Teamsters looking for new investor for Interstate Bakeries

KANSAS CITY, Mo. (AP) -- The International Brotherhood of Teamsters is taking a second shot at bringing in an investor for bankrupt Interstate Bakeries Corp., the maker of Hostess Twinkies and Wonder Bread.

Union spokesman Rich Volpe told The Kansas City Star on Thursday that the Teamsters had reached an agreement with Ripplewood Holdings, a New York-based hedge fund, that includes collective bargaining agreements covering the 10,000 Teamster members working for Interstate Bakeries.

Volpe said the fund is now talking with Silver Point Finance LLC, which already has agreed to provide Interstate Bakeries with $400 million in after-bankruptcy financing. He said those discussions include bringing in additional management that could resolve issues between the company and the union.

Creditors for Kansas City-based Interstate Bakeries are currently voting on a reorganization plan that hinges on the company reaching a number of concessions with the Teamsters. Both sides broke off talks in October and Teamsters officials have since said they would prefer Interstate Bakeries being liquidated to working with the current management.

They claim the work and welfare concessions sought by Chief Executive Officer Craig Jung and his team are too expensive.

Interstate Bakeries said it was aware of the Teamsters' negotiations with a third party on a labor agreement and was reviewing documents regarding those discussions.

"With respect to the reported discussion between IBT and a third party, when and if the company receives an alternative plan with committed financing, a business plan and proposed recovery for constituents, it will assess the proposal," Interstate Bakeries told The Star.

A March 12 hearing has been scheduled to determine if enough creditors have voted to approve the reorganization plan to allow the company to exit bankruptcy after almost 3 1/2 years.

"The March 12 date for a confirmation hearing on the company's business plan remains on the court calendar, and the company continues to be committed to its plan of reorganization until another plan is presented that offers higher value and greater recovery for the company's constituents," the company said.

Under the current plan, Interstate Bakeries' lenders would receive all the $450 million they are owed in new stock while unsecured creditors would receive about 30 percent of their claims. Current shareholders would receive nothing.

This is the second time the Teamsters have tried to team up with a third party to invest in Interstate Bakeries. In November, Los Angeles-based hedge fund Yucaipa Cos. and the U.S. subsidiary of Mexican baking giant Grupo Bimbo said they planned to make an offer to buy the company. Bimbo later backed out of the partnership, and Yucaipa never made an official offer.

Volpe said Yucaipa is not involved in the Ripplewood deal. He said Ripplewood is asking for substantial concessions from the union but that he thinks they are workable.

"The deal is costly (in terms of concessions), but there are investment dollars there," he said.

He said the Ripplewood agreement would bring in new management and new members of Interstate Bakeries' board of directors. Volpe added that Jung and his management team wouldn't necessarily be replaced immediately, if the Ripplewood agreement goes through.

"I have no ax to grind with Mr. Jung other than he lacked bakery experience, and he lacks experience in working with unions," he said.

---

Information from: The Kansas City Star, http://www.kcstar.com