JLL Partners, the New York private equity firm, will reportedly seek bankruptcy protection for New World Pasta, its pasta-brand rollup, which is laden with more than $400 million (€337 million) of debt.
JLL began its pasta platform in 1998 with the $450 million purchase of Hershey Foods’ pasta division.
A year and a half ago, New World Pasta warned that the installation of a troublesome new computer system had rendered its financial statements unreliable, according to reports.
Analysts claim that part of New World’s woes have to do with the rising popularity of the Atkins diet, which preaches the avoidance of carbohydrates like bread and pasta. New World’s sales reportedly dropped 7 percent last year.
Another seller of carbohydrates, publicly traded donut merchant Krispy Kreme, recently issued a profit warning, also blaming its own weak sales on the Atkins diet.
JLL Partners, run by founder Paul Levy, raised $750 million for its fourth fund in 2002. Despite the New World setback, the firm has recently enjoyed two significant exit events – the $1.4 billion sale of hospital group Iasis Healthcare to Texas Pacific Group, and blockbuster $7 billion sale of pharmacy benefits manager AdvancePCS.