IBC: files reorganization plan and heads off Yucaipa-Bimbo bid

Kansas City / MO. (ibc) Interstate Bakeries Corporation (IBC) announced that it has filed its Plan of Reorganization and related Disclosure Statement with the U.S. Bankruptcy Court for the Western District of Missouri.

A cornerstone of the Plan is the previously announced commitment by Silver Point Finance, LLC, to provide the Company with up to 400 million USD in exit financing upon IBC´s emergence from Chapter 11. Additionally, as also previously announced, the Company has obtained plan funding agreements to support the Reorganization Plan from JP Morgan Chase Bank, N.A., McDonnell Investment Management LLC, Quadrangle Master Fund Ltd., and Silver Point Capital, L.P.

In addition, several additional holders of the Company’s pre-petition senior secured credit facility have also signed the plan funding agreements as of November 02, 2007. In total, holders of approximately 95 percent of the Company´s pre-petition senior secured credit facility now support the plan funding agreements. The Company´s motion seeking authorization to enter into the financing and plan support agreements will be heard at its previously scheduled hearing on November 07, 2007.

The Company does not intend to pursue its September 13 motion seeking to extend its exclusive right to file a plan of reorganization. However, the effect of filing the Reorganization Plan, 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.

«The Company believes that the Reorganization Plan it has filed now provides substantial value to its creditors», said Craig Jung, chief executive officer of IBC. «We believe strongly that our Reorganization Plan is the best alternative to maximize value for our constituents in the bankruptcy process, build competitive advantage, and secure the jobs of IBC employees. It is based on our business plan, which has been endorsed by everyone who will be involved in its implementation going forward – except for the Teamsters», he said.

The Company has been actively seeking higher and better offers to the proposed financing and plan support agreements and has received interest from multiple parties regarding the opportunity to invest in the Company. However, all of the financing proposals IBC has received to date require that the Company reach mutually acceptable agreements on modifications to collective bargaining agreements with its two principal unions, the Bakery, Confectionery, Tobacco Workers + Grain Millers International Union (BCTGM) and the International Brotherhood of Teamsters, that would make it possible for the Company to implement its business plan. As previously announced, IBC has reached agreement with the BCTGM, but has yet to reach agreement with the Teamsters.

«In light of our inability thus far to reach a mutually acceptable agreement with the Teamsters and our ability to obtain a substantial financing commitment despite an increasingly challenging capital markets environment, the time is right to invite all potential investors to come forward with their own alternative proposals», said Jung. To allow for the fullest range of competing offers, the Company will permit potential investors to freely discuss proposals with other parties, including the unions, subject to appropriate confidentiality restrictions. The Company believes that the auction bidding procedures, which are to be considered by the Bankruptcy Court at the November 07, 2007, hearing, are broad enough to permit any alternative proposals that may be contemplated, but there can be no assurances that these procedures will be approved by the Bankruptcy Court.

«We believe that any alternative proposal should provide even more value for constituents and equal or better job security for all employees in order to be acceptable to the Company and its constituents», Jung said.

«The Teamsters announced that they are working with Yucaipa Cos., a Los Angeles-based investment firm, and the U.S. affiliate of Grupo Bimbo, a Mexico-based baked goods company, to develop an alternative plan of reorganization (see «Teamsters: propose buyout plan for IBC»). Now that management has fulfilled its obligation to put forth what we believe is the best possible plan, we are opening the door for others. If Yucaipa or anyone else has a better idea about how to help this Company emerge from Chapter 11, secure jobs, and maximize value for creditors, we welcome the opportunity to review the details of their proposal», said Jung. In a pleading filed with the Bankruptcy Court on November 02, 2007, Yucaipa acknowledged that it had not yet developed a plan of reorganization and the Company noted that no specific proposal had been made beyond Yucaipa´s request for time to explore a potential alternative plan of reorganization. The Company can give no assurances that any alternative will ultimately be proposed.

«After only eight months, I am extremely pleased to be in a position to file the Reorganization Plan, based upon our comprehensive business plan and with committed financing. And I would like to thank once again our 25.000 employees who have continued each day to bake our bread and cake products, deliver them to our customers, and remain focused on the job at hand. All of us at IBC will continue to meet our customers´ needs and operate our business normally as we work to ultimately emerge from Chapter 11», concluded Jung.

About: Interstate Bakeries Corporation (IBC) is one of the United States´ largest commercial bakers and distributors of fresh-baked bread and sweet goods, sold under various brand names. The company is headquartered in Kansas City, Missouri. IBC filed for bankruptcy protection in September 2004, citing liquidity issues resulting from declining sales, a high fixed-cost structure, excess industry capacity, rising employee healthcare and pension costs, and higher costs for ingredients and energy. The company continues to operate its business in the ordinary course as a debtor-in-possession.