Merisant to use portion of year-end cash balance to prepay senior debt

By Jennifer Lanning Drey

Portland, Ore., Nov. 15 - Merisant Co. will use approximately half of any excess cash flow on its balance sheet at the end of the year to prepay senior secured debt, Diana Ferguson, Merisant's chief financial officer, said Thursday during the company's third-quarter conference call.

Merisant had $40.5 million of cash and cash equivalents at Sept. 30, a 71% increase over the company's cash balance at Dec. 31, 2006, primarily due to a one-time cash payment received in 2007 related to a third-party agreement.

The debt prepayment will be made because Merisant's senior credit agreement limits the amount of cash the company can retain at the end of the year - a condition the company would like to amend so that it could invest more of its cash in its growth strategy, Merisant executives said.

"There are fundamental longer-term issues to be addressed with respect to our capital structure if we're going to achieve long-term growth and pursue our strategic objectives," Ferguson said.

Merisant's plans for growing revenue include pursuing product innovations to bring new sweetened products and brand extensions to the market and developing products that have the potential to transform the company's brand portfolio, according to its form 10-Q filed with the Securities and Exchange Commission.

Capital expenditures for 2007 are expected to be in the range of $5 million to $7 million and will increase in the fourth quarter as the company invests in optimizing its operating efficiencies.

Merisant generated $8 million in cost savings during the third quarter through a previously announced internal cost-savings program, Ferguson said.

Chairman and chief executive officer Paul Block said Merisant expects to announce a new product launch within the next 12 months but would not provide any more details on the anticipated product due to the possibility of competitors listening to the call.

In the third quarter, the company showed year-over-year improvements in sales and operating EBITDA in three of its four business segments. In North America, sales were up 13% over the prior year, Merisant reported.

Merisant is a Chicago-based marketer of low-calorie tabletop sweeteners, including Equal and Canderel.

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