Interstate Bakeries Files Amended Plan of Reorganization and Disclosure Statement

October 6, 2008 9:56 AM EDT

KANSAS CITY, Mo.--(BUSINESS WIRE)--

Interstate Bakeries Corporation (IBC) (OTC: IBCIQ) announced today that it filed an amended Plan of Reorganization and related Disclosure Statement with the U.S. Bankruptcy Court for the Western District of Missouri on October 4, 2008.

The filing of the Plan of Reorganization and related Disclosure Statement was made in connection with the plan funding commitments, announced on September 12, 2008, from an affiliate of Ripplewood Holdings L.L.C. (the "Equity Investor") and from Silver Point Finance, LLC, and Monarch Master Funding Ltd. As previously announced, the funding commitments form a basis for IBC to emerge from Chapter 11 as a stand-alone company, under the Plan of Reorganization filed with the Bankruptcy Court.

The Plan of Reorganization and related Disclosure Statement filed on October 4, 2008 reflect a substantially impaired recovery for pre-petition senior secured creditors. For general unsecured creditors and equity security holders, the amended Plan of Reorganization and related Disclosure Statement reflect no recovery, although on October 3, 2008 the Company and its pre-petition secured creditors reached a compromise with the Official Committee of Unsecured Creditors appointed in the cases. As a result of the compromise, the Official Committee of Unsecured Creditors withdrew its previously filed objection to the Company's efforts to obtain Bankruptcy Court approval of the plan funding commitments and agreed to support the Company's Plan of Reorganization as it will be subsequently amended to reflect the compromise. The Plan of Reorganization has the support of approximately 53.8% of the pre petition secured debt holders.

The compromise reached with the Official Committee of Unsecured Creditors, which is subject to definitive documentation, provides for, among other things, the establishment of a creditors' trust upon IBC's emergence from Chapter 11 for the benefit of the general unsecured creditors. The creditors' trust will be funded through a cash payment of $5 million. Costs of administering the trust will be paid from the trust assets. The creditors' trust will also receive rights to pursue certain litigation claims at the expense of the creditors' trust. Finally, the creditors' trust will potentially receive a cash payment upon a future liquidity event with such payment based on the increase, if any, in value of a 3% equity ownership stake in the reorganized IBC in excess of 150% of the investment equity value paid by the Equity Investor. There can be no assurance that the litigation claims or the potential cash payment described above will result in any distributable value for general unsecured creditors.

The filing of the Plan of Reorganization and related Disclosure Statement is an important step in IBC's ongoing efforts to emerge from Chapter 11. Going forward, the Company intends to amend the filed Plan of Reorganization and related Disclosure Statement to reflect the compromise reached with the Official Committee of Unsecured Creditors and seek Bankruptcy Court approval of the amended Disclosure Statement and confirmation of the amended Plan of Reorganization through the Chapter 11 process.

About the Company

Interstate Bakeries Corporation is one of the nation's largest commercial bakers and distributors of fresh-baked bread and sweet goods, sold under various brand names, including Wonder(R), Merita(R), Home Pride(R), Baker's Inn(R), Hostess(R), Drake's(R), and Dolly Madison(R). The Company is headquartered in Kansas City, Missouri.

Interstate Bakeries Corporation filed for bankruptcy protection on September 22, 2004, citing liquidity issues resulting from declining sales, a high fixed-cost structure, excess industry capacity, rising employee healthcare and pension costs, and higher costs for ingredients and energy. The Company continues to operate its business in the ordinary course as a debtor-in-possession.

About Ripplewood Holdings L.L.C.

Based in New York, Ripplewood Holdings L.L.C. is a leading private equity firm established in 1995 by Timothy C. Collins. Through five institutional private equity funds managed by Ripplewood, the firm has invested over $4.5 billion of equity in transactions in the U.S., Asia, Europe and the Middle East.

