Tom's Foods files for Chapter 11

New York, April 7 - Tom's Foods Inc. filed for Chapter 11 two days ahead of the maturity of its amended credit facility and more than five months after it failed to pay off $60 million of maturing bonds when due.

The Columbus, Ga., snack food manufacturer made its filing Wednesday in the U.S. Bankruptcy Court for the Middle District of Georgia.

Tom's Foods listed assets of $93.10 million and liabilities of $79.09 million.

Directly and indirectly the company is owned by Heico Cos., LLC of Downers Grove, Ill.

The largest unsecured creditor is Rudolph Foods Inc. of Lima, Ohio, with a trade claim of $390,000.

Tom's Foods had failed to pay the principal and interest due on its 10½% senior secured notes when they matured on Nov. 1, 2004. On March 14, the note trustee, Bank of New York, began legal action to require it to pay the overdue principal and interest on the notes, filing a motion for summary judgment in the Supreme Court of the State of New York.

The company also owed $12 million under a $15 million revolving credit facility with Fleet Capital Corp.

The revolver was originally due to mature on Oct. 22, 2004 but was amended several times, most recently on March 31 to extend the maturity to April 8.

Tom's blamed its financial troubles on lower than expected sales volumes due to the bankruptcy of some convenience store chains, lower travel because of higher gas prices and pressures on consumers' budgets. It also suffered reduced volume under co-packing agreements, temporary closings due to hurricanes and higher agricultural prices. In addition, higher energy prices increased its costs and reduced customer demand, especially in lower income rural areas.

Tom's Foods asked for - and received court approval for - interim access to $5 million ahead of a permanent $22 million debtor-in-possession financing.

Some holders of the senior secured notes will participate in the DIP and have made it a condition of their consent to priming liens that the company commit to the proposed permanent financing.

The interim financing is a $5 million secured promissory note with Fleet Capital Corp. which matures May 6 and carries interest at Prime plus 300 basis points.

The $22 million permanent DIP facility will be a term loan via lenders led by Fleet as administrative agent.

Proceeds will be used to repay the pre-bankruptcy credit facility and the interim DIP loan, with the remainder being available for operating and other expenses.

The DIP will mature on Dec. 31, 2005 unless Tom's exits Chapter 11 or sells its assets earlier.

Interest will be at prime plus 450 basis points.

The facility has a 300 basis points commitment fee payable at closing.

Tom's Chapter 11 case number is 05-40683.

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