcy-as-marketing-budgets-dry-up
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