Planet Organic aims to renegotiate loans

The organic food market chain that bills itself as Canada’s leading natural products retailer has replaced its chief executive while it looks to negotiate new terms with its lenders.

Planet Organic Health Corp. announced Friday that its president and CEO since 2002, Ron Francisco, will step aside, to be replaced by Darren Krissie, the Edmonton company’s vice-president and CFO, and board member Brent Knudsen, managing partner at San Francisco-based Partnership Capital Growth Advisors.

Krissie and Knudsen are jointly named to run an interim “Office of the CEO” for the next three to six months while a search gets underway for a permanent replacement with “extensive retail experience.”

The company reiterated that it “remains in default of its debt covenants with its senior lenders based on its results for the period ending December 31, 2008” and said Friday it now expects “additional covenants will be breached” for the quarter ending March 31.

Although the firm has had initial talks with its lenders to “waive certain events of default,” it said all principal and interest payments have continued to be made to the lenders and its loans are all in good standing up to the date hereof “except for the aforementioned covenant defaults.”

The talks’ outcome is “uncertain,” the company said, but “management is optimistic that they will be successful based upon the company’s relationship with its lenders.”

Krissie’s and Knudsen’s primary responsibility in the CEO’s office will be “to lead Planet Organic during this transition, maintain strong financial discipline within the organization, strengthen Planet Organic’s balance sheet, and restore the confidence of its shareholders,” the company said.

Planet Organic has 10 natural food supermarkets in Canada under the Planet Organic Market banner and 11 natural food supermarkets in the U.S. under the Mrs. Green’s Natural Markets banner.

The company’s other Canadian operations include 43 natural health outlets under the Sangster’s Health Centre banner and eight natural health outlets under the Healthy’s and Planet Organic Living banners. It also runs Trophic Canada, the country’s “leading manufacturer of natural supplements.”

Francisco, who came to the company as the CEO of Trophic Canada, will remain on Planet Organic’s board of directors. He “has been integral in providing the company with the early-stage financings that helped catapult Planet Organic from a small retailer with one location in 2001 and generating $1.7 million in revenue to the successful chain it is today with revenues of over $120 million,” Krissie said Friday.

In the same release, Planet Organic noted that Roy Sangster, a “natural health industry pioneer” in his role as founder of Sangster’s Health Centres, has stepped down from Planet Organic’s board of directors to “pursue other interests.”

Sangster’s was the first retail health food franchise in Canada when it began in 1971, Planet Organic noted.

Planet Organic on Friday also announced two new members on its board: Dan Katz, co-head of portfolio management at U.S. finance firm Ares Capital Corp. (ARCC), and Mike Arougheti, ARCC’s president.

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