Interstate Bakeries announces plan funding commitments; DIP facility amendments approved

By Jennifer Lanning Drey

Portland, Ore., Sept. 12 - Interstate Bakeries Corp. has received plan funding commitments from a group of lenders holding about 53% of Interstate's pre-bankruptcy secured debt that forms the basis for Interstate to emerge as a stand-alone company, Interstate announced Friday.

The commitments are from an affiliate of Ripplewood Holdings LLC and Silver Point Finance, LLC, Monarch Alternative Capital LP and McDonnell Investment Management LLC.

According to an Interstate Bakeries news release, Silver Point, Monarch and McDonnell have committed to provide $339 million under a new secured term loan, while the Ripplewood affiliate has committed $130 million of new capital to the reorganized company.

Interstate said representatives of its two major labor unions have agreed to modifications to their labor agreements that are essential to the commitments.

"This agreement provides the cornerstone for a revised plan of reorganization that will preserve the jobs of more than 22,000 IBC employees," Craig Jung, chief executive officer of Interstate, said in the release.

"It has the support of approximately 53% in amount of IBC's pre-petition senior secured creditors, provides a fully underwritten exit financing commitment and has the support of national representatives of IBC's major labor unions for modifications to IBC's existing labor contracts that will lower the company's cost structure and enable us to create sustainable competitive advantage to secure the company's future."

Terms of funding

Under the terms of the revised plan of reorganization contemplated by the new plan funding commitments, holders of general unsecured claims and holders of existing common stock would have their rights canceled and receive no distribution.

Upon completion of the reorganization, John Cahill and Greg Murphy, industrial partners of Ripplewood Holdings LLC, will serve on Interstate's board of directors.

Interstate said it will work closely with all parties involved in the commitments and other key constituents to develop and submit a revised plan of reorganization and related disclosure statement that incorporates the terms of the commitments.

The commitments require Interstate to emerge from bankruptcy by Feb. 9, 2009.

The plan funding commitments are subject to approval from the U.S. Bankruptcy Court for the Western District of Missouri.

Additionally, the two major unions must ratify the modified contracts.

DIP facility amendments approved

Interstate also announced Friday that it received court approval to extend the maturity of its debtor-in-possession facility to Feb. 7 from Sept. 30 and to increase the commitment to $329 million from $250 million, allowing it to implement the revised plan of reorganization.

When requesting the DIP amendments, Interstate said it could otherwise be forced to begin an orderly wind-down of its business "if circumstances dictate."

The company also said the amendment needed to be approved before it would be in a position to file its 10-K report for the year ended May 31 with the Securities and Exchange Commission.

Prior to the company's Friday hearing on the amendments, Interstate's official committee of unsecured creditors objected to the motion, claiming that it appeared premised on a proposed plan of reorganization that had not yet been publicly disclosed.

The committee also said the company would incur substantial fees if the amendments were approved.

Interstate, a Kansas City, Mo., bakery operator, filed for bankruptcy on Sept. 22, 2004 in the U.S. Bankruptcy Court for the Western District of Missouri. Its Chapter 11 case number is 04-45814.

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