Twinkies, Wonder Bread On Ropes?
Interstate Bakeries Corp., the nation's largest wholesaler baker, whose products include Twinkies and Wonder Bread, filed for Chapter 11 bankruptcy reorganization early Wednesday.
Concurrent with the filing, the Kansas City-based company said it received a commitment for $200 million in debtor-in-possession financing from J.P. Morgan Chase Bank to fund post-petition operating expenses as well as supplier and employee obligations, subject to the court's approval.
The maker of such baked goods as Twinkies and Wonder Bread also named Tony Alvarez as new CEO, succeeding James Elsesser, who also resigned as chairman.
John Suckow was named chief restructuring officer.
Alvarez helped found and is co-chief executive of the corporate advisory and turnaround management services firm Alvarez & Marsal Inc., while Suckow is a managing director.
Director Leo Benatar was elected non-executive chairman of the board.
Interstate Bakeries, which has been struggling of late to line up financing, cited several factors behind its bankruptcy filing: liquidity issues resulting from declining sales, a high fixed-cost structure, excess industry capacity, rising health-care and pension expenses, and higher costs for ingredients and energy.
"By filing for protection under Chapter 11 and obtaining the D-I-P financing, the company should have the liquidity, time and resources necessary to thoroughly identify, assess and address the issues that will enable this company to be successful in the future," Alvarez said in a press release.
Interstate, with annual sales of $3.5 billion, operates more than 50 bakeries and employs about 34,000, including 600 of them in the Kansas City area.
The company faced a Sept. 26 deadline to meet certain conditions or receive waivers from its bank lenders to continue drawing on a revolving credit facility.
The company also set a target of submitting its 10-K filing for fiscal 2004 by Sept. 26. Interstate Bakeries deferred its filing last month, citing what it called "the convergence of a number of recently identified interrelated circumstances."
Previously, the company sought and obtained an extension for filing the 10-K because of delays encountered in finalizing its audited financial statements for fiscal 2004.
The Kansas City Star reported Wednesday that IBC listed assets of $1.626 billion and liabilities of $1.321 billion in its bankruptcy filing.
IBC said it would continue to operate its bakeries, outlet stores and distribution centers and deliver its products.
Shares of Interstate Bakeries slipped 13 cents to end at $3.82 in Tuesday's trading.