Teamsters make deal with interstate creditors
David Twiddy - Associated Press
Thursday, August 21, 2008
KANSAS CITY, Mo. — The International Brotherhood of Teamsters said Wednesday it had brokered a deal between a financial firm looking to invest in bankrupt Interstate Bakeries Corp. and the company’s lenders.
Interstate is the owner of Emporia’s Dolly Madison Bakery.
The Teamsters, who had publicly criticized lenders Monday for holding up the negotiations, said the deal had been reached in late-night discussions Tuesday and early Wednesday.
They said Ripplewood Holdings, based in New York, will provide the cash for the Kansas City-based maker of Hostess Twinkies and Wonder Bread to exit almost four years of Chapter 11 reorganization.
“This deal is important in IBC’s recovery from bankruptcy as we work to protect our members’ jobs,” said Teamsters General President Jim Hoffa, whose union represents more than 9,500 of the company’s 23,000 employees.
An Interstate Bakeries spokeswoman said the company was “encouraged to hear reports of progress and discussion between Interstate Bakeries’ secured creditors and the Teamsters.
“At the same time, outstanding issues remain to be resolved before the agreement is final,” spokeswoman Maya Pogoda said.
A spokesman for Ripplewood didn’t immediately return a phone call for comment late Wednesday.
Richard Volpe, director of the Teamsters Bakery Workers Conference, said details of the plan would be provided in the coming weeks.
“This settlement is not without sacrifices from all parties involved,” Volpe said. “But it will place the company on the best footing possible for its future success, and keep as many hardworking union men and women employed as possible.”
The announcement came two days after the Teamsters said they held “little hope” of a reorganization plan being developed, blaming the lenders’ “greed” for potentially threatening thousands of jobs.
A spokesman for JPMorgan Chase Bank didn’t return calls or e-mails for comment. A spokeswoman for Monarch Alternative Capital said the company would not comment.
Interstate Bakeries filed for protection from creditors in September 2004.
It developed a reorganization plan late last year in which Silver Point Finance LLC would provide $400 million in post-bankruptcy financing. But the company abandoned that plan in March when the company was unable to gain workplace and welfare concessions from the Teamsters.
In particular, the Teamsters have objected to proposed changes in Interstate Bakeries’ distribution network that the company said would improve efficiency and profitability but that the union said would cost jobs.
During a bankruptcy court hearing on the plan, a Teamsters attorney said the union would prefer to see the company liquidated to accepting the concessions.
Instead, Interstate Bakeries began negotiating with Ripplewood, which the Teamsters said had proposed a reorganization plan that included concessions it could accept.
In April, Interstate Bakeries also negotiated a new financing package worth $250 million with JPMorgan, Monarch and three other lenders, due to expire Sept. 30.
The company also said it would begin developing a plan to sell itself whole or in pieces if it ultimately couldn’t get a reorganization plan approved.