KANSAS CITY — U.S. Bankruptcy Judge Jerry Venters late last week postponed a confirmation hearing on Interstate Bakeries Corp.’s reorganization plan to April 23 from March 12. The decision followed the announcement from I.B.C. that it has begun talking with a new investor.
"We are pleased with the interest financial investors have shown in our company," said Craig Jung, chief executive officer. "We remain hopeful that, working together with all our constituents, we will be able to quickly achieve modifications to our plan of reorganization, or receive an alternative plan of reorganization that will allow I.B.C. to maximize constituent recoveries and emerge from Chapter 11 well positioned to compete in the marketplace and build capability and competitive advantage."
In late February, I.B.C. was informed that the International Brotherhood of Teamsters had initiated discussions with a third party on a proposed labor agreement, a move that could pave the way for a new investor to enter the hunt to acquire the bankrupt Kansas City-based wholesale baker.
That investor has since been identified as New York-based hedge fund Ripplewood Holdings. Ripplewood primarily invests in the automotive, manufacturing, financial services, entertainment, and technology sectors, but has held a stake in the food business in the past, including ownership in Edwards Fine Foods.
As it currently stands, I.B.C. has a financing agreement with Silver Point Finance L.L.C. under which the latter has agreed to provide up to $400 million in post-bankruptcy financing. But that agreement is contingent on I.B.C. striking a deal with the Teamsters and expires on March 14, well before the new reorganization hearing date.
I.B.C. said it plans to continue discussions with Silver Point as well as other potential lenders in an effort to obtain a replacement commitment for exit financing for a stand-alone plan of reorganization.
Because the agreement with Silver Point will expire, and because negotiations with Ripplewood may fail, I.B.C. said it also has begun an orderly process to sell all or portions of its businesses and assets.
"Under the circumstances, the only prudent course of action for the company is to embark on a dual-path and explore alternatives that include the sale of the company in multiple transactions," Mr. Jung said. "As part of this process, we will immediately begin holding discussions with potential strategic purchasers, many of whom have already expressed interest in buying certain of the company’s businesses and assets."
I.B.C. said it has begun discussions with JPMorgan Chase Bank, N.A., as administrative agent for the lenders party to the existing debtor-in-possession (DIP) financing agreement, to extend the maturity date and increase the size of its current DIP credit facility. The DIP credit facility is currently set to expire on June 2.