KANSAS CITY (Reuters) – Interstate Bakeries Corp, the bankrupt maker of Wonder Bread and Twinkies snack cakes, said on Friday that efforts to secure financing to exit bankruptcy were taking longer than expected.
“As everyone knows, it is a difficult environment in these financial markets and reaching agreement is taking more time and is more complex than we had hoped for,” company spokesman Lew Phelps said.
“There were letter agreements in place, but going to final contracts, there are a lot of details that have to be worked out. That is what is taking so long,” he said.
The financing arrangements are still being negotiated with General Electric Co (GE.N), according to International Brotherhood of Teamsters spokesman David White. The union represents more than 9,000 Interstate Bakeries employees.
Two other sources familiar with the situation said that the company was continuing to negotiate with GE.
GE’s GE Capital Corp and GE Capital Markets units agreed last year to provide financing including a $125 million revolving credit line to Interstate.
Phelps would not confirm that talks with GE were delaying the exit from bankruptcy but said the company was “working very hard to achieve negotiated agreements with all its lenders.”
“The goal is to negotiate a deal, get the financing done and get out of bankruptcy,” he said.
GE declined to comment on the matter.
Interstate Bakeries has hired Kasowitz, Benson, Torres & Friedman as special conflicts counsel, according to court documents.
Interstate Bakeries is facing a Feb. 9 deadline on its debtor-in-possession financing. The company had intended to emerge from bankruptcy before the end of December.
Early last month the U.S. Bankruptcy Court in Kansas City approved the company’s reorganization plan, which included $600 million in financing needed for the bakery to emerge from bankruptcy as a stand-alone company.
Financing commitments include $44.2 million in cash from New York investment firm Ripplewood Holdings. Ripplewood also committed to provide $85.8 million in convertible debt for a 50 percent stake in the company. Other lenders include JPMorgan and private equity funds including McDonnell Investment Management, Silver Point Capital and Quadrangle Group.
Interstate Bakeries, which operates 41 bakeries throughout the United States and employs more than 22,000 people, filed for bankruptcy in September 2004. Its brands include Wonder, Hostess, Home Pride and Dolly Madison.
By Carey Gillam
(Additional reporting by Caroline Humer, Emily Chasan and Megan Davies in New York, editing by Gerald E. McCormick)