Wonder Bread maker files to exit Chapter 11

Just days before a Bankruptcy Court showdown with its largest union, Interstate Bakeries Corp. has filed a reorganization plan for ending more than three years of bankruptcy.

The Kansas City, Mo.-based maker of Wonder Bread and Hostess Twinkies filed the plan late Monday, saying it had lined up $400 million in financing from specialty lender Silver Point Finance and had received initial approval from 95% of the holders of the company’s pre-petition debt.

The plan, which must be approved by the court, effectively stymies an attempt by Yucaipa Cos., the Los Angeles-based investment firm of supermarket billionaire Ron Burkle, to buy Interstate.

Burkle sought to buy the company with help from the U.S. subsidiary of Mexican baking competitor Grupo Bimbo and the International Brotherhood of Teamsters union.

That group made its proposal Friday, saying it would not require outside financing and would give creditors a better deal than the one Interstate would offer.

Calls to Yucaipa and the Teamsters were not immediately returned Tuesday.

Interstate has until Jan. 7 to persuade its creditors to approve the plan. Meanwhile, unless the court rules otherwise, other parties can’t offer their own plans.

A Bankruptcy Court judge in Kansas City had given the company and the Teamsters until a hearing scheduled for today to work out disagreements over work and welfare concessions.

The union, which represents almost 10,000 of the company’s 25,000 employees, claims that the company’s plan to restructure its distribution network will cost union jobs.

Interstate Bakeries previously said the Silver Point deal was contingent on gaining concessions from its unions.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents about 9,000 employees, has already largely approved the measures.

Interstate still has not reached a deal with the Teamsters.

On Monday, Chief Executive Craig Jung said that although Interstate had filed the reorganization plan, it would consider other proposals.

“If Yucaipa or anyone else has a better idea about how to help this company emerge from Chapter 11, secure jobs and maximize value for creditors, we welcome the opportunity to review the details of their proposal,” Jung said in a statement.

Under the company’s plan, it would exchange its pre-petition lenders’ $450 million in debt for $250 million in second-lien notes, $165 million of convertible secured notes and $35 million in class A common stock, to be issued by the reorganized company.

Unsecured creditors would receive almost 30% of the outstanding shares of common stock and be able to participate in a rights offering of $50 million in class B common stock.

Current stockholders, whose shares were worth about 6 cents Tuesday, would receive nothing.

Yucaipa surfaced as a potential suitor this summer but has not had a chance to look at Interstate Bakeries’ operations in depth after refusing to sign confidentiality agreements that would prevent it from sharing that information with the Teamsters.