Interstate Bakeries and GE Capital Reach Agreement in Principle On Revised Terms Of Revolving Credit Financing

"We are now working diligently with GE Capital and our other financing providers to finalize all documentation for our exit financing. We are optimistic that we will emerge from Chapter 11 in the near future," said Craig Jung, CEO of IBC.

IBC's existing debtor-in-possession financing matures, and its exit financing commitments expire, on February 9, 2009.

"Given today's challenging credit markets, our road to emergence from Chapter 11 has been longer and more challenging than anticipated, but we have now reached the final stretch," Mr. Jung said. "While much work remains to be done to close our financing transactions, we believe that our accord with GE Capital has cleared the last significant obstacle to our emergence," he said. "Negotiations with GE Capital over the past several days have been constructive, and so I am optimistic we will have a timely completion of this transaction."

IBC said it has filed a motion with the bankruptcy court seeking approval to close on the amended terms of the revolving credit facility, and that it expects the court to have a hearing on the motion on Thursday, January 29, 2009.

IBC also cautioned that there can be no assurance that its exit financing will close as expected.

About the Company

Interstate Bakeries Corporation is one of the nation's largest commercial bakers and distributors of fresh-baked bread and sweet goods, sold under various brand names, including Wonder(R), Merita(R), Home Pride(R), Baker's Inn(R), Hostess(R), Drake's(R), and Dolly Madison(R). The Company is headquartered in Kansas City, Missouri. The company employs 22,000 persons, of which approximately 18,000 are represented by the International Brotherhood of Teamsters and the Bakery and Confectionery Workers International Union of America. IBC has major facilities and significant employment in the following states: California (1,887 employees), Colorado (252), Florida (969), Georgia (553), Illinois (1,722), Indiana (1,094), Iowa (408), Kansas (1,037), Kentucky (309), Louisiana (521), Maine (505), Massachusetts (322), Michigan (441), Missouri (1,436), Montana (324), Nevada (341), New Jersey (625), New York (807), North Carolina (793), Ohio (1,358), Oklahoma (453), Pennsylvania (716), Tennessee (816), Utah (634), Virginia (262), Washington (281), Wisconsin (222), with approximately 3,000 total employees in other states.

Forward Looking Statement

Some information contained in this press release may be forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are not historical in nature and include statements that reflect, when made, the Company's views with respect to current events and financial performance. These forward-looking statements can be identified by forward-looking words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "could," "should" and "continue" or similar words. These forward-looking statements may also use different phrases. All such forward-looking statements are and will be subject to numerous risks and uncertainties, many of which are beyond our control that could cause actual results to differ materially from such statements. Factors that could cause actual results to differ materially include, without limitation: the ability of the Company to continue as a going concern; the ability of the Company to consummate its plan of reorganization, which was confirmed by the bankruptcy court on December 5, 2008; the ability of the Company to obtain the financing necessary to implement its business plan and emerge from Chapter 11; the ability of the Company to operate pursuant to the covenants, terms and certifications of its DIP financing facility, as amended and restated; the ability of the Company to successfully negotiate an extension and increase in the amount available under, or refinance, its DIP financing facility, if needed, which expires on February 9, 2009; the Company's ability to implement its business plan; the significant time that is and will be required by management to consummate the plan of reorganization, as well as to continue to evaluate various alternatives in the event the plan of reorganization is not consummated, including, but not limited to, the sale of the Company or some or all of its assets, infusion of capital, debt restructuring, or any combination of these options and, absent the ability to pursue any such strategy, the orderly wind-down of the Company's operations; the ability of the Company to obtain court approval with respect to motions in the Chapter 11 proceeding filed by it from time to time; risks associated with third parties seeking and obtaining court approval for the appointment of a Chapter 11 trustee or to convert the Chapter 11 proceeding to a Chapter 7 proceeding; risks associated with cost increases in materials, ingredients, energy and employee wages and benefits; risks associated with the Company's restructuring activities, including the risks associated with achieving the desired savings; the Company's ability to successfully reject unfavorable contracts and leases; the duration of the Chapter 11 process; the ability of the Company to obtain and maintain adequate terms with vendors and service providers; the potential adverse impact of the Chapter 11 proceeding on the Company's liquidity or results of operations; the Company's ability to operate its business under the restrictions imposed by the Chapter 11 process; the instructions, orders and decisions of the bankruptcy court and other effects of legal and administrative proceedings, settlements, investigations and claims; risks associated with product price increases, including the risk that such actions will not effectively offset inflationary cost pressures and may adversely impact sales of the Company's products; the effectiveness of the Company's efforts to hedge its exposure to price increases with respect to various ingredients and energy and the Company's ability to hedge given its financial condition; the ability of the Company to attract, motivate and/or retain key executives and employees; changes in its relationship with employees and the unions that represent them; successful implementation of information technology improvements; increased costs and uncertainties with respect to a defined benefit pension plan to which we contribute; costs associated with increased contributions to single employer, multiple employer or multi-employer pension plans; the impact of any withdrawal liability arising under the Company's multi-employer pension plans as a result of prior actions or current consolidations; the effectiveness and adequacy of our information and data systems; changes in general economic and business conditions (including in the bread and sweet goods markets); changes in consumer tastes or eating habits; acceptance of new product offerings by consumers and the Company's ability to expand existing brands; the performance of the Company's recent and planned new product introductions, including the success of such new products in achieving and retaining market share; the effectiveness of advertising and marketing spending; any inability to protect and maintain the value of the Company's intellectual property; future product recalls or food safety concerns; actions of competitors, including pricing policy and promotional spending; bankruptcy filings by customers; costs associated with environmental compliance and remediation; actions of governmental entities, including regulatory requirements; the outcome of legal proceedings to which we are or may become a party; business disruption from terrorist acts, our nation's response to such acts and acts of war; and other factors.

These statements speak only as of the date of this press release, and we disclaim any intention or obligation to update or revise any forward-looking statements to reflect new information, future events or developments or otherwise, except as required by law. We have provided additional information in our historical filings with the SEC, which readers are encouraged to review, concerning other factors that could cause actual results to differ materially from those indicated in the forward-looking statements.

SOURCE: Interstate Bakeries Corporation

Sitrick And Company 310-788-2850 Lewis M. Phelps or Maya Pogoda