Menu Foods cuts jobs in rebuilding process

12-10-2007 | |

Toronto, Canada based Menu Foods is cutting jobs and paring salaries of its senior management as it tries to rebuild operations following the petfood-melamine recall scandal.

Menu Foods said Wednesday it will cut 10 to 15% of its 900-plus workforce, or
90 to 140 employees – victims of its business disruption since the massive
mid-March recall.

Meanwhile, the fund’s CEO, who at the time apologized
to people who lost their pets but declined to name the supplier behind the
tainted pet food, took a pay cut, along with other senior executives.

The
recall of up to 60 million tins and packages of pet food was the biggest in the
industry’s history and was provoked by reports of pets falling ill and some
dying of kidney failure after eating its products.

In cutting his own
compensation by 22%, CEO Paul Henderson said the move was made “with the
objective of sharing the pain.” Other senior executives and board members will
take pay cuts of 17 to 20%.

Class action lawsuit
The number of
animals affected from the contaminated petfood is unclear, but Menu foods is
expecting to face more than 100 class-action lawsuits.

The upward
adjustment in recall expenses is an extra $10 million, bringing the cost to $55
million “principally because the volume of customer returns and associated costs
are now estimated to be greater than originally anticipated,” the company
said.

In addition to the job cuts in the remaining workforce, the
restructuring charges involve write-offs of inventory, a customer relationship,
receivables and idle assets.

Menu Food’s shares were valued at over CAN$7
just before the March recall, closed down to $2.26 on the Toronto Stock Exchange
on Wednesday, Oct. 10.

Previous items on this subject:
Canada’s Menu Foods fights for its life
Menu Foods loses largest pet food customer
$45 million damage for Menu Foods

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