Interstate Bakeries demands details of Teamsters agreement

KANSAS CITY, Mo. -- Interstate Bakeries Corp. will ask a bankruptcy judge today to force a consortium interested in buying the maker of Hostess Twinkies and Wonder Bread to provide more details on an exclusive arrangement it says it has with one of the company's largest unions.

Yucaipa Companies, a Los Angeles-based investment firm owned by supermarket billionaire Ron Burkle, and the U.S. subsidiary of Mexican baking giant Grupo Bimbo said Nov. 2 that they planned to make a joint bid for Interstate Bakeries.

Interstate Bakeries, based in Kansas City, has been under Chapter 11 bankruptcy protection since September 2004.

In court filings, Yucaipa and Bimbo said they had an exclusive agreement with the International Brotherhood of Teamsters, which represents about 9,500 of the company's 25,000 employees.

Talks between the Teamsters and Interstate Bakeries broke down last month over wage and welfare concessions, as well as the union's opposition to proposed changes to the company's distribution system.

Interstate Bakeries has proposed a reorganization plan for getting out of bankruptcy that would provide $400 million in financing from specialty lender Silver Point Finance LLC but is contingent on getting approval from the company's unions. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents about 10,000 Interstate Bakeries employees, has already approved the changes.

During a Nov. 7 hearing, U.S. Bankruptcy Judge Jerry Venters gave other bidders until mid-December to propose better deals for the company, which could lead to an auction in January.

At that hearing, Interstate Bakeries said it was nearing an agreement with Yucaipa and Bimbo to provide them confidential information about the company's businesses so they could flesh out a bid for the company. But in return, the bidders had to provide details of their agreement with the Teamsters.

The company has said the existence of such an agreement could scare off other potential bidders and that bankruptcy law allows Interstate Bakeries to demand those details.

Interstate Bakeries said Yucaipa and Bimbo have had the confidential company information since Nov. 13 but have yet to provide the Teamsters details.

In separate responses, Bimbo and Yucaipa officials say the Teamsters information is not available under bankruptcy procedures, that it would be difficult to provide and that it would involve disclosing confidential commercial information.

"(Interstate Bakeries), frustrated by their well-known inability to reach an agreement with the (Teamsters), now seek disclosure of exclusive agreements," Bimbo wrote in its response. "Bimbo respectively requests the court to view the movants' requests for what they are -- a last-ditch effort to ward off parties that may be better situated than (Interstate Bakeries) to maximize the estates' value and provide meaningful recovery for their creditors."

Interstate Bakeries has dismissed concerns that it would be a burden to provide the details, noting that Yucaipa has said the agreement was verbal, not written, "so the volume of potentially responsive documents cannot be great (if any even exists), and the 'burden' of locating and producing such a modest quantity of documents should not be severe."