Jefferies sent out books last week for the manufacturer of private-label and branded kettle-cooked chips, pretzels and other snack foods, the source said. The company does not disclose its financials, but according to Moody's Investors Service's June 28 ratings report, Shearer's generated about $370 million in sales and $44 million of Ebitda as of March.

Shearer's could be of interest to strategic buyers such as PepsiCo Inc., which owns Lay's Potato Chips and Sabrita's tortilla chips, as well as snack distributors Wise Foods Inc. and Snyder's of Hanover, another source suggested.

Jefferies worked with Shearer's on the leveraged finance side in March, when the Brewster, Ohio, company acquired Snack Alliance Inc. and its Canadian affiliate in March for an undisclosed sum. Jefferies and BMO Capital Markets Corp. arranged about $140 million in term loans and $5 million of mezzanine debt at the time, according to Standard & Poor's Leveraged Commentary & Data.

Equity financing came from Mistral, along with some rollover equity from Snack Alliance, which was owned by Canadian private equity firm Trimin Capital Corp. and management.

Shearer's has suffered from rising commodity costs and operating issues of late, Moody's said. In May, the ratings agency downgraded Shearer's corporate family rating to B2, from B1, and its term loan B facilities to B1, from Ba3, citing operating challenges, higher-than-expected integration costs, delays in recognizing benefits from expansion and exposure to rising commodity costs.

Moody's said it had originally expected leverage to remain at or below 4 times when it initiated coverage in March 2010, but leverage has exceeded 4.5 times in each of the past three quarters and is likely to rise to above 5 times by the end of fiscal 2011. "Its increasing leverage is a result of expansion plans that have yet to generate improved cash flows," the agency said.

Moody's said Mistral Equity had put an additional $14.3 million of equity into the company and completed an amendment to its credit agreement. But the agency maintained a negative outlook on the company and has not revised its credit rating.

--Mike Schoeck contributed to this report.