Forward-Looking Statement

Some information contained in this press release may be forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are not historical in nature and include statements that reflect, when made, the Company's views with respect to current events and financial performance. These forward-looking statements can be identified by forward-looking words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "could," "should" and "continue" or similar words. These forward-looking statements may also use different phrases. All such forward-looking statements are and will be subject to numerous risks and uncertainties, many of which are beyond our control that could cause actual results to differ materially from such statements. Factors that could cause actual results to differ materially include, without limitation: the ability of the Company to continue as a going concern; the ability of the Company to obtain approval of the revised plan of organization and related financing agreements and fees from the bankruptcy court on a timely basis; the Company's ability to obtain ratification from its unionized workforce of the modifications to their collective bargaining agreements contemplated by the revised plan of reorganization; the terms of any reorganization plan ultimately confirmed; the Company's ability to implement its business plan; the ability of the Company to operate pursuant to the covenants, terms and certifications of its DIP financing facility, as amended and restated; the ability of the Company to obtain court approval with respect to motions in the Chapter 11 proceeding filed by it from time to time; risks associated with third parties seeking and obtaining court approval for the appointment of a Chapter 11 trustee or to convert the Chapter 11 proceeding to a Chapter 7 proceeding; risks associated with cost increases in materials, ingredients, energy and employee wages and benefits; risks associated with the Company's restructuring activities, including the risks associated with achieving the desired savings; the Company's ability to successfully reject unfavorable contracts and leases; the duration of the Chapter 11 process; the ability of the Company to obtain and maintain adequate terms with vendors and service providers; the potential adverse impact of the Chapter 11 proceeding on the Company's liquidity or results of operations; the Company's ability to operate its business under the restrictions imposed by the Chapter 11 process; the instructions, orders and decisions of the bankruptcy court and other effects of legal and administrative proceedings, settlements, investigations and claims; the significant time that will be required by management to implement the revised plan of reorganization; risks associated with product price increases, including the risk that such actions will not effectively offset inflationary cost pressures and may adversely impact sales of the Company's products; the effectiveness of the Company's efforts to hedge its exposure to price increases with respect to various ingredients and energy; the ability of the Company to attract, motivate and/or retain key executives and employees; changes in our relationship with employees and the unions that represent them; successful implementation of information technology improvements; increased costs and uncertainties with respect to a defined benefit pension plan to which we contribute; costs associated with increased contributions to single employer, multiple employer or multi-employer pension plans; the impact of any withdrawal liability arising under the Company's multi-employer pension plans as a result of prior actions or current consolidations; the effectiveness and adequacy of our information and data systems; changes in general economic and business conditions (including in the bread and sweet goods markets); changes in consumer tastes or eating habits; acceptance of new product offerings by consumers and the Company's ability to expand existing brands; the performance of the Company's recent and planned new product introductions, including the success of such new products in achieving and retaining market share; the effectiveness of advertising and marketing spending; any inability to protect and maintain the value of the Company's intellectual property; future product recalls or food safety concerns; actions of competitors, including pricing policy and promotional spending; bankruptcy filings by customers; costs associated with environmental compliance and remediation; actions of governmental entities, including regulatory requirements; the outcome of legal proceedings to which we are or may become a party; business disruption from terrorist acts, our nation's response to such acts and acts of war; and other factors. These statements speak only as of the date of this press release, and we disclaim any intention or obligation to update or revise any forward-looking statements to reflect new information, future events or developments or otherwise, except as required by law. We have provided additional information in our filings with the SEC, which readers are encouraged to review, concerning other factors that could cause actual results to differ materially from those indicated in the forward-looking statements.

Similarly, these and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of the Company's various pre-petition liabilities, common stock and/or other equity securities. No assurance can be given as to what values, if any, will be ascribed in the Chapter 11 proceeding to each of these liabilities and/or securities. Accordingly, the Company urges that the appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities.

Source: Interstate Bakeries Corporation

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