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Twinkie-maker can seek creditor approval of plan

Thursday, October 30, 2008 | 2:44 p.m. CDT; updated 4:43 p.m. CDT, Thursday, October 30, 2008

KANSAS CITY — Interstate Bakeries Corp. can begin seeking creditor approval of a plan that would allow the company to exit more than four years of bankruptcy, a judge said Thursday.

U.S. Bankruptcy Judge Jerry Venters approved a disclosure statement describing the reorganization plan to creditors, putting the maker of Hostess Twinkies and Wonder Bread in the last stages of emerging from court protection for the second time since it filed for Chapter 11 bankruptcy in September 2004.

An earlier reorganization plan fell through this spring when the Kansas City-based company was unable to secure necessary concessions from union members.

The new plan will be mailed to creditors by Nov. 6, and they'll have until Dec. 1 to vote on it, Venters said. He's scheduled a confirmation hearing for Dec. 5, and, if the plan is adopted, attorneys said the company would emerge from bankruptcy on Dec. 15.

Under the plan, Silver Point Capital LP and two other lenders who together hold $451 million of Interstate Bakeries' pre-petition secured debt will exchange that for $142.3 million in notes and $85.8 million in debt that can be exchanged for shares in the reorganized company.

Silver Point and Monarch Master Funding Ltd. would also provide a $344 million loan to help Interstate Bakeries exit bankruptcy, while General Electric Credit Corp. would provide a $125 million revolving loan.

Investment firm Ripplewood Holdings would invest $44.2 million in cash and $85.8 million in convertible debt in exchange for a 50 percent stake in the new company and an opportunity to late acquire another 15 percent.

Unsecured creditors, who are owed almost $323 million, would receive nothing under the plan.

However, they have worked out a compromise with the company where Interstate Bakeries will pay $890,000 of the creditors' expenses and set aside $5 million in cash to a trust for the unsecured creditors.

In addition, the unsecured creditors will be able to recoup a fraction of the $19.3 million they're owed by three Interstate Bakeries' subsidiaries.

In return, the unsecured creditors have agreed to withdraw their opposition to the plan.

The company plans to cancel all existing shares and take the company private.

The International Brotherhood of Teamsters, which represents about 9,500 of the company's 23,000 employees and helped torpedo the previous reorganization plan, is now a supporter. The roughly 500 Teamster locals are in the process of voting on the new contracts.

 


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