Former Hostess details sale proceeds, pays majority of secured debt

By Caroline Salls

Pittsburgh, Sept. 19 - Old HB, Inc., formerly Hostess Brands, Inc., was able to obtain $855 million in gross proceeds from its major brand sales with the closing of the fifth sale in July, according to a status report filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

The company said that figure does not include deductions for transaction fees, property taxes, break-up fees and other amounts.

Post-closing activities related to the major brand sales are expected to be completed by the end of 2013.

In addition, Old HB said on it closed on a transaction on Aug. 29 under which it sold the vast majority of its remaining "hard assets" for a post-auction purchase price of $62.51 million.

According to the report, some personal property assets remain for sale, including 46 rail cars with an estimated value of between $500,000 and $1 million and remnant intellectual property with an estimated value of less than $300,000.

These sales are expected to be completed by the end of October.

Old HB said proceeds of the winddown of its businesses and sales of assets have allowed it to pay in full a majority of its secured debt.

As of Wednesday, the company said it fully paid a pre-bankruptcy asset-based lending facility, on which more than $50 million was owed at the time of the bankruptcy filing; Up to $75 million of debtor-in-possession financing; a $30 million post-bankruptcy Hilco loan; more than $405 million in first-lien term loan debt; and more than $172 million of third-lien term loan debt.

In addition, Old HB said it has paid $8.2 million on account of its fourth-lien secured notes. The company said $222.6 million in outstanding principal amount of fourth-lien secured notes remains unpaid.

The company said it is unlikely that it will ultimately be able to pay the fourth-lien secured notes in full, and it does not expect to have funds available for distribution to administrative creditors whose claims are not included in a winddown order liquidation budget.

Hostess Brands, an Irving, Texas-based operator of regional bakeries, filed for bankruptcy on Jan. 11, 2012 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 12-22052.

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