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Twinkies maker might be owned by Ripplewood after bankruptcy exit

By Steven Church
Bloomberg News

POSTED: 07:37 p.m. EDT, Sep 17, 2008

Interstate Bakeries Inc. might be taken over by Ripplewood Holdings LLC under a reorganization plan to be proposed by the bankrupt maker of Hostess Twinkies and Wonder Bread.

The company has a bakery in Akron and retail operations in Akron and Tallmadge.

In exchange for $130 million, New York-based Ripplewood would gain shares and convertible notes that would give it half of the new stock to be issued by Interstate as part of its reorganization, the Kansas City-based baker said in a court filing. The company would also get warrants for the purchase of an additional 15 percent of the new stock with a ''strike price'' of $12.50 a share.

''This truly is a watershed moment,'' Interstate said.

Interstate asked a bankruptcy court judge to approve the agreement as part of the company's plan to exit court protection after four years. Under the proposal, an affiliate of Ripplewood would invest the $130 million while Silver Point Finance, Monarch Alternative Capital LP and McDonnell Investment Management LLC would loan the company $339 million, according to a statement.

Interstate asked U.S. Bankruptcy Judge Jerry W. Venters in Kansas City to approve the agreement with Ripplewood at an Oct. 2 hearing. The company said it should be able to exit bankruptcy by early next year if it receives court approval.

Under the proposed reorganization, unsecured creditors, those whose claims aren't guaranteed by company assets, would not be paid anything. Their attorneys and those for Interstate's lenders are scheduled to meet this week in New York to begin negotiating details of a new reorganization plan.

Interstate, which also makes Hostess snacks such as Ding Dongs and Sno Balls, threatened to sell itself in pieces earlier this year when it failed to persuade its largest union, the Teamsters, to accept new work rules. The union had said it would rather see Interstate liquidated than accept a previous plan.

The two sides said Sept. 12 that they reached a compromise under which the Teamsters would accept a new contract allowing concessions to the company. Details of that proposed contract haven't been made public.

Interstate Bakeries Inc. might be taken over by Ripplewood Holdings LLC under a reorganization plan to be proposed by the bankrupt maker of Hostess Twinkies and Wonder Bread.

The company has a bakery in Akron and retail operations in Akron and Tallmadge.

In exchange for $130 million, New York-based Ripplewood would gain shares and convertible notes that would give it half of the new stock to be issued by Interstate as part of its reorganization, the Kansas City-based baker said in a court filing. The company would also get warrants for the purchase of an additional 15 percent of the new stock with a ''strike price'' of $12.50 a share.

''This truly is a watershed moment,'' Interstate said.

Interstate asked a bankruptcy court judge to approve the agreement as part of the company's plan to exit court protection after four years. Under the proposal, an affiliate of Ripplewood would invest the $130 million while Silver Point Finance, Monarch Alternative Capital LP and McDonnell Investment Management LLC would loan the company $339 million, according to a statement.

Interstate asked U.S. Bankruptcy Judge Jerry W. Venters in Kansas City to approve the agreement with Ripplewood at an Oct. 2 hearing. The company said it should be able to exit bankruptcy by early next year if it receives court approval.

Under the proposed reorganization, unsecured creditors, those whose claims aren't guaranteed by company assets, would not be paid anything. Their attorneys and those for Interstate's lenders are scheduled to meet this week in New York to begin negotiating details of a new reorganization plan.

Interstate, which also makes Hostess snacks such as Ding Dongs and Sno Balls, threatened to sell itself in pieces earlier this year when it failed to persuade its largest union, the Teamsters, to accept new work rules. The union had said it would rather see Interstate liquidated than accept a previous plan.

The two sides said Sept. 12 that they reached a compromise under which the Teamsters would accept a new contract allowing concessions to the company. Details of that proposed contract haven't been made public.




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