Bankruptcy judge: approves IBC financing plan

Kansas City / MO. (ibc) Interstate Bakeries Corporation (IBC) announced that the Bankruptcy Court approved its motion to enter into an agreement with Silver Point Finance, L.L.C. to provide the Company with up to 400 million USD in exit financing upon IBC´s emergence from Chapter 11. The Court also authorized the Company to enter into an agreement supported by approximately 95 percent of the Company´s pre-petition secured lenders to convert funded pre-petition senior secured debt into new debt and equity securities to be issued upon the Company´s emergence from Chapter 11 as well as to pay certain fees associated with the financing. This financing, upon which the Plan of Reorganization is based, contemplates an enterprise value of approximately 580 million USD.

The Court also approved bidding procedures to govern the process to seek alternative investment proposals. The transactions contemplated by the agreements with Silver Point and the other Plan Supporters provide a «stake in the ground» for this process with which to measure the value offered by alternative proposals and ensure that IBC receives the highest and best offer to maximize value for the Company and its constituents. As the Company previously announced, it believes the Alternative Proposal Procedures are broad enough to permit any alternative proposals that may be contemplated.

«We are very pleased with the Court´s decision. The Plan Funding Commitment and the Alternative Proposal Procedures are the keys to completing the final stage of the process we began earlier this year – a process we believe will allow our Company to emerge from Chapter 11 and achieve sustainable profitability», said Chief Executive Officer Craig Jung.

In accordance with the recently approved proposal procedures, indications of interest are due by November 28, 2007 and final proposals must be submitted by January 15, 2008. In the event multiple proposals are received, an auction will be held on January 22, 2008. The deadline dates for the auction process were modified by IBC to reflect concerns of certain constituents that the auction process was scheduled at too rapid a pace.

The Company believes that the alternative proposal procedures are the best way to maximize value of the bankruptcy estates to the benefit of its constituents. The Company also said that it continues to believe that its business plan is the best alternative to maximizing creditor recovery and building a strong future for the Company and its employees. However, as the previously stated, the Company must achieve a mutually acceptable agreement with its unions on modifications to its collective bargaining agreements to be able to implement its business plan and meet the requirements of the Plan Funding Commitment.

The Company also said that it has agreed to enter into a mutually acceptable confidentiality agreement with Yucaipa Companies and the U.S. affiliate of Grupo Bimbo S.A.B de C.V. The confidentiality agreement will allow Yucaipa and Bimbo to speak with third parties, including the Company´s unions. In addition, Yucaipa and Bimbo will be permitted, on a confidential basis, to perform due diligence with respect to the Company and its businesses. However, if no final proposal is made by Yucaipa and Bimbo by December 13, 2007, the Company´s agreement to provide due diligence and management access will terminate.

«Now that the alternative proposal procedures are in place, we look forward to receiving proposals from other potential investors, including Yucaipa and Bimbo. Moreover, all of our constituents can be reassured that an orderly process is in place to encourage competition among interested parties. This well conceived process, in our view, provides the floor for value and a mechanism to consider whether further proposals provide greater value», Jung said.

IBC also said now that the Court has approved the Funding Motion, it will seek to extend the maturity of the DIP facility to June 02, 2008. The DIP facility is currently scheduled to expire February 09, 2008. «Extension of the DIP financing is valuable because it will assure all constituents that IBC will continue to have access to ample capital resources to operate its business normally through the duration of the alternative proposal process and beyond», the Chief Executive Officer said. The Company can provide no assurance that it will be able to obtain an extension of its DIP financing on terms acceptable to it or at all.

As previously announced, the Company did not pursue its September 13 motion seeking to extend its exclusive right to file a plan of reorganization. However, the effect of having filed its Plan of Reorganization on November 05, 2007, coupled with prior orders of the Bankruptcy Court, is that third parties may not file, absent further court order, a plan of reorganization prior to January 07, 2008, which is the date by which IBC has the exclusive right to solicit acceptances with respect to the Reorganization Plan.