Farallon takes veggie option

Tue Nov 1, 2005



Toughening bankruptcy laws that took effect in mid-October inspired a flurry of last-minute bankruptcy filings by publicly traded corporations seeking the more lenient terms of Chapter 11 protection afforded by the old statute. All of this provided ample investment opportunities for hedge funds looking for event-driven opportunities in distressed companies and potential turnarounds.

One of the more curious of such buys was Gardenburger, the California-based firm that helped popularize a "veggie burger" craze in the mid-1990s with the help of prodigious advertising on the Seinfeld show. Crushed by the anti-carb craze a` la the Atkin's diet and suffering increased competition from rival Kraft's popular Boca Burger, the franchise saw its fortunes fall. Over the past 18 months, the company has been operating at a loss, falling precipitously from its height of $100 million in net income five years ago. And investor indigestion surely set in as the stock crumbled in...

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