Potential buyer Yucaipa ask court to deny Interstate Bakeries' access to $400 million exit financing

By Reshmi Basu

New York, Nov. 2 - Yucaipa Cos. Inc., a potential buyer for Interstate Bakeries Corp.'s assets, asked a judge to deny Interstate Bakeries' proposed $400 million exit financing from specialty lender Silver Point Finance LLC, according to a Friday filing with the U.S. Bankruptcy Court for the Western District of Missouri.

Yucaipa has teamed up with Bimbo Bakeries USA and the International Brotherhood of Teamsters in an offer to buy Interstate Bakeries. And according to Yucaipa's filing, the company does not need outside financing to improve the financial viability of Interstate Bakeries or to improve recovery rates for creditors.

According to the filing, the Los Angeles-based Yucaipa said that after more than three years in Chapter 11, Interstate Bakeries has not filed a plan of reorganization nor has it reached an agreement on labor concessions with the Teamsters Union, which is a prerequisite for securing the $400 million exit financing.

Therefore, the proposed exit financing is "at best a non-starter," Yucaipa said, calling for the termination of Interstate's exclusivity extension, which is set expire on Wednesday, so that other parties are allowed to formulate and propose plans of reorganization.

Within the next month, Yucaipa said Bimbo, the Teamsters and itself will jointly propose a reorganization plan and has also asked the court to provide it with three weeks of access to Interstate's information.

Yucaipa is a holding company founded in 1986 by billionaire Ronald Burkle and invests mostly in supermarket and grocery chains while Bimbo is a U.S. affiliate of Mexico's Grupo Bimbo SAB de CV.

The hearing for approval of the exit financing commitment is scheduled for Nov. 7. In addition, the court will also rule on the motion to extend the company's exclusive periods to file a plan of reorganization and solicit votes on the plan.

The 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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