
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 30, 1993                   TAG: 9304300159
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: BLUE BELL, PA.                                LENGTH: Medium

BANK ACTION SHUTS DIET CENTERS

Nutri-System Inc.'s nearly 300 company-owned diet centers were closed and employees told not to come to work after a bank seized the troubled company's cash during restructuring talks.

About 1,800 employees were affected when Nutri-System said late Wednesday that it was closing its 283 company-owned centers in the United States. Its 857 franchised centers and its Canadian operations will stay open.

An employee at the Roanoke outlet, who declined to give her name, said the center on Electric Road is a franchise and is "completely unaffected" by the parent company's problems. She said the local franchise's owner was out of town Thursday.

Nutri-System said Fidelity Bank, the agent for a seven-member consortium of banks, "had seized all of the company's cash and had taken control of all of the company's bank accounts."

Saying it was "appalled" by the bank action, Nutri-System said the company had "negotiated in good faith for several months with several viable investors in an attempt to restructure the company."

"The banks were aware of those negotiations and Nutri-System had been advised that the banks did not oppose the company's plans," the statement said.

Barbara Nate, spokeswoman for Philadelphia-based Fidelity, had no comment.

Ed Richey, chairman of the Association of Nutri-System Franchises, said the franchised centers have been told that negotiations were continuing for new financing.

Arrangements have been made for the franchises to continue receiving supplies, including the prepackaged food that Nutri-System centers sell to dieters, he said.

The group's statement said the company's financial problems resulted from corporate overexpansion in the 1980s.

Nutri-System became a large, national weight-loss chain under businessman Harold Katz, who sold his interest in 1986 after 14 years in the business.

by CNB