Teamsters' partnership looks to buy Interstate Bakeries

By Caroline Salls

Pittsburgh, Nov. 2 - The Teamsters have formed a partnership with Yucaipa Cos. and Bimbo Bakeries USA to attempt to buy Interstate Bakeries Corp., according to a Teamsters news release.

According to the release, the acquisition could save tens of thousands of jobs at the bankrupt Interstate Bakeries.

"Under IBC's plan, our members were being asked to make the largest sacrifice, putting their faith in an untested delivery system in an entity that had little room for error," Teamsters general president Jim Hoffa said in the release.

"It was a recipe for another bankruptcy."

The Teamsters said the partnership would bring together the financing of Yucaipa, which has expertise in working with unionized companies; the operating prowess of Bimbo Bakeries, one of the largest baking companies in the world; and the Teamsters union as the key component of the distribution system.

"A key ingredient of our plan will be a commitment from Ron Burkle and the Yucaipa Companies and Bimbo Bakeries to value the sacrifices of our members and position the company for long-term growth," Hoffa said in the release.

Specifically, the release said the partnership's plan includes investing in Interstate Bakeries' operations and marketing while maximizing job security and wage and benefits opportunities for Interstate employees.

As previously reported, Interstate's management is recommending a plan backed by Silver Point Finance.

The Teamsters said this plan "would leave the company highly leveraged, [with] Teamster-represented route sales and transport workers shouldering the largest part of financial cuts."

"Our plan is in direct contrast to IBC's proposed financing plan with Silver Point," Teamsters Bakery and Laundry Conference director Richard Volpe said in the release.

"We have low expectations in IBC's plan to sustain the company for any length of time.

"The current product synergies, commitment for new product development and national distribution network will give our members the best chance to protect their earnings, health care and retirement."

As previously reported, Interstate Bakeries cannot move forward with the Silver Point-funded plan and exit commitment until the Teamsters agree to related collective bargaining agreement changes.

Interstate said in an Oct. 22 news release that it may be forced to withdraw its exit commitment and plan funding agreement motions if the company does not reach a contract change agreement with the Teamsters by Nov. 7.

Interstate said in that release that it still believes that the best alternative for maximizing value for all of its stakeholders is to emerge from Chapter 11 as a stand-alone company, but it has been exploring other alternatives, including a potential sale of the company.

Interstate said it has recently begun discussions with potential strategic buyers that may be interested in acquiring the company or its assets.

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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