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Interstate's current funding and all of the commitments it has for financing to operate the business upon emerging from bankruptcy expire in less than two weeks. The company needs court approval for the financing changes, and documentation must be rewritten, approved and signed.
Interstate and GE late Monday reached an agreement on a revolving loan that was needed for the wholesale baker to emerge from more than four years in bankruptcy. The agreement came after GE reduced the loan amount to $105 million, from the $125 million originally committed to in September.
Kansas City-based Interstate also agreed to pay additional underwriting fees and a higher interest rate.
As part of the negotiations, other lenders who have agreed to make a term loan to the maker of Wonder Bread and Hostess snacks increased their commitment to $354 million from $344 million.
In a court filing Monday night, the baker asked the bankruptcy court to approve the change in the financing terms. An emergency hearing is scheduled for Thursday.
Craig Jung, Interstate chief executive, said the company and its lenders were working diligently to complete the financing documentation.
"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," Jung said in a statement. "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."
The loan from General Electric Capital Corp. and GE Capital Markets is part of a nearly $600 million package that would provide Interstate the capital and loans to operate its 41 bakeries and the rest of its business after bankruptcy.
The baking company, which filed for bankruptcy in September 2004, got court approval Dec. 5 for its reorganization plan but had to complete the details of the financing package it had negotiated in the fall.
Under the plan, New York investment firm Ripplewood Holdings has agreed to invest $44.2 million in cash and $85.8 million in convertible debt in Interstate. It will take a 50 percent equity stake in the reorganized company.
Silver Point Finance LLC and Monarch Master Funding Ltd, agreed to make a $344 million term loan, a sum they have now increased to $354 million.
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By the numbers
Interstate Bakeries Corp. on Tuesday filed a monthly financial operating report with the bankruptcy court showing it had an $11.5 million operating loss for the four weeks ending Dec. 13 on revenues of $201.2 million.
The company said as of Dec. 13, it had borrowed $110.9 million under its $309 million so-called debtor-in-possession credit facility.
To reach Eric Palmer, call 816-234-4335 or send e-mail to epalmer@kcstar.com.
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