Kansas City, Missouri, March 07, 2008 - Interstate Bakeries Corporation (IBC) today said it is currently engaged in discussions with multiple parties regarding modifications to its plan of reorganization that would allow the Company to emerge from Chapter 11 as a stand-alone Company.
A financial investor had previously expressed interest in making an equity investment in the Company and last week provided the Company with a proposal regarding labor concessions to which the International Brotherhood of Teamsters (Teamsters) was willing to agree if the financial investor were to become an investor in the Company. IBC said that it continues to review the proposed labor concessions negotiated between the financial investor and the Teamsters to determine if the proposed terms are acceptable to the Company, and looks forward to a term sheet from the financial investor with details on committed financing and constituent recoveries, as well as any suggested modifications to the Company's business plan, for consideration by IBC's board of directors.
"We are pleased with the interest financial investors have shown in our Company," said Chief Executive Officer Craig Jung. "We remain hopeful that, working together with all our constituents, we will be able to quickly achieve modifications to our plan of reorganization, or receive an alternative plan of reorganization that will allow IBC to maximize constituent recoveries and emerge from Chapter 11 well positioned to compete in the marketplace and build capability and competitive advantage."
As a result of these ongoing discussions, IBC has asked the Bankruptcy Court to continue the confirmation hearing on its plan of reorganization, currently scheduled for March 12, 2008, to April 23, 2008.
As a consequence of the continuance of the confirmation hearing, the Company expects the commitment from Silver Point Finance, L.L.C. for exit financing of up to $400 million to expire on March 14, 2008 in accordance with its terms. The current exit financing commitment contained several conditions, including a requirement that the Company obtain confirmation of its plan of reorganization by March 14, 2008. Continuing the confirmation hearing to April 23, 2008 makes it impossible for the Company to fulfill that condition.
The Company said that it plans to continue discussions with Silver Point Finance, L.L.C. as well as other parties in an effort to obtain a replacement commitment for exit financing for a stand-alone plan of reorganization. However, there can be no assurances that the Company will be successful in obtaining a new exit financing commitment.
To meet its obligation to maximize constituent recovery and ensure the best possible outcome for its constituents, IBC also announced that concurrent with the actions discussed above, it has begun an orderly process to sell all or portions of the Company's businesses and assets. The Company and its financial advisors believe that absent a confirmable, stand alone plan of reorganization, a sale of the Company in multiple transactions is the best alternative to maximize the recovery to stakeholders.
"Under the circumstances, the only prudent course of action for the Company is to embark on a dual-path and explore alternatives that include the sale of the Company in multiple transactions. As part of this process, we will immediately begin holding discussions with potential strategic purchasers, many of whom have already expressed interest in buying certain of the Company's businesses and assets," Mr. Jung said.
To provide the Company with sufficient time and liquidity to support normal business operations as it pursues this dual path process, IBC has begun discussions with JPMorgan Chase Bank, N.A., as administrative agent for the lenders party to the existing debtor-in-possession (DIP) financing agreement, to extend the maturity date and increase the size of its current DIP credit facility. The DIP credit facility is currently set to expire on June 2, 2008. The Company can provide no assurance that it will be able to obtain an extension or increase the size of its DIP financing facility on acceptable terms or at all.
About the Company
Interstate Bakeries Corporation is one of the nation's largest commercial bakers and distributors of fresh-baked bread and sweet goods, sold under various brand names, including Wonder(R), Merita(R), Home Pride(R), Baker's Inn(R), Hostess(R), Drake's(R), and Dolly Madison(R). The company is headquartered in Kansas City, Missouri.
Interstate Bakeries Corporation filed for bankruptcy protection on September 22, 2004, citing liquidity issues resulting from declining sales, a high fixed-cost structure, excess industry capacity, rising employee healthcare and pension costs, and higher costs for ingredients and energy. The Company continues to operate its business in the ordinary course as a debtor-in-possession